The cost of living crisis encompasses a series of significant rises in bills and taxes that have already hit most households in the UK. These include gas, electricity, fuel, water, council tax, broadband, phone, TV, rail fares, vehicle excise duty as well as food and clothing. The inflation rate currently stands at 7% and is set to rise to 10% later this year.
After two years of increased public spending in response to covid, we now face having to repay that debt, on top of the excessive debt we were already servicing. The national debt has risen to about £2.3 trillion, or about 95% of GDP. This is the highest level since the early 1960s. Wages are not increasing commensurately and taxes have not been reduced. The impact of increased borrowing have had a cascade effect on the cost of living which in turn will have a devastating impact on the economy.
What does this mean in practical terms for individuals, families and businesses?
As prices increase for basic things we need (energy, fuel, water, internet, food, clothes etc.) it means that households are forced to cut back on non-essential spending. We have less left over to spend in hospitality, theatres, hairdressers, travel, and so forth. This has a knock-on effect on the whole economy. Businesses with physical premises are already struggling after the last two years of restrictions. Increases in outgoings will result in many small and medium size businesses in ‘non essential’ sectors struggling to sell their products and services. This will result in many being unable to survive, with ensuing job losses. In turn, advertising, marketing and related sectors will also incur job losses.
These increasing and debilitating financial pressures on individuals, families and businesses will lead to increased poverty, lower wages, higher unemployment, homelessness, debt, home repossessions, bankruptcy and empty high streets.
So what can we do?
It is important to remember that we are not powerless. Many of the fiscal decisions being made by those in charge are nonsensical given the reality we are faced with. We must demand a change of tack. Please write to your MP asking them to pledge to fight against the rising cost of living and to vote to cut bills and taxes immediately to protect UK citizens. This will be done in return for your vote. We have prepared a template letter for MPs to amend and send. In addition you can contact your energy supplier to insist on finding cheaper alternatives.
We must also demand that lockdowns and restrictions are never implemented again to encourage potential economic growth and a confidence in the future.