Status: 01.09.2022 11:25 a.m
Skyrocketing energy and food prices will exacerbate poverty in Britain, a study finds. Almost every fifth resident could be affected.
According to a new study, poverty in Great Britain will increase significantly due to the current unchecked increase in energy and food costs and the continuing rise in consumer prices. If the future government continues the current policy, the number of people living in absolute poverty will rise by three to 14 million by the financial year 2023/24 (March 31), the think tank Resolution Foundation (RF) announced today. That would be almost one in five of Britain’s 67 million inhabitants.
From loss of wealth to risk of poverty
Relative child poverty – this is when parents have less than 50 percent of the average net income available for their family – will then climb to 33 percent by 2026/27. The authors of the study emphasized that the main reason was the rapid fall in real wages. By mid-2023, all real wage growth in 20 years will have been wiped out.
So far, in connection with the skyrocketing consumer prices across Europe, the talk has mainly been of so-called “loss of prosperity”, which is also a consequence of the Russian attack on Ukraine and must be accepted. The British study now shows that more and more people could be directly affected by poverty.
“Frightening Prospects”
“Britain is already experiencing its biggest fall in real wages since 1977 and a harsh winter looms as energy bills soar to £500 a month,” said RF expert Lalitha Try. The prospects are frightening; so radical policy action, such as an energy support package worth tens of billions of pounds, is needed, says Try.
In other European countries, too, government aid worth billions has long been discussed intensively or has already been decided. In Germany, for example, another relief package is to be passed in the coming days.
The problem of rising inflation is likely to remain: in July, inflation in the UK had already climbed to 10.1 percent, the highest rate since 1982. Consumer prices in the euro zone also climbed to a record high in August.
More than 20 percent inflation?
Experts are now expecting a further strong increase in British consumer prices. Experts at the US investment bank Goldman Sachs have warned of inflation of more than 22 percent in the coming year if gas prices continue to rise, the Financial Times recently reported. Even in less drastic scenarios, Goldman Sachs expects UK inflation to peak at around 15 percent in 2023.
The US investment bank is not alone in these assessments: the major US bank Citi also recently forecast an increase to 18 percent for January at the beginning of the new year.
Goldman Sachs believes a recession in the UK is inevitable – even with relief packages and other discussed measures announced by the favorite in the race to succeed Johnson, Liz Truss.
“Summer of Strikes”
Meanwhile, British rail workers are demanding significant wage increases and decent working conditions in the face of high inflation. They ended a three-day strike just a few days ago, and further industrial action is planned for the end of September.
There are also strikes in the country at the moment, including at the post office, in ports and in the media sector. Other industries are currently being asked about their willingness to take industrial action. The British media are therefore already talking about the “summer of strikes”.
Communication Workers Union general secretary Dave Ward said: “We cannot live in a country where our bosses make billions in profits while their employees are forced to use food banks.”