Saturday, December 10, 2022

Inflation in Great Britain: “Everything is getting more expensive. Everything”

Status: 08/20/2022 06:29 AM

Energy prices: rising and rising. Inflation: Now in double digits, many Britons worry about what they will have in the near future. Relief helps, but is it enough?

By Christoph Prossel, ARD Studio London

Sue Lucas has a small fish shop in Camberley – a town west of London. Entrepreneur feels inflation every day. Everything is getting more expensive, she lists on the TV channel ITV: “Energy, packaging, distribution, cleaning costs are going up, sauce prices. Just everything.” And at the moment it means: the profit is low – “of course”.

Christophe Procelli

Many families and pensioners are also grappling with rising costs. Janet Kane retired two years ago at the age of 66. Now he had to start working in a nursing home again – because of the high prices, especially the high energy costs. With what she earns, she has just 63 pounds – the equivalent of about 75 euros – a month on groceries.

the value of money is going down

Kane is not alone: ​​more than two million pensioners in the UK live in poverty. And now the inflation rate has exceeded ten percent for the first time in decades, largely because of the huge cost of gas and electricity.

Because a lot is heated with gas in the United Kingdom, and gas is also important for generating electricity. The cost of electricity and gas for ordinary households will continue to rise, to about €5300 per year until next April.

Companies are also now reacting to the situation. A grocery chain announced that it would offer interest-free loans for purchases. This includes small amounts of up to 100 pounds sterling (120 euros). However, critics such as Labor MP Stella Cressi fear such an offer could prompt people to spend more.

“It Won’t Be Enough”

The government had already decided on a range of aid in May. Each house is to be given a relief of about 480 euros. There is another 180 euros on top for pensioners. Those who receive some form of social assistance get even more.

It’s a very broad program, says Paul Johnson, director of the Institute for Fiscal Studies, an independent economics institute. But, he Johnson argues that inflation, and especially energy prices, is now much higher than in May. His conclusion: “So it won’t be enough for many homes.”

The top candidate for the Presidency of the Conservative Party agrees. But they are campaigning, and Prime Minister Boris Johnson is on leave despite the crisis.

Two candidates, two concepts

Former finance minister Rishi Sunak announced that he would reduce VAT on electricity and gas, costing the state more than 14 billion euros. He wants to start paying more support for homes.

On the other hand, Secretary of State Liz Truss, who is competing with Johnson to succeed him, wants to cut taxes and eliminate levies for the green energy transition. Critics accused him of not reaching out to the needy in the society.

The Labor Party is calling for energy prices to stabilize at current levels to prevent significant growth. Corporations should pay for this. Opposition leader Keir Starmer wants to significantly increase the additional benefits tax:

This is our choice. We can see oil and gas companies making huge profits while millions of families can’t pay their bills, or we can do something about it.

More Debt – Is It Worth It?

A proposal that could also reduce inflation. Since truss and sunk schemes cost a lot of money, the state will have to go into more debt.

Paul Johnson of the Institute for Fiscal Studies says more government spending could lead to more inflation – and the central bank could raise interest rates. But he believes: “You have to take that risk.”

Who will pay for it – Energy prices in the UK

Christophe Prossel, ARD London, August 19, 2022 at 5:08 pm

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