The expense of living has significantly increased in a short period of time. Several causes have contributed to this happening - according to the United Nations Development Programme, this crisis has increased the risk of poverty. It has been reported that an additional 71 million people were pushed into poverty due to the demands in the economy. There have also been multiple events that contributed to such a crisis across the United Kingdom as well as the whole world. In the UK, people say that the cost of living crisis was a result of the way the government handled Covid-19. The Bank of England issued a warning saying that inflation might reach a peak of 13.3%, which is the longest recession that has occurred in the UK since 2008.
However, as the government did not want the public to blame them, former Prime Minister Boris Johnson stated that the cost of living crisis occurred due to the Russian invasion on Ukraine which resulted in the petrol and other essential goods prices to increase.
Impact in the UK
Living standards have significantly decreased for households in the UK since late 2021 in the UK alone. The cost of living crisis that has resulted from the conflict in Ukraine is fast limiting household budgets. It has been shown that household incomes decline when food prices rise. This has significant effects on the levels of poverty and hunger, educational achievement, and access to electricity. This mostly affects the lower classes in society as the cost of fundamental basic needs such a food and shelter has been increased by a lot.
According to recent statistics, 92 percent of UK families said that their cost of living has increased from a year earlier. When compared to a peak of 91 percent in the summer of 2022, 67 percent of households reported monthly rises in their cost of living in the same month. The affected households mostly ascribed this increase to rising food, fuel, and energy prices. The situation is particularly worse for the poorest households in the UK because they often spend a larger percentage of their income on housing and food. This has been stated by Statista to be the biggest fall since the mid 50s, with more information on the statistics visit the website: Cost of living crisis in the UK - Statistics & Facts | Statista.
What are the next steps?
There are multiple ways that the public can claim and get help from the government. Grants and refunds that increase the amount of money going into household bank accounts are a strategy to assist the public in coping with Britain's current financial crisis. The impact of inflation is being lessened by governments implementing new policies such as:
tax cuts
free train tickets
energy subsidies
cash transfers.
Due to the pressure of cost, the government has increased the national living wage to help cover the inflation in the UK. They also recommend each household to appeal in the energy grant scheme which has been already announced by the Government, from £400 to £600 for 11 million low-income households. Liz Truss and Rishi Sunak, the Conservatives' leadership hopefuls, have repeatedly cited tax cuts, but experts say they won't make much of a difference for those who are most affected by the cost-of-living crisis.
There is further support available for those who find themselves in a situation where government programmes are unable to relieve the stress this causes them in their daily lives. There is a charity called 'The Centre for Financial Capability' who works to guarantee that young people receive the fundamental financial literacy skills that earlier generations lacked. They contend that every kid in the UK needs assistance getting a fair education. This charity shows support even with the financial struggles that securing every child has a right to a good financial education. The All-Party Parliamentary Group on Financial Education for Young People released a report in July 2021 that was supported by 150 members of parliament and was sponsored by the Centre for Financial Capability.
With more information about this charity and how it can help you, follow the link: Home - The Centre for Financial Capability (tcfc.org.uk).