Large nations are equally facing the strain of the many-sided exogenous shocks in the international economy as small island nations like St. Vincent and The Grenadines. Most notably, the fallout of the Covid-19 pandemic and the ongoing war in Ukraine have created the perfect storm.
The United Kingdom with its large Vincentian diaspora is reeling from the dual effect and what the opposition party has termed the current government’s own failure to address the fundamentals of the UK economy.
The British worker is not lacking graft, “it is this government that is the problem,” the Shadow Chancellor said over the weekend at a Labour Party conference.
The current crisis is driven by a high inflation rate, which is set to continue to rise and reach a 40-year high at the end of 2022.
This means key household costs, like food, petrol, and energy bills, are rising at their fastest rate in 30 years.
There are multiple reasons that have been attributed to this including increased demand since the pandemic, plus post-Brexit trading rules.
The inflation rate shows how prices are increasing over time, and it impacts a majority of goods, services and financial products. It’s compared to how expensive things were one year ago. So, if there’s an inflation rate of 2%, you’ll pay 2% more for it this year than you did last year.
At the same time, wages are not rising at the same rate as the costs of living. So as things get more expensive, people have less income to pay for them. As a result, many people are feeling the squeeze.
Over 43% of household said in a survey that they have had to adjust their budget due to feeling financial pressure as a result of the Covid-19 pandemic having seen their personal income negatively impacted. Moreover, households and businesses have seen their energy bills increase since April with many expected to pay more over the upcoming winter.
With food prices continuing to increase, the rising prices could mean that the average UK household would have to pay an extra £2,500 in 2022/23 to buy the same goods and services that it bought in 2021/22.