UK's financial woes worsen during another turbulent year

By XING YI in London | China Daily Global | Updated: 2024-01-02 09:17
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A homeless person rests on a street in Central London. XING YI/CHINA DAILY

Many people weighed down by more expensive rents and mortgages while wages have not kept up

When the United Kingdom's prime minister declared victory in halving the nation's inflation rate in November, Rahmath Ali had been doing gig work at weekends for six months to make up the 500 pounds rise in his monthly mortgage.

With a weekday job in Slough, to the west of London, Ali earns an annual income that is slightly above the country's average of 33,000 pounds ($41,800). But with a mortgage to pay and a family to feed, he is among millions of UK residents who have been experiencing the pain brought by high inflation, which started at the beginning of 2022.

Now the inflation rate is back down again, the cost-of-living crisis is still far from over. A stagnant economy, tightening public spending, and growing inequality have fueled the crisis, leaving millions of low-income households worse off now and likely to remain so in the years to come.

Ali's wife left work five years ago to be a full-time mother when she gave birth to a second child because hiring someone to take care of their children was "too expensive in this country".

"The salary is not enough. It just covers basic things. Forget about anything high standard," said Ali. "Even Slough is become very expensive now… After paying tax, monthly mortgage, bills and food, nothing left, to be honest."

The UK's consumer price index, which measures the change of the price of goods and services paid by urban residents, has hiked from below 5 percent in late 2021 up to a 40-year record high of 11.1 percent in October 2022 and lingered around 10 percent for months before edging back down.

The rate was finally down to 3.9 percent in November, and the latest data from the Office for National Statistics, or ONS, showed food prices were 30 percent higher than they were two years ago.

"The political narrative right now is that the cost-of-living crisis is old news," said Mike Brewer, chief economist at the Resolution Foundation, an independent think-tank that focuses on research into living standards in the UK.

"The chancellor and the prime minister are both celebrating the fact that inflation is half the level it was a year ago, and the government clearly wants to move on and talk about something else," he said during a briefing on Dec 14. "The question we're posing today is how much does that make sense, what are our families really experiencing right now? Energy may be cheaper than it was a year ago, but food and housing certainly are not."

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