In the UK, as purchasing power plummets, the government chooses not to intervene

In exactly one week, British households will suffer a violent double shock to their purchasing power. 1^er April, the ceiling of their electricity and gas bill, supervised by the regulator, will increase by… 54%. On average, this corresponds to almost 700 pounds sterling (840 euros) extra per household per year. On the same day, social contributions, deducted at source from wages, will increase by 1.25 points (from 12% to 13.25% in the majority of cases). Adding the inflation shock caused by the war in Ukraine, Britain’s purchasing power will fall by 4% this year, the biggest decline since the 1970s, according to calculations by the Resolution Foundation, a think tank . Although a little less pessimistic, the official forecasts of the British government are counting on a decline of 2.2% in purchasing power, “the largest single-year decline since comparable statistics became available, in 1956-1957”.

The reaction of the authorities? A few peripheral aids, not negligible but which are far from compensating for the shock. In the UK, no “tariff shield” nor of “whatever it takes”. Rishi Sunak, the Chancellor of the Exchequer, warned on March 19: “We can’t help everyone, because it’s too expensive. »

On Wednesday March 23, by presenting his spring mini-budget, he confirmed this strategy. Mr. Sunak is not quite sitting idly by. It cuts fuel tax by 5 pence per liter for a year, increases heating aid for the poorest homes by £500 million and introduces 0% VAT on materials that improve the energy performance of homes ( solar panels, insulation, etc.).

“The strongest shock for a generation”

But for the Chancellor of the Exchequer, it is above all necessary to pay attention to public finances. “Borrowing more is not without risk. I already said this in the fall: [mon objectif est de] reduce borrowing and debt. »

As everywhere else, the impact of the Covid-19 pandemic on public finances is indeed significant. Public debt has gone from around 80% of gross domestic product to almost 100%. For two years, the United Kingdom has used the same tools as the rest of Europe: partial unemployment, state-guaranteed loans, increased social assistance… But, since the fall of 2021, Mr. Sunak has been doing everything to turn the page. In particular, it abolished partial unemployment.

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