Social unrest is growing in the UK. The London Underground was completely immobilized on June 6 by a closely followed strike. A new day off is expected on June 21. Intercity trains will also be severely disrupted next week, with a three-day strike announced. Less than half of the usual traffic must be ensured. The unions have also planned a demonstration in London, Saturday June 18, to denounce “the cost of living crisis”.
“The pressures on households are getting worse, denounces Frances O’Grady, the general secretary of the Trade Union Congress, the main trade union confederation. Refueling a family car now costs over £100 [116 euros], and many low-paid workers can no longer afford to drive. Electricity and gas bills are rising twenty-three times faster than salaries. And next year, the OECD [Organisation de coopération et de développement économiques] predicts zero growth for the UK economy, the worst performance in the G20 except for Russia. » The OECD, which is counting on weak but positive growth in the euro zone in 2023 (+ 1.6%) and in the United States (1.2%), in fact anticipates only 0% across the Channel.
Like everywhere else, the United Kingdom is suffering the repercussions of the war in Ukraine, but the shock is a little more intense there. On the one hand, inflation is soaring: it reached 9% in April. On the other hand, growth is taking a serious hit. The economy may have already entered a recession, even as economists argue over the issue. Gross domestic product fell in March (–0.1%) and April (–0.3%) (the UK Statistics Office now calculates monthly GDP), and the Bank of England forecasts a decline of 0, 3% in the second quarter. In any case, the United Kingdom is therefore going through a period of stagflation (stagnation and inflation combined).
No “tariff shield”
Attempting to strike a balance between these two forces, the Bank of England announced on Thursday, June 16, the fifth increase in its interest rate since December. This rose by 0.25 points to 1.25%. Three of the nine members of its monetary policy committee wanted to go faster, proposing an increase of 0.5 points.
For the British, the “cost of living shock” really came to fruition on 1er April, when the new regulated gas and electricity tariff came into effect. The jump was unprecedented: bills increased by 54%. Across the Channel, no “price shield”: soaring prices on the wholesale markets are passed on as a whole, with a new regulated price calculated twice a year (in April and October).
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