Concerns over the Omicron variant have been giving way to an issue that threatens to rock British politics to its core.
Some economists have forecast a perfect storm brought by rocketing bills and tax rises in what’s already been dubbed a “cost of living crisis” in Britain. In short, this means most UK households will see their living standards reduced, with those already experiencing financial hardship expected to be hit the hardest. But what’s driving it?
For one, the coronavirus pandemic has disrupted global supply chains with pent-up demand, shipping delays, and staff shortages, which has in turn led to prices rising, particularly for raw materials but also for food. At the same time, energy bills are projected to soar, with the UK’s energy regulator, Ofgem, expected to raise the price cap by more than 50% this year. This would take the average annual bill to nearly £2,000, pushing many households into fuel poverty.
That’s not the only thing expected to affect living standards from April onwards, though. National insurance contributions will rise, by a significant amount, for both employees and employers, while changing levels of retail price inflation will gradually eat away the value of money.
Add to those the other areas of our lives that will continue to experience price spikes, such as rent and petrol, and the magnitude of the challenge becomes evident. So much so, that the commentariat has begun to agree the cost of living crisis is about to shape political dynamics in an extraordinary way. In fact, it’s already doing so.
Conservatives at Westminster have been clamouring for the prime minister to take action to tackle rising energy bills and inflation and to scrap the planned increase in national insurance. Meanwhile, Labour has unveiled its own proposals for tackling energy price rises, which include scrapping VAT on bills and introducing a windfall tax on North Sea oil producers – measures that they claim could save the average family £200, rising to £600 for those on low incomes.
With the cost of living rising so rapidly and the government facing scandal after scandal, Boris Johnson’s team has started the year with many questions to answer and many more people to appease. Whether it’s a price spike or a sleaze claim, it all keeps adding up.