Because inflation will be on the agenda of the new British Premier
How inflation rises in the UK and why. The article by Daniele Meloni
Inflation in the UK in July rose to + 10.1% compared to June. More than expected by analysts. The figures released in the morning by the Office for National Statistics, the English Istat, alarm the world of British politics and economy. But, above all, they alarm citizens, who see the high cost of living erode their purchasing power as never before since 1982.
It was, in fact, 40 years that prices hadn't risen so quickly. In particular, the cost of food and drink has contributed to the soaring, with basic necessities such as eggs, bread, cheese, milk and cereals rising the most, along with, of course, electricity and gas bills. At the same time, the average wages of the British remain at stake: today they buy 3% less products and services than in the same period of 2021.
The high cost of living and inflation have forcefully entered the campaign for the election of the new Tory leader. Outgoing Prime Minister Boris Johnson himself pointed out that the government's £ 37 billion plan to help consumers pay their bills is now outdated. But Johnson won't be the one to deal with the matter. The Tory leader has already made it known that it will be up to the next government to put their hand to aid and subsidies in order not to transform what the Economist has called the Summer of Discontent into a new Winter of Discontent.
Liz Truss, the favorite to enter Downing Street on 5 September, has already said that she will want to support the British by providing them with the tools to cope with the high cost of living but not by distributing handouts, subsidies, rain. Sunak, who is the mastermind behind the £ 5 billion tax hike on energy companies' extra-profits last spring, seems to be better positioned on the subject, but the Tory base feels more attracted to post-Thatcher Truss, who enjoys it. also of the support of the veterans of Johnsonism and the right of the party, represented by the 60 MPs of the European Research Group, ultra-brexiteers and liberalists in economic policy.
Meanwhile, Labor has presented a plan to limit consumers' monthly consumption of gas and electricity to a maximum of 2,000 pounds for six months, thus seeking to limit the damage of the British winter. For Sir Keir Starmer, who the polls give as a possible Prime Minister after the elections, this is a fundamental test to put himself on the same wavelength as the electorate. The press welcomed the proposal, saying that the Opposition leader took the government and new Tory leaders off guard, pressing them on the topic of the moment.
Finally, the Bank of England, also at the center of the conservative leadership contest, with candidates accusing it more or less covertly of delaying the rate hike and pumping too much money into the economy with quantitative easing at the time of the pandemic. For Threadneedle Street, the current inflation spiral is set to last and the current 2% target will not be met for the next two years. Andrew Bailey, the governor under fire from the Tory government, however, warned: the bank's independence from politics – which this year celebrated its 25th anniversary – cannot be touched.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/inflazione-regno-unito-luglio-2022/ on Wed, 17 Aug 2022 09:18:57 +0000.