Status: 22/06/2022 12:52
Consumer prices in the UK rose again in May at the highest rate in 40 years. The country’s workers are threatened with further wage cuts due to the aftermath of Brexit.
High fuel and food prices pushed UK inflation to 9.1% in May. This was announced by the Office for National Statistics (ONS) in London. It is the highest inflation rate since record-breaking in 1997. According to the ONS, inflation may have been highest in 1982.
The inflation rate is likely to be double-digit soon
By April, prices had already risen 9.0 percent from the previous year. “We are using all the tools at our disposal to reduce inflation and combat rising prices,” Finance Minister Rishi Sunak said of the new figures. “We can build a stronger economy through independent monetary policies, responsible fiscal policies that do not increase inflationary pressures and by increasing our long-term productivity and growth.”
In order to relieve price pressure, the Bank of England raised its benchmark interest rate last week for the fifth time in seven months. It is now at 1.25%. This means that the inflation rate is expected to return over the medium term to the two per cent target set by the monetary authorities. However, the central bank expects prices to rise for the moment: for example, an inflation rate of 11 percent is forecast for October.
Less competitive export companies
Such high inflation rates put a strain on employees, who have to accept heavy losses in their real wages. In the case of Britain, there are now also the negative effects of Brexit.
Leaving the EU has had an impact on Britain’s economic performance, according to a study by the think tank Resolution Foundation and the London School of Economics (LSE), reported by The Guardian. According to this, employees must expect an average annual wage loss of over £ 470 by 2030 due to Brexit. This would correspond to less than 1.8 percent inflation-adjusted. According to the study, the reason is the reduced competitiveness of the UK export industry following the exit from the EU.