Cost-of-Living Squeeze Could Push UK into ‘Mild Recession’
The latest round of price hikes and issues announced as part of the UK’s cost-of-living crisis, could push the country into a mild recession, according to financial experts.
Issues with petrol prices, food safety, rail strikes, and inflation are all putting the UK under great strain this week.
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Key events being reported on include:
- UK faces ‘significant risks’ to quality of food imported post-Brexit
- More rail strikes due this week
- Petrol firms engaged in ‘rocket and feather’ pricing
- UK petrol hits new high
- Criminal barristers begin strike in row over legal aid fees
- Manufacturing and banks could be worse hit by recession
- Inflation could push UK economy into recession
And this isn’t accounting for the expected energy price hike this autumn, which could push bills as high as £3,000.
Petrol prices hit record highs
Over this weekend, the price of UK petrol hit a record new high.
- Saturday 25th June: The cost of diesel hit an all-time high of 199.09p/litre on, as it headed towards the £2 mark, before dipping back a little on Sunday
- Sunday 26th June: Data from Experian Catalyst shows that the average price of a litre of petrol rose to 191.05p, data from Experian Catalyst shows. This takes the cost of filling a typical 55-litre family car to £105, up from around £72 a year ago.
Edmund King, AA president, said record fuel prices were hitting businesses, and could add to the cost of holidaying in the UK this summer when airports were struggling:
Pain at the pumps continues. As we come towards the end of June and into the full summer season, we still have crippling record prices at the pumps. The Government needs to urgently take action on price transparency and cut duty levels.
Inflation could lead to recession
The latest Cost of Living Tracker, from Retail Economics and HyperJar, found that the average household’s discretionary income fell by 10.6% compared with May 2021.
This has left families short of £127 for non-essential items.
The least affluent households have seen a reduction in their spare cash of 13.9%, after paying for essential items.
Mat Megens, CEO of HyperJar, which runs a money management app and prepaid debit card, says families could struggle to pay for Christmas or energy bills:
The energy discount clearly hasn’t taken the chill off consumer confidence. This research shows that most of us have or plan to cut back on discretionary spending, right up to Christmas, and to significantly reduce our energy consumption this winter.
He added that usually ‘big financial shocks’ prompt people to pursue longer-term money habits, so people are probably already starting to plan ahead of future financial ‘pressure points’ like the combination of Christmas and winter fuel costs.
Travel disruption caused by strikes
Further rail strikes are planned this week following worsening disputes over issues including conditions, pay and jobs.
Members of the drivers union Aslef on the Croydon Tramlink are set to strike on Tuesday 29th June and Wednesday 30th June over pay. Three days of railway strike action were held last week as well as a 24-hour stoppage on the London Underground.
While this will make it difficult for people to get into work, many are more able to work-from-home since the pandemic made it clear this was a more available option than previously thought.
Working from home also has the additional benefit of saving money on increasingly expensive commutes, so landlords should consider highlighting work from home spaces in their property adverts to catch the attention of tenants looking for that work-from-home/life balance.
