Status: 06/22/2022 12:52 p.m
Consumer prices in the UK rose again in May at their highest rate in 40 years. Workers in the country are threatened with additional wage cuts due to the consequences of Brexit.
High fuel and food prices pushed UK inflation up to 9.1 percent in May. This was announced by the Office for National Statistics (ONS) in London. It is the highest inflation rate since records began in 1997. According to the ONS, inflation may have been higher in 1982.
Inflation rate will probably soon be in double digits
In April, prices had already risen by 9.0 percent compared to 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 increasing our long-term productivity and growth.”
In order to alleviate the price pressure, the The Bank of England raised interest rates last week for the fifth time in seven months. It is now at 1.25 percent. This means that the rate of inflation should return to the two percent target set by monetary authorities in the medium term. However, the central bank is expecting prices to continue to rise for the time being: for October, for example, they are expecting an inflation rate of eleven percent.
Export companies less competitive
Such high inflation rates put a particular strain on employees, who have to accept heavy losses in their real wages. In the case of Great Britain, there are now also negative effects from Brexit.
According to a study by the think tank Resolution Foundation and the London School of Economics (LSE), reported by The Guardian, leaving the EU has impacted Britain’s economic performance. According to this, employees must expect an average annual wage loss of more than 470 pounds sterling by 2030 due to Brexit. That would correspond to an inflation-adjusted minus of 1.8 percent. According to the study, the reason is the reduced competitiveness of the British export industry as a result of the exit from the EU.