What effect did the Ukraine-Russia war have on increasing poverty in the UK?
What is the reason for rising energy costs in the UK in recent weeks?
What warnings have political and economic experts given to the government about the repercussions of the Ukraine-Russia war?
How many British households have been hit by the sharp rise in electricity and gas prices in the UK?
How much higher was the UK inflation rate last year than the Bank of England forecasts?
With rising global energy prices following the Ukraine war, British experts have warned the government of a tsunami of poverty in rural areas.
The Request of NGOs from the British Government
Many NGOs in the UK have called on the UK government to provide help for 14% of British households who are “off-grid” amid the Ukraine war and sharp fluctuations in the energy market. Experts have warned the government that a “tsunami of poverty” could hit rural communities if it did not help 14% of British households without access to main gas.
Rising Energy Costs
Drew Hendry MP warned in the House of Commons last month that spiking energy costs and rising oil prices have led many rural households to turn to electricity, increasing their home energy bills by fourfold. Many of these suburban households rely on oil, gas canisters, coal, and wood for heating and cooking. But as a result of fluctuations in the energy market due to the war in Ukraine, they have faced an exponential increase in energy bills. In Cornwall, 47% of homes are out of gas.
The Impact of Covid-19 on UK’s Vulnerable Strata
The Churches Together in Penzance Food Bank manager, Michelle Brown, referring to the impact that Covid-19 has had on the lives of many of UK’s most vulnerable, has said that, in addition to providing meals, people should be helped to pay their bills. “There’s a tsunami of poverty that’s going to sweep over us. It’s been a choice for some time, especially during Covid, that people are having to choose to pay their rent, whether to put food on their family’s tables or whether to heat. There’s no point us sending out food to people who can’t heat it,” she said. This is especially true in the current situation caused by the coronavirus pandemic, when people do not know how to spend their meager income to prepare food, pay their rent or heat their homes. Europe has a large share of Russia’s oil export market and the UK is one of the countries which has not escaped the unprecedented rise in energy prices following the war in Ukraine and the US embargo on Russian oil and gas exports.
Unprecedented Inflation in the UK
Inflation has increased poverty in the UK. The unprecedented spike in inflation and rising food and energy prices have added to the number of poorer households in the country. The rise in inflation to an all-time high of 5.1% last December has pushed up energy and food prices and reduced the quality of life for many people. Statistics show that more than 2.5 million Britons received food from charities last year.
Beware of Rising Inflation
UK Charities have warned that rising inflation will worsen the situation for the poor. The price of bread in the country has increased by 4.5%, butter by 27% and eggs by 5.4%. Inflation has also increased the cost of transport, clothing and energy for British households. The price increases do not end here and the cost of council services is set to double by spring.
Sharp Rises in Gas and Electricity Prices
Gas and Electricity prices in the UK have risen sharply just one day after the end of the financial support provided by Boris Johnson’s government for hundreds of thousands of quarantined workers, creating serious concerns over rising unemployment and poverty. The Office of Gas and Electricity Markets (Ofgem) has announced that it will increase the ceiling on fixed price contracts for gas and electricity sales by 12%. This increase means that the annual household energy bill in the UK will increase by an average of £139. Those with a rechargeable metre will also see an average increase of £153.
Impact of Rising Prices on 15 Million British Households
The increase is estimated to affect around 15 million households across the UK who do not have fixed-rate energy contracts. By doing so, Ofgem has tried to prevent more companies operating in the energy sector from going bankrupt. In recent months, several private gas and electricity companies in the UK have gone bankrupt due to rising gas wholesale prices. This is important when we know that smaller companies are unable to offset this increase due to fixed price contracts with their customers and are gradually going bankrupt.
The UK Inflation Rate is Higher than Forecast
Experts believe that a 12% increase in the ceiling of fixed price contracts will not have an immediate impact on the financial situation of private gas and electricity companies. NGOs and charities, meanwhile, have warned that rising energy prices are not fair. On the other hand, the inflation rate in the UK has been higher than the central bank estimates for several months, placing additional pressure on the cost of living in this country. The Bank of England had forecast inflation at 2% for last year, but the Consumer Price Index (CPI) rose to 3.2% last August, according to the ONS.
Economists blame UK’s exit from the EU, the Covid-19 pandemic and supply chain problems, among other crises, for exacerbating inflation. They also predicted that the economic situation in the UK would worsen. The fact is that Brexit and the Covid-19 pandemic have dealt a severe blow to the UK economy. Although all European countries are in an economic crisis caused by the pandemic, statistics and polls show that the UK is in the worst position in all respects compared to all OECD countries.