The Cost of Living: A Twenty-first Century Crisis

If you have been as chronically online as we are here at The Student Diplomat, you must have heard of the cost of living crisis in the UK, either from TikTok or news platforms; shedding light on the increased prices of food, energy and housing in the UK.

On an honest note, do you know what the whole debacle is about? The cost of living crisis is a result of the ever-growing inflation rate, the war between Ukraine and Russia, Brexit, the pandemic, and increased unemployment rates.

You must be wondering how any of that affects the cost of living in the UK. Ever since the war between Ukraine and Russia began, it has greatly affected the world in terms of the agricultural markets from Ukraine as well as the huge role Russia plays in gas distribution to Europe and certain parts of Asia. Since Russia supplies so many countries with gas and their domestic requirement for gas has increased due to the war, several countries have had to resort to alternative measures to gain access to gas, resulting in an overall increase in gas prices in the international market.

The UK in particular has been affected by this, as 40% of electricity is generated in gas-powered stations, and 85% of households use gas boilers to heat up their homes, along with the fact that houses are poorly insulated, resulting in increased expenditure on energy by citizens of the United Kingdom.

 Due to  Britain exiting the European Union, many issues have arisen in terms of the import and export of goods, resulting in less economic productivity with the percentage of export and imports of goods decreasing by 13.2%, London’s economy shrinking by approx £30 billion (2.5% than predicted) and so on.

All these factors have left the UK vulnerable to fluctuations in foreign exchange rates, leaving the economy in a state of distress, and contributing significantly to the cost of living crisis.

The Food Problem Explained

Why exactly are food prices going up and up? There are numerous reasons for this ranging from labour strikes to supply shortages and Brexit. Labour strikes are so detrimental because of the fact that prices are going up due to inflation and there has not been an increase in pay for the workers in the oil and gas industry, causing individuals to strive for better pay to address their demands. This leads to an overall lack of productivity from firms, which negatively affects buyers.

Once again, the war in Ukraine plays a role in the increase in food prices: producers are experiencing a 50% inflation in their costs, leading to food being sold at higher prices to make up for the loss created by inflation. Previously, when Britain was still in the European Union (EU), it was a popular country to work in when seasonal labour was required; but Britain's exit from the EU has resulted in a loss of almost £16 million in wasted, unpicked fruit and vegetables due to the lack of seasonal labour.

Climate change has also been a major contributor to this problem as extreme weather conditions ( storm surges, flooding, snow and drought ) have caused low yields on local and international farms. This creates a decreased supply while there is a never ending demand for food crops.

 It is said that the overall price of food and nonalcoholic beverages have risen by around 25%- this increase in the overall price of food has caused individuals to resort to much cheaper food- Tesco meal deals; frozen food from Lidl, Asda, and Poundland, or simply skipping meals to save on money. Around 28% of individuals have acknowledged that they have been consuming less nutritious food due to this increase in food costs. This less nutritious diet has increased mortality rates.

Housing and the homeless

Over the years, we have seen prices of housing go up each year.  While the prices of apartments and houses are rising to keep up with raging inflation rates, employers seem to be paying their employees less and less.

Imagine an individual working 40 hours a week but earning minimum wage. They will barely get £440  a week- not enough to pay rent, utility bills, council tax, or buy food for the week. Since apartments in south east London  start at around 400 pounds per week, this has resulted in numerous individuals relying on grants, pensions, loans, and universal credit just to pay the bills.

The ONS (Office for National Statistics) says that the increase in homelessness in London has reached around 15000 individuals. This ever growing number of people is getting so big that even shelters cannot provide support as they are overcrowded. Thus, a great number of individuals resort to sleeping on the streets risking their lives as this is illegal according to the Vagrancy Act of 1824, which might lead them into more debt as the penalty for this crime is a fine of up to 2500 pounds.

You might be thinking- “why doesn’t the government just build more houses and offer them?” Well, the amount of individuals living in council houses is growing by the day and the government plans to add around 600 new homes to combat the living crisis.

What is the government doing about the cost of living crisis?

So, what has the government actually done to provide relief to those severely affected by this crisis and to relieve the financial burdens of the nation? In November 2022, an autumn statement the UK government said that a further package of cost of living payments was to be paid over the course of 2023-2024. Although the cost of living is still exorbitant, the government has said they have no plans to extend the cost of living payments and that they will stop by the spring of 2024.

 Previously, in 2023, there was a price guarantee in which the prices for gas were fixed for suppliers to ease the gas inflation rates on the consumers. It was brought back in April, 2024, creating a 12% reduction in energy costs. The temporary cut to fuel duties, which was introduced in March of 2022 to combat high fuel prices after the pandemic and the invasion of Ukraine has been extended to 2024/2025. Although increasing the minimum wage by one pound is a huge change, it is not enough to save and feed hundreds of individuals who are in danger of living on the streets.

Even though inflation rates have decreased from 11.1% in 2022 to 2.3% in 2024 does not mean that the prices of goods will decrease immediately. In reality, prices are rising, but simply much slower than before. Questionable decisions such as decreasing the price of prosecco but not food makes us wonder if the UK is losing the glory it once had due to  its deteriorating economy, unfair pay gap, Brexit and other social issues.

In conclusion, the rich are getting richer while the backbone of this nation, the working class, are getting poorer and poorer by the day. If there is no change in this pattern, the UK, as well as the global community, is destined for destruction.