The Solution to Britain’s Cost of Living Crisis Is Higher Wages
The cost of living crisis is causing Britain’s biggest fall in living standards in decades. The only way to change this: wage increases across the economy.
Construction workers take a lunch break on Oxford Street in London, United Kingdom. (Mike Kemp / In Pictures via Getty Images)
The Bank of England expects inflation to hit a whopping 8 percent over spring 2022 and warns that it could rise to even higher levels later in the year. We haven’t seen price increases like this in decades, but inflation seems like such an abstract concept that it’s often hard to convey what this might mean for people’s living standards.
Rising energy costs act a bit like a tax on the poor. Generally, if the price of one good (say, wheat) is increasing, then consumers can switch to another, cheaper good to maintain their living standards.
But there are no substitutes for fuel. While we might start to see a shift to electric vehicles and renewed enthusiasm for retrofitting existing housing and installing solar panels and wind turbines, households cannot just decide to change the composition of their energy consumption overnight — especially not poor ones. And those living in rented accommodation are completely stuck.
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