British households lose more purchasing power as gas prices soar - IMF

By Al Mayadeen English
Source: The Guardian
2 Sep 2022 12:56

British households will lose more purchasing power than households across other countries in Western Europe a study by the IMF shows.

British households will be forced to cut their budgets as winter comes (Bloomberg)

The increasing energy crisis is wreaking havoc on British family budgets more than any other country in Western Europe, according to The Guardian, citing a research by the International Monetary Fund research.

The research also made note of the fact that compared to other countries in Europe, Britain has a far wider disparity in the cost burdens placed on low-income and rich families. This was ascribed to the UK's high reliance on gas to create energy and heat houses during a period of rising gas costs. The IMF also notes that the UK has the least energy-efficient housing in Western Europe.

According to the study, increasing energy costs will cause the typical UK household to lose 8.3% of its overall purchasing power in 2022. The percentage is anticipated to be 4% in Germany and Spain. In all of Europe, only Czech and Estonian households are more affected than UK households.

Energy costs are expected to account for 17.8% of household budgets for the lowest 10% of UK households this year, compared to just 6.1% for the wealthiest 10%. The IMF evaluated 25 European nations, and this divergence of 11.7% points is by far the biggest among them. The gap is 3.9% points in France and 2.5% points in the Netherlands.

Furthermore, in 2022, it is anticipated that the rising cost of other goods would reduce household budgets in Britain by another 2%.

Another study, citing a research paper published by the Institute for Government (IfG), also reported on by The Guardian, on August 28, revealed that Britain may have to spend $27 billion more in subsidies if they are going to cover the surging energy bills in the upcoming heating season.

This statement would entail every British household paying £900 ($1,057.45) more this winter compared to May's estimate. At this rate, according to the IfG, it is estimated that the subsidies will be jumping to £90 billion ($106 billion) next season.

An NHS chief warned, on August 20th, that soaring energy costs will kill more than 10,000 people this winter; a situation the NHS Confederation referred to as a "humanitarian crisis".

The NHS Confederation's letter addressed to Chancellor Nadhim Zahawi and Health Secretary Steve Barclay warned that health bosses in the UK are witnessing huge suffering in the local communities because of the cost-of-living crisis.

Chief Executive of the NHS Confederation, Matthew Taylor, stated in a letter, “Many people could face the awful choice between skipping meals to heat their homes and having to live in cold, damp and very unpleasant conditions," The Birmingham Mail reported.