Getting to know the British Crisis that is getting scarier: Chronology & 8 Facts

Jakarta, CNBC Indonesia – Economy Crysis in the government English more real and deeper. It’s not just a matter of energy.

The crisis that hit the country of the late Queen Elizabeth II was also related to the problem of rampant inflation and poverty. This is also related to the chaos in the bond market which is believed to have created a financial catastrophe.

Here’s the chronology and the facts:

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Chronology

The majority of economists agree that the British problem was triggered by the actions of former British Prime Minister (PM) Boris Johnson when he was in power, pulling Britain out of the European Union (EU) membership on January 1, 2020. Since then, Britain has been hit by a shortage of goods.

Post-Brexit there was extraordinary chaos in the practice of foreign trade. Inflation was exacerbated by a surge in energy prices due to stagnating supplies after the Ukraine-Russia war.

The Facts

1. Energy Prices Soar

The increase in energy prices further exacerbated the crisis. This got a lot of people entangled.

This increase was driven by rising fuel prices after the Russian attack on Ukraine. Britain and some of its allies imposed an embargo on some Russian fuel.

In October, British energy authority Ofgem even planned to raise the ceiling tariff on household electricity by up to £3,549 a year. In fact, previously the upper limit rate only touched the figure of 1,971 pounds or Rp. 33.7 million.

It is believed that this will increase the costs that residents have to pay. This also pushes up inflation.

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2. Nearly 10% Inflation

Rising energy prices push other goods up. This also includes food.

In August 2022, UK inflation stood at 9.9% year-on-year (yoy). This happened when food prices in the country rose as the cost of living crisis continued.

For core inflation, which excludes volatile energy, food, alcohol and tobacco. It was up 0.8% month-on-month and 6.3% year-on-year.

4. Difficult Society: Chewing Rubber and Prostitution

The high cost of energy and high inflation have then made it difficult for residents to get food. A recent report at a school in Lewisham, Southeast London, alerted the charity Chefs in Schools about a child who ‘pretended to carry an empty lunch box’.

“We hear about children who are so hungry that they chew gum at school. Children come because they haven’t eaten anything since lunch the day before. The government must do something,” Chief Executive Chefs in Schools, Naomi Duncan, told Guardians.

In addition, the increase in the cost of living is a driving factor for more women to become prostitutes. In the country’s early summer alone, starting in June and ending in September, an additional 1/3 of women became prostitutes.

The latest data from the English Collective of Prostitution, quoted at the end of last month, said that many of the residents who became prostitutes were single parents. In the UK, indoor prostitution is permitted by the government.

“The current cost of living crisis is driving women into sex work in various ways. Whether it’s on the street, on the premises or online,” said spokeswoman Niki Adams, published Sky News.

Meanwhile, citing the Survey Resolution Foundation, in that period until the 2020 pandemic, the average income of the working class only rose 0.7% per year. This is far from the previous decade’s record of 2.3% (between 1961-2005).

5. The Bank of England Raises Interest Rates

In the midst of the crisis, the central bank Bank of England (BoE) has raised interest rates by 50 basis points to 2.25%. This interest rate hike is the seventh in a row.

The central bank even plans to deliver a ‘significant’ rate hike when its next meeting is in November. This is done to control inflation to the level of 2%.

6. New PM’s Controversial Policy

Meanwhile, in the midst of a crisis, the newly elected Prime Minister (PM) Liz Truss issued a controversial policy. He gave an economic stimulus package, namely tax cuts worth US$48 billion, without reducing state spending.

The BoE strongly criticized the policy. It is even said that the government is scaring investors.

The central bank said a collapse in confidence in the economy could pose a “material risk to UK financial stability”. The IMF also thinks similarly, where the agency asked the G-7 member countries to encourage PM Truss to abandon the planned tax stimulus package and seek loans to cover spending costs.

7. Pound Collapses

The BoE and the government’s struggles made the pound fall. Last Monday, its value even fell by 4.37% to US$ 1.0382/GBP.

This is the pound’s weakest on record. Previously, the currency was at US$ 1.0520/GBP which was recorded on February 26, 1985.

8. Already in Recession?

According to S&P Global Ratings’ calculations, the UK is currently in a full-year recession. S & P suspect this recession has started in the second quarter of this year.

This was caused by households facing inflation of up to 9.9%. This figure is also projected to increase due to the upcoming winter so that consumers will reduce their spending.

9. Likened to the 2008 US Crisis

Some indications of the crisis in the UK shows similarities to the financial tsunami that hit the United States (US) in 2008. At that time, he Then it became a domestic to global economic crisis.

Events in the US leading up to the explosion of the crisis were people living in makeshift tents everywhere. This includes sidewalks, fields, and parks.

Americans don’t just fall into poverty and can’t eat. But also become homeless due to not being able to pay the mortgage loan installments that rose due to skyrocketing bank interest rates.

[Gambas:Video CNBC]

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The British Crisis is getting more terrifying, many residents are ‘forced’ to become prostitutes

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