A Cost of Living Crisis
Trends Briefing: 28th April 2022 | 9am-10am | Register here
In October of last year, we took a look at how the next six months were shaping up for the UK. Half a year later our core prediction, that economic concerns would overtake health concerns in the consumer mindset, holds true.
If anything, we weren’t pessimistic enough.
The last six months have been eventful – to say the least. The Omicron variant of Covid saw yet another wave of infections even as the UK transitioned to `living with Covid`, Partygate hit Westminster, and there’s a war in Ukraine. For consumers though, one thing is dominating the headlines. The worst cost of living crisis the UK has seen since the mid-20th century.
As we continue into the second quarter of the year and beyond that crisis is set to only get worse.
Stagnating wages have now been joined by a rise in National Insurance and a huge jump in energy bills – with energy costs set to increase again come the Autumn. Inflation has risen to the highest levels in three decades and could rise further – driven by supply-side shocks and skyrocketing fuel costs. Rises in interest rates threaten to hit the pockets of borrowers and mortgagors. At a macro level, growth forecasts for the UK economy are falling whilst, on the global stage, China’s commitment to a `Zero-Covid` policy threatens a global recession.
There’s still some room for hope.
Consumer demand in some sectors remains strong, especially in tourism and travel where pent-up demand is driving renewed spending, and summer may offer consumers a reprieve from rising energy bills. Yet, taken as a whole, a perfect storm looks to be brewing.
As we look ahead to the next six months, we’ll be exploring in depth what this cost of living crisis means for both consumers and businesses.
How is consumer confidence faring? Are recessionary mindsets making a comeback? How are consumers adjusting to `living with Covid`? Will the cost of living crisis further bolster the influence of trade unions and the labour movement? How might the government look to offset rising living costs and inflation? Are there still reasons to be optimistic? And finally, what are the scenarios for the next six months?
Summer may be on the horizon, but there are tough times ahead.