The Chancellor of the United Kingdom, Rishi Sunak, has acknowledged that “difficult times” lie ahead, hours after official data revealed the longest stretch of dropping disposable income due to increasing inflation.
The most recent economic data is unsettling for the Treasury at a time when businesses are pleading for assistance on multiple fronts, pushing for steps to ease the tight labor market.
Real disposable income had decreased for four consecutive quarters for the first time since records began, according to data from the Office for National Statistics (ONS) covering the first three months of the year.
It showed a decrease of 0.2 percent between January and March as household inflation of 1.7 percent exceeded income growth of 1.5 percent.
According to more current ONS data, the serious cost of living strain on family budgets is unlikely to have lessened as inflation has continued to rise faster than wage growth.
Inflation, as measured by the consumer price index, reached a new 40-year high of 9.1 percent in May, and the Bank of England has warned of worse to come, particularly in October when the energy price ceiling is expected to surpass the £3,000 threshold.
The avalanche of rising costs in the economy spurred Mr. Sunak to provide targeted help, with a new £15 billion package of broader aid announced in May being highly praised, although opponents have argued that he must go further.
Separate ONS data released on Tuesday increased the pressure on the chancellor after it was revealed that the country racked up a record current account deficit in the first quarter of this year, with the deficit ballooning to 51.7 billion pounds or 8.3 percent of gross domestic product.
The gap between the value of goods and services imported and exported by the United Kingdom reached its highest level since 1955, according to the Office for National Statistics (ONS). However, the deficit figure was accompanied by a stern warning due to a lack of data collection information since Brexit.
In his speech to the annual meeting of the British Chambers of Commerce (BCC), the chancellor lauded the business community’s resiliency since the pandemic, but he made no mention of possible future assistance.
The business lobby organization encouraged him to implement a five-point strategy to address mounting cost issues for businesses, which are contributing to the problem of inflation as they are passed on to the economy.
The wish list includes a temporary restriction on energy prices for small enterprises and the extension of the financial assistance announced last week for homes to small businesses.
Shevaun Haviland, the organization’s director-general, stated on Sky’s Ian King Life that growing expenses and post-Brexit labor shortages were impeding development and investment.
“What we’ve asked the chancellor to do today is take another look at the shortage occupation list”.
It is a previously existing framework… It enables the government to take very targeted methods to attract workers back into our economy in specific sectors, and we believe this will have a significant impact on the extremely tight labor market”.
