The experts pointed out that inflation was the main factor behind the increase in loans. This reached its highest level in 40 years, putting millions of households under pressure.
The acceleration in prices is largely due to the increase in the costs of Energy within the country, linked to the rise in international prices, unleashed after the war in Ukraine. Domestically, in one year energy prices doubled.
To try to meet these costs, the Government cut energy bills for households in England, Scotland and Wales by £400 this winter, and also launched the Energy Price Guarantee plan, which limits average household bills to £2,500 by year.
In addition, he announced cuts to public spending in an effort to reduce the budget deficit. However, experts say that this will be insufficient to reduce indebtedness to an acceptable level.
The bank of englandfor his part, warned that the high level of indebtedness is a threat to the financial stability of the country.
The Government is expected to adopt a multilateral approach to address the debt problem, includings higher taxes, spending cuts and structural reforms.
Grant Fitzner, ONS chief economist, told the BBC that the cost of supporting the energy bill had added around £7bn to the lending figures from December. Meanwhile, the interests to pay for the bonds of the UK, which the Government sells to international investors to raise the money it needs, increased considerablysaid.
This is because many bonds are “index-linked”which means that government reimbursements increase in line with the measure of retail price index inflationwhich is currently in double-digit levels.
However, the Governor of the Bank of England, Andrew Bailey, said that the inflation took a turn after the fall in November and Decemberand that probably will keep falling in the coming months due to the decrease in energy prices.
With a 10.5%the annual rate of price increases is more than five times the Bank’s current target of 2%.
On the other hand, as the cost of living crisis continues, according to the BBC, the number of companies on the verge of bankruptcy increased by a third late last year, according to data from insolvency firm Begbies Traynor. He further indicated that he expects this number to continue to increase due to the high cost of living and a reduction in consumer spending.
To this scenario are added the protests that arose from the levels of inflation and from claims in the health system due to difficulties in meeting the demand for care. This is the worst episode of labor unrest since the government of Margaret Thatcher.
Source: Ambito
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