The UK public thinks high prices and lower incomes are here to stay – Poll suggests

Research published by polling firm Ipsos Mori has found that the UK public has among the lowest confidence in its economy of any country. The poll, conducted between the 24th March and 7th April 2023 featuring 23,309 respondents from 29 countries, found that six in ten people in the UK believe it will take at least a year for inflation to return to normal levels, this is the lowest of any nation surveyed, other than Sweden. 46% also believe that their income after taxes and bills will fall in 2023/24. Continual policy failures by the UK Government lie at the heart of this economic mess  – if Scotland is to become economically prosperous,  independence and rejoining the EU are essential.

Inflation

ONS figures released today show that CPI inflation is at 8.7% for the year up to April 2023. While this has come down from its October peak of 11.1%, it remains significantly above the Bank of England’s 2% target. Although the rate of inflation has come down, this does not mean prices are decreasing – it just means they are increasing at a slower rate. 

Comparing that to other nations: The UK has the highest inflation in the G7 and is higher than both the EU and US at 7% and 5.5% respectively.

As Business for Scotland previously predicted, over the past month food inflation has overtaken energy as the largest contributor to the overall inflation level. The crisis in energy which developed last autumn and peaked throughout the winter months has spilled over into the food and beverage industry. The latest research by Kantar for March 2023 has shown increased prices have added £837 to the average household’s annual bill – this will only have increased since then.

Source (ONS, 2023)

Rapid food inflation is being caused by the intersection of three factors, each of which could have been avoided in Scotland were we an independent nation.

Brexit

Brexit remains one of the key reasons for the increase in food prices. The barriers to trade that have been imposed on the UK through the economic self-harm of Brexit have made the UK a less attractive country to trade with. The imposition of border delays, red tape and supply chain disruptions which cost producers and exporters time and money ultimately find their way into our supermarkets in the form of increased prices at checkouts.

Labour shortages on farms are also to blame. Many fruit pickers and farm workers in the UK are seasonal migrant workers who have, since Brexit, returned to the UK in fewer and fewer numbers due to less seasonal worker visas being issued. This has led to calls from the Home Secretary Suella Braverman for the UK to train more fruit pickers and lorry drivers despite a similar scheme in 2021 being scrapped due to lack of applicants. The result of this is that crops  have been left to rot in fields as they have been unable to be harvested in time to make it to supermarket shelves, forcing farmers to attempt to recoup their investments through higher prices.

Global Weather Events and Food Security

While adverse weather conditions in some food producing nations such as Morocco and Spain, leading to lower harvests than average, are impossible to predict, they are not impossible to plan for. By removing ourselves from the EU community without a proper food security plan, the UK and by extension Scotland found ourselves at the back of the queue during shortages.

This was the case just a few months ago during the ‘fruit and vegetable crisis’ where many UK supermarkets found themselves without, or having to ration, certain types of fruits and vegetables. Pictures of empty shelves made the rounds on social media, juxtaposed with pictures of shelves in EU member states packed with fruit and veg. At one point it was easier to get tomatoes in war torn Ukraine than in the UK. 

The most up to date data from 2020 shows that 28% of the UK’s food imports come from the EU. Member states have an obligation to trade first with other member states and the single market incentivises this further. Upon leaving the EU the UK Government failed to implement a renewed food security policy that would ensure the UK food imports in the event of an unforeseen crisis. Unless Scotland can become independent and rejoin the EU, we will remain at the back of the queue and without food security.

Energy Prices

While energy price inflation has eased up in the past month, prices are still increasing. Ever increasing energy prices, as we have mentioned before, bleed over into other sectors of the economy. This means that domestic producers, whose home grown produce contributes to the usual fall in food prices during the summer, are being forced to ask for higher and higher prices to cover the previously mentioned factors, such as shortages in their workforce. This has forced them to leave perfectly good produce to rot in fields.

Once again mismanagement by the UK Government has amplified this crisis. By building an energy infrastructure that would work to Scotland’s strengths in renewables rather than one based on the burning of expensive gas, we could ensure that all energy bills would be lower in an independent Scotland. 

UK living standards are falling

The poll by Ipsos Mori shows that 46% of people in the UK believe that their income after taxes and bills will fall in 2023/24 – the highest figure of the 29 countries surveyed. In an increase of 20% from the previous year, 26% admit that they are finding it difficult to get financial help. Under its remit to bring inflation back to its 2% target, the Bank of England has raised interest rates 12 times in the same number of Monetary Policy Committee meetings. The Bank Rate now stands at 4.5% and further rises have not been ruled out. The Bank Rate feeds through into other interest rates, most notably into mortgage rates, which influence monthly payments on adjustable rate mortgages. Increased interest rates are already forcing the average homeowner into £2,300 a year in extra interest payments. 

Conclusion

This is the broken economy which Scotland must leave behind. Battered by the fallout of Brexit, which is a main driver behind out of control food prices. Households are being crushed under the weight of energy bills and mortgage payments – the latter of which is being singlehandedly caused by the Bank of England’s unwillingness to admit this inflation is being driven by supply side factors – and are set to achieve the largest fall in living standards on record. All of the aforementioned crises have solutions but these can only be met through one avenue: independence for Scotland and a break with the UK’s broken economy.