Rising food and energy prices are set to continue.

The effects of Brexit and the profiteering by energy companies in the UK has produced a series of shocks to the UK Economy.

Coupled with the Tory UK Government’s rise in National Insurance rates hitting low and middle earners, very few people (except the very well off) will be unaffected by these blows to the economy. Into this mix is the Covid-19 pandemic ongoing since the start of 2020 with 177,410 deaths in the UK , at the time of writing, (194,550 where Covid is mentioned). 986 deaths in the last 7 days.

The House of Commons Treasury Committee took evidence on Monday 16th of May from the Governor of the Bank of England, Andrew Bailey. He said:

“It is not just about what the shocks are; it is essentially about what effect they are going to have”

Also to hit the UK economy is the fall in the number of people available to work. Brexit meant we lost thousands of workers from countries in the EU who decided to return to Europe. There has also been an increase in long term sickness, so those who could work are unable to do so due to ill health. Andrew Bailey told MPs that he had not expected such a sudden drop in the UK workforce due to ill health.

“The persistence and scale of this drop has been a surprise to us. We have seen an increase in long-term sickness in that number of about 320,000 people.”

Are these ill health issues due to long Covid or to other conditions affected by poverty and a weakened NHS ?

Andrew Bailey warned the committee about the real income shock that would hit people across the UK. This means that people have to spend more on basics, heating and eating. Spending more on basics in turn results in people having less income for other items which they have to do without – it could be clothes, furnishings, a holiday, a car, a whole range of items.

Andrew Bailey continued:

“The main driver of the profile of inflation—particularly what brings it down—is the very big real income shock that is coming from these outside forces, in particular from energy prices now and still global goods prices. That real income shock will obviously have an effect on domestic demand and damp activity. I am afraid, as we say in the projection, we think that it will increase in unemployment.”

It is the job of governments to manage the economy so that other shocks, like the war in Ukraine, do not have such a devastating effect as is happening in the UK. Food security has been an issue in the UK since the toll of customs duties and delays hit us when we left the world’s largest free trade market. Ukraine is a major producer of sunflower oil and wheat. If Ukraine cannot get 1. its products out 2. cannot plant for next year, this will affect UK food security. It will also have a devastating impact on countries in East Africa with  Ethiopia, Kenya, Somalia, Sudan, and South Sudan being the hardest hit.

This all may seem madness if you can see around you farmers working hard in our communities producing the best quality foodstuffs in the world and wind turbines incessantly whirring round powering the UK energy system.

The worst effects of the shocks to the UK economy and to household incomes will be felt the further away from London that you are. The Highlands and Islands of Scotland, a net exporter of energy, will be hit the hardest.

Highlands and Islands SNP MSP Emma Roddick has commented about the impact of fuel poverty hitting island communities as Scotland tries to today achieve net-zero to mitigate the impact of the climate emergency.

Emma Roddick said:

“Fuel poverty is at its highest in parts of my region and it is vital that when we talk about doing away with oil boilers and such, we also think about the impact this could have on household energy bills.

“I will continue to make the case with the Scottish Government that, while many of the levers of power around energy policy lie with Westminster, more has to be done at home to support those bearing the brunt of bad decisions down south and more consideration has to be given to island contexts when we create Scottish policy.”

Rising food costs are not just hit by the challenges of distribution but also by the more ‘invisible’ (to the consumer) price rises of animal feed stuffs. The price for feed wheat in the UK has set a new record, rising £35/tonne since last month, and now stands at £253/tonne.(Poultry Network). There’s no joy either if you decide to go meat/ egg free in your diet as Soyameal has also climbed to a new record level, hitting £484/tonne at the start of March.

The UK Government, with Downing Street now the crime hot spot of the UK with 100 fines issued for breaking Covid rules – partying whilst the people grieved for their dead loved ones and businesses struggled to keep going, has completely failed to manage the economy. Weaker, isolationist, and unable to use the considerable economic levers it has to protect the people from the shocks of Brexit, Covid, the war in Ukraine, and profiteering by energy companies, the UK is ‘sick’.

The Scottish Government can strive to mitigate the effects of these monumental issues hitting the UK economy, but at the fundamental level, where it really counts, only the Tory UK Government has the powers at its disposal to avert, or at the least lessen, the shocks on the incomes of ordinary people.

Fiona Grahame