Economic expert warns of worst domestic crisis in a century in UK

LONDON, Aug. 22 (Xinhua) -- As millions of people in Britain face the prospect of escalating bills, Keith Baker, a research fellow in fuel poverty and energy policy at Glasgow Caledonian University, warned the country could face its worst peacetime crisis since the General Strike of 1926.

For many British families, food prices were already rocketing, adding extra dollars to weekly food bills, but planned rises in the cost of electricity and gas due in the fall would add to the misery, Baker told Xinhua.

"Many people are going to be struggling to keep roofs over their heads, or to pay their mortgages and rents. I honestly don't know what households can do about it that wouldn't be either illegal or futile," he said.

Since the winter of 2021, Britain's inflation has kept rising and successively hit new highs. The latest data from British Office for National Statistics (ONS) showed the Consumer Prices Index (CPI) rose by 10.1 percent in the 12 months to July 2022, far above the 2 percent target set by the Bank of England (BoE).

The 40-year-high inflation has eaten into the value of people's wages at a record pace. Baker said more than half of the British population is likely to be drastically hit by the cost of living crisis.

"We are now into really quite scary, unknown territory. We don't know how much mortgage rates will go up, we don't know how much food prices will go up, but we are seeing a trend that is certainly heading in that direction, and there's no sign of it changing. In fact, there's every sign it's going to get worse," said the scholar.

Earlier this month, the BoE, Britain's central bank, expected the consumer price index (CPI) to keep growing in the near future. Higher energy prices are expected to push inflation to 13 percent in the fourth quarter of the year and inflation is likely to remain at very elevated levels throughout much of 2023, said the BoE.

In early August, the energy regulator Ofgem in the United Kingdom (UK) confirmed the energy price cap would be updated quarterly rather than every six months, warning that "customers face a very challenging winter ahead."

A typical household is now predicted to pay the equivalent of 4,266 pounds (about 5,034 U.S. dollars) a year for energy in the first three months of 2023, according to new forecasts for the energy price cap from the market research firm Cornwall Insight.

"We are looking at households spending 30 percent or 40 percent plus of their incomes on fuel bills. And that's just energy bills," said Baker, warning that up to 12 million people in the UK have gone into fuel poverty, and the situation will get worse in the future.

A substantial section of people who consider themselves as the middle class would find their cost of living was really ratcheting up, he said.

"I think for a lot of people, it will be a smaller Christmas," said Baker, suggesting Britons be more careful on this year's Christmas spending. "Don't go into debt, don't take out any form of loan to fund your Christmas," he said.