Home Business British life enters ‘non-essential, no-consumption’ time – FT中文网

British life enters ‘non-essential, no-consumption’ time – FT中文网

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British life enters ‘non-essential, no-consumption’ time – FT中文网

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After the British royal family’s renewal ceremony ended last month, ordinary people immediately returned to reality.

Entering October, the Royal Mail strikes and railway strikes, which were suspended due to the death of the Queen, were revived. On the eve of the strike, signs were erected outside large and small railway stations, warning passengers to “don’t travel unless necessary.” This year is the third time the railway system has held a general strike. Against the backdrop of rising inflation and living costs, the British Rail, Maritime and Transport (RMT) trade union organization has put forward demands to the Ministry of Transport for wage increases and guarantees of an “iron rice bowl”. As the demands have not been met, RMT said the strike plan is likely to extend into the middle of next year.

It is not difficult to “do not travel unless necessary” for a few days, but it is unimaginable if the heating cannot be turned on in winter. From October 1, the UK’s annual energy price cap of £3,549 will come into effect, which is 80% higher than the original price. Amid the mourning, the new Downing Street government announced the “Energy Price Guarantee” policy to help people pay their energy bills, which came into effect immediately. This means that in the next two years, the energy cap for a typical user will be £2,500 a year, which is a relief for some people.

On the last day of September, on the eve of the rise in energy prices, many financial experts generally suggested that users who do not have smart gas meters at home should submit their gas and electricity meter readings by phone or online before the new price cap takes effect, so as to avoid energy consumption. The company charges the energy used before the price increase as the price after the price increase. As a result, when I logged on to the website of our registered energy company that day, I had to wait in line for 6 minutes to enter the website, which was unprecedented.

Wholesale gas prices have risen 250% since January, data from the Oil and Gas Institute shows. In May of this year, the price of gas in my house was 7.5p per kWh and the price of electricity was 29p per kWh. By now, gas prices have risen to 10p per kWh, and electricity costs 35p per kWh. Go back to energy prices from a year ago: 2.5p per kWh for gas and 10.5p per kWh for electricity. If nothing else, the comparison is unbelievable. Just heard yesterday that someone has started getting scam text messages claiming to subsidize their energy bills. The decline of the people’s livelihood is evident.

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The pound has been falling steadily since “Brexit”. Following the announcement of the “mini-budget” policy of the new Chancellor of the Exchequer recently, it has exacerbated market volatility and exchange rate shocks. The pound has fallen to its lowest point since the currency floated freely in 1971.

The trigger started when the new Chancellor of the Exchequer announced the country’s most aggressive tax cut in nearly half a century, which, astonishingly, removed the top income tax rate that only applies to people earning more than £150,000 a year. Although the basic income tax, which is suitable for most people, will also be cut by one percentage point from 20% (this policy does not apply to Scotland), this so-called “tax cut”, even if it will be reverted to the amount of National Insurance before the former Prime Minister Johnson formulated the policy. Taking it into account, the money that ordinary people can save is nothing compared to the soaring winter heating bills and the prices of daily necessities. Therefore, from a global perspective, measures such as “removing the banker’s bonus cap” have really benefited the high-income group, which only accounts for 1% of the UK’s total population. According to data released by the polling website YouGov at the end of September, the Conservative Party’s support rate has fallen sharply since the introduction of the “mini budget”. The Labour Party currently leads the ruling party by a large margin by 33 percentage points, of which 17% of voters voted for the Conservative Party in 2019. Now he has chosen to defect. What’s more, a petition calling for an immediate general election appeared on the petition page of the British Parliament, with nearly 550,000 signatures as of the 5th of this month. By convention, as long as a petition exceeds 100,000 people, Parliament will consider debates on relevant issues. At this time, protest marches against the “mini-budget” also appeared in various parts of the UK. Amidst the turmoil, the Chancellor of the Exchequer suddenly announced on October 3 that the plan to cancel the 45% top income tax rate would not be pushed forward.

I have found that the popular media has coined the term “Trussonomics” for the current economic climate. And the context in which this new word is used is often sarcastic. Nobel laureate in economics Paul Krugman bluntly called Truss “extremely stupid”, but said on social media: “Everyone calm down, Britain’s GDP is only 3.2% of global GDP. Not going to cause a global crisis. The UK market is really messed up, but we’re far from 1976 (the sterling crisis).”

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For the British people, in just one week, the market shock brought about by the “tax cut” has turned everyone’s attention to the mortgage interest rate. Today, there are about 6.8 million households in the UK who have to repay their mortgages every month. When purchasing a mortgage interest rate product, everyone will have two choices: fixed mortgage interest rate and variable mortgage interest rate products. In the past two weeks, about 2 million households in the UK who have chosen floating mortgage rate products have become worried: the Bank of England recently raised the interest rate from 1.75% to 2.25%. At the time, the Bank of England’s base rate was expected to rise to 6% by next summer. This is startling. For example, if someone borrows £200,000 from the bank, every 0.5% increase in the variable home loan rate means the family has to pay an extra £60 a month. And since the chancellor’s abrupt U-turn to scrap the top income tax rate was announced, the Bank of England’s forecast for interest rates next summer has dropped to 5.5%, still a scary figure. At present, the prospect of mortgage interest rates is unabated, and many banks and lenders have suspended the sale of mortgage interest rate products. In retrospect, it was only less than a year ago that more than a dozen lenders and banks in the UK were racing to launch products below 1% in a price war.

A friend of mine bought a house two years ago. At that time, the mortgage and renovation costs were calculated. After two years of unexpected building materials price increases and inflation, it has seriously exceeded the budget. However, his friend chose a 5-year fixed mortgage interest rate product two years ago, and he will not be affected by interest rate fluctuations for the time being, so he is a little fortunate. He used the same lender to repay the loan in his old home, with a fixed rate of 4.82% three years ago; while the same lender introduced a minimum fixed rate of 1.5% two years ago. Lenders and borrowers alike tend to seek as much certainty as possible in a time of economic uncertainty against the backdrop of Brexit, pushing UK lending rates to record lows two years ago. But now it looks like that period is over. According to the current interest rate trend, it is expected that newly registered users of 2-year fixed interest rate products will face an increase in interest rates from the current 4.28% to 5.62%.

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It’s been an eventful time. London has had more rain lately, but a dry spell over the summer has driven the Thames to its lowest level in 17 years and cisterns the worst year since 2003. From late August to the present, users under the jurisdiction of Thames Water Company are still unable to use hoses to connect to faucets to wash cars, water flowers, fill swimming pools, clean windows and doors, etc. The price of living continues to rise without any suspense, and the average price of various ingredients in supermarkets has risen by 50p. The price increase has penetrated more aspects of society, including Sky TV, which also issued a notice to employees last week that the price of the internal restaurant menu will be increased.

At home, we’ve also begun to pay more attention to the details of saving energy: turning off the lights immediately after leaving a room, using less hot water to wash dishes, and unplugging all plugs before going to bed. There are many more articles in the newspapers that recall the energy crisis in the 1970s. According to data from UK market research firm Retail Economics and retail technology company Metapack, retail sales are expected to drop by around 22% in this year’s Christmas “golden shopping season”, as 60% of the UK population is cutting back on “non-essential” spending. Dine-in consumers are expected to drop by a fifth. Walking down the road, the only thing I saw that didn’t keep falling into the abyss was the price of diesel: from £1.99 a litre at its peak this summer, it has fallen back to around £1.77 and has stabilized for some time. Although it is still a long way from the average price of £1.29 per liter before the epidemic, in this world where people’s livelihood has fallen to the lowest ebb since the “living standard” was recorded in the 1960s, it is worthy of praise for not increasing the price.

(This article only represents the author’s own views, editor email: [email protected])

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