British consumers are more pessimistic than their peers in major economies about the prospects for inflation and their own personal finances.
The findings in a survey of 18 countries by YouGov Plc add to evidence that the UK is being hit harder than most by a surge in consumer prices and shortages after the coronavirus pandemic.
The poll, shared exclusively with Bloomberg, showed 71% in the UK expect the cost of living will “increase a lot” over the next 12 months. That’s higher than any other nation and well above the 48% reading in the US. In total, nine-in-10 of those in the UK are bracing for higher costs, also the most in the survey.
The research covers almost 20,000 adults from China and Indonesia to the US, France and Poland. It backs up suggestions from economists that the UK is facing a unique inflation shock — and one that is likely to prove more enduring than in other advanced economies.
On top of the energy and supply chain shocks faced by other countries, the UK is grappling with a falling currency, the aftershocks of its departure from the European Union and tax increases that threaten to eat further into incomes.
In the face of those events, 61% of people in the U.K. expect their personal financial situation to worsen over the next year. That’s more than any other nation in the poll. More than a quarter are predicting things will get “a lot worse.”
The findings illustrate the scale of the inflation crisis facing the UK, which is causing a headache for both Prime Minister Boris Johnson and Bank of England Governor Andrew Bailey.
With the cost of fuel and food soaring, UK price gains are already at a four-decade high of 9%, while a report on Wednesday is expected to show a further acceleration to 9.1%. Gains are set to hit double digits later this year when further energy bill increases kick in.
That’s left the UK at risks of a severe economic downturn, or even a recession, as consumer confidence plummets and household’s disposable incomes face up to one of their worst years on record.
Johnson’s government has responded by introducing a multi-billion pound program of aid for households. The central bank, meanwhile, has hiked rates for five straight meetings and hinted it unleashed even bigger moved if inflation spirals further out of control.
The survey is not alone in painting the UK in a poor light. Speaking to MPs on the Treasury Committee last month, former BOE rate-setter Kristin Forbes, said the UK alone among major economies was facing inflationary pressures from all six of the key sources she follows.
Prices are set to rise a further 5.3% next year on average, the highest in the Group of Seven, according to the International Monetary Fund.
With the crunch looming, the YouGov poll shows most expect to cut spending on luxuries such as holidays and meals out. They also may attempt to reduce energy use and shift habits when it comes to food shopping. About 40% will save more or travel less, and a third will dip into existing savings, the poll shows.
Still, in a more positive sign, only 10% plan to borrow more to help them through the crisis.
Source :- bloomberg