Inflation and Poverty Levels Are Predicted to Rise in the United Kingdom

The United Kingdom has been predicted to have an increase in inflation of up to 4% this year. This would in turn reduce the standard of living of its citizens, eventually pushing up their poverty level, reports the Resolution Foundation, an economic think-tank based in the United Kingdom.

British Economy Opens Up

This comes as the UK economy is finally opening up after the devastation of the COVID-19 pandemic the previous year. The Resolution Foundation says that many expenses are being incurred by citizens, and they are therefore compelled to begin spending their savings from the past year. This would lead to an increase in costs and, consequently, an upsurge in the demand for goods and services.

British Government to Cancel £20 Weekly Increase in Universal Credit

In addition, the British government intends to suspend its incentive for a £20-per-week rise in universal credit by September. The government launched this incentive in April 2020 to assist citizens during the pandemic period. As of last month, up to 6 million people were beneficiaries of this project, which is twice the number of people that applied for it before the lockdown last year.

Inflation Facts

According to reports released last week, the British CPI (Consumer Price Index) used for evaluating inflation jumped dramatically from 1.5% to 2.1% in the space of a year. This figure is predicted to spring up to about 3% before the end of the year and should then drop back to 2%, according to the Bank of England.

Andy Haldane, who is the outgoing chief economist of the Bank of England, said at the beginning of the month that the country was being haunted by inflation and that the government was about to confront trying times.

This imminent inflation is set to push interest rates up, thereby weakening the Great British Pound generally in the Forex market.

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