Sat, 27 Nov 2021

The coronavirus and its associated lockdowns have had a threefold effect on the British economy. The inflation rate has risen. There is a potential increase in the unemployment rate. Supply chains from Europe to the island have been negatively affected as well.

These measures for economic performance are being watched over with keen concern by analysts in the country. The monitoring of inflation, the jobs market, and supply chain movements is vital for the planned post-pandemic recovery that the government wants to implement.

Peculiar to the British situation is its departure from the European Union. Brexit has contributed majorly to the supply chain issues and caused shortages in skilled workers in the UK.

Among the various detrimental effects of this triad of troubles is what farmers have had to endure. Disturbingly, they have had to destroy their pork livestock because there are not enough skilled butchers in the entire country. This is very distressing and indicative of what many businesses have had to put up with in recent months. The pandemic alone is quite tough to manage. Adding supply chain woes to a company's daily to-do list is incredibly stressful.

The consumer price inflation rate rose to 3.2% in August, a figure that is the highest the UK has seen in almost ten years. Though this remarkable increase was influenced by global events such as the pandemic and its related lockdowns, the Bank of England is still convinced that the inflation rate will rise above 4%. This number is twice the projected inflation rate of 2%.

The pandemic has had unique effects on national earnings as well. Wages have seen extraordinary increases, which would normally be met with appreciation on the part of the employee. In the current climate, however, inflation is taking a significant chunk out of employee earnings. As a result, the net income level has decreased over the last three months.

Prime Minister Boris Johnson optimistically believes that the inflation rate's effects can be mitigated if British businesses simply obey the basic rules of supply and demand found in any thriving economy.

Various shortages around the country have made sizable contributions to the rise in the inflation rate. Knowing that the fuel and food sectors are struggling with scarcities, the British government quickly put together a plan to grant 10,500 European employees work visas to help out the economy. However, Europeans are not interested in working in the UK because the current working conditions are, at best, unstable.

Earnings have already been identified as being affected by inflation. They are also affected by shortages. The lack of supply of particular goods and services necessarily means that the prices of what is available on supermarket shelves will skyrocket. Any employee who enjoys a salary increase during this corona era immediately sees their increase being spent on pricier commodities.

The situation is causing uncomfortable callbacks to the Second World War era when rationing was the order of the day. Things are getting so bad that rumours are beginning to rumble regarding the potential of supermarkets rationing their products so that the challenging supply chain situation can be dealt with proactively.

The hospitality sector is bearing the brunt of these shortages as they are losing about 20% of their inventory to the poor supply chain situation. Fuel scarcity has not improved the bottlenecks in the supply chain. This lack of fuel has resulted in many instances of panic-buying and dramatic decreases in traffic. These factors combined do not bode well for the British economy.

In addition to the dire situation, farmers have found themselves in due to the various shortages, emergency services employees have faced horrendous difficulties due to fuel shortages. Ambulance workers have had to endure nightmarishly long queues, and care workers have had to miss shifts at the homes of their charges due to the national lack of petrol.

In this economic climate marred by the coronavirus, jobs have also been scarce. A combination of Brexit and the supply chain crisis has had a severely detrimental effect on the jobs market. It should be noted that the decrease in employee supply is not unique to the Brits. Other economies around the world are struggling with the same issue. But what makes it difficult for the British economy is the 2016 referendum to leave the European Union. Since then, the UK has dealt with a severe lack of relevant talent in their jobs market.

In dire times like these, a common concern is how to take care of ourselves and our families. Most people are not overly materialistic, but they are keenly aware that money does matter. Money is losing its purchasing power, and households need to act. People can use stocks ISA to protects their investments from inflation risk. It can also offer a buffer against the myriad shortages currently facing the British economy. Making prudent financial choices and perhaps reconsidering one's political choices at the next election could contribute to successfully weathering the shortage storm.

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