Britons' Economic Outlook Turns Grim as Inflation Soars

WASHINGTON, D.C. -- As inflation in the United Kingdom soars to levels not seen in 40 years, Gallup surveys show Britons are less optimistic about their standard of living now than they were even during the height of the Great Recession. In fact, the 28% of Britons who said in June that their standard of living is getting better is the lowest level that Gallup has measured in the U.K. at any time in the past 16 years.

This record low is likely to be tested at least through early next year, as inflation, which has been driven higher by surging energy and food prices in the U.K., could reach as high as 19% by one estimate. In the current climate, Britons are being squeezed on all sides, as the real value of workers' wages fell at its fastest rate in 20 years in June, and growth in average earnings failed to keep up with the cost of living.

Further illustrating Britons' changing economic fortunes over the past year, the percentage of Britons who see their living standards getting worse has more than doubled since 2021. More than four in 10 adults (42%) this year say their living standards are getting worse, up from 20% the previous year. Although not a record high, this is the highest level of pessimism among Britons since the Great Recession, when 47% in 2008 said living standards were getting worse.

Majority of Britons See Deteriorating Economic Conditions

Amid growing expectations that the U.K. will enter recession by the end of the year, the majority (56%) of Britons believe that their local economy is getting worse -- the highest level of pessimism in a decade. This pessimism runs deep in British society, with majorities of Britons at every income level -- from the poorest 20% to the richest 20% -- agreeing that conditions are getting worse.

Number of Britons Struggling to Get By Edges Up

At the time of the survey in June of this year, many Britons had yet to feel the full effects of rising inflation -- even as they braced for tougher times. The majority of Britons (52%) said they were living comfortably on their present household incomes, which is one of the highest percentages on recent record. Another 32% said they were getting by.

However, the percentage of Britons who were finding it "difficult" or "very difficult" to get by on their present household incomes inched up slightly from 11% in 2021 to 16% in mid-2022.

Implications

Whoever takes outgoing Prime Minister Boris Johnson's seat must prepare themselves and their cabinet to handle a cost crisis that a large proportion of their constituents find alarming. As the Office of Gas and Electricity Markets increases the country's energy price cap by 80%, and leaders such as London's Mayor Sadiq Khan declare inflation to be out of control, the next prime minister will need to make tough choices to curb energy prices and bring down prices for everyday goods.

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