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The cost of living crisis is such an insipid term. Think about what each of those words mean. Life has become too expensive. For a government, that surely has to be the number one indication that you have failed. The worst thing about this current crisis is that it is entirely self-made and the government is doing nothing to fix it. Actually scratch that. The worst thing is that the government is actively making it worse.

Why has everything suddenly become too expensive?

In short, it’s a mix of a pandemic, Brexit and war and it’s impacted virtually every part of the economy.

We’ll start with supply chains. Supply chains were absolutely hammered by Brexit. The extra customs checks alone have added enormous cost and bureaucracy to trade with Europe. Estimates put the admin cost alone at £15bn. Add to that the cost of lost productive and the disruption that is faced by just in time supply chains, and you have a particularly nasty reality of Brexit.

Supply chains were also battered by COVID. The pandemic made transport of goods almost impossible in the early days. When things finally started moving again, it created a massive supply / demand imbalance. This led to massive labour shortages across the EU, especially for HGV drivers. Sadly for Britain, all the EU drivers had left. For some reason they didn’t want to stick around and help a country that had spent the last 5 years comparing them to cockroaches. The result is that international freight costs have gone through the roof, especially in the UK.

Shipping to Britain is 24% more expensive on average than shipping to elsewhere in Europe. Some costs have risen 600% in the last year. Naturally, this all has a knock on effect. The UK Imports roughly 32% of the goods it consumes. The transport costs for all of these goods has just blown up. This has lead to inflation of 5.4%; an astronomical increase after decades of stability around the 2% mark.

Again, some of this is the pandemic, but most of it is Brexit. And there lies the problem; the government cannot criticise Brexit. It’s all they have.

What about energy prices?

You will probably have seen the meme on social media. OFGEM has raised the price cap by 54%. This means that the price that energy companies can charged just increased at a rate 10x inflation. The government has allowed this because they are worried about more energy firms going bust. But make no mistake they had a choice. Some companies were struggling, sure, but the biggest providers took home billions in profits in 2021. This looks all the worse when one compares Britain to France, where price rises have been capped at 5%. This option was available to the government, but it would have required some semblance of competence.

But wait – wasn’t one of the Brexit benefits on offer that the government could get rid of VAT on energy bills? Surely, the Brexit government is going to make good on that promise at this critical time? Of course not. In fact, because VAT is levied on spending, VAT yields on energy are going to soar.

So they aren’t going to keep their promise on VAT, and they aren’t going to reduce the cap. How will they help struggling households? The government is going to give every household in the country a “loan”. But you’re not allowed to call it a loan. And you’ll have to pay it back whether you benefit from it or not.

Are the government doing anything?

Of course they are! No government could stand by in good conscience whilst the population suffers. The government has increased National Insurance! Whilst also cutting taxes on banks apparently. Everyone is going to be paying more to a government that point blank refuses to help shoulder the burden of rising costs. So what are they doing with the money? Wasting it on expensive vanity projects and giving it to fraudsters most probably.

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