Mounting Headwinds For The U.K.

It’s been only a few months since the United Kingdom reopened its economy after a pitched battle with COVID-19. After a promising summer, Britain is ripe for a fall.

Inflation in the U.K. is heading north and likely to breach the 4% mark in the coming months. Prices of petrol, natural gas, food and a range of other goods and services have been surging.

This comes at a bad time for British consumers, who are coping with the end of the employment furlough scheme, the expiration of universal credit for poorer families, and National Health Service tax rises, which are all straining the income side of household budgets.

The production side of the U.K. economy is also in a bad way. Several British power companies have failed, and some factories halted operations amid surging energy prices. COVID-19, tax changes (IR35 is resulting in a significant cut to take-home pay) and curbs on low-skilled foreign workers are creating enduring labor shortages in Britain.

After a strong summer, the U.K. economy has run into a wall of worry.