The United Kingdom economy fell behind India amid grave recession fears. According to BBC, the Bank of England said a recession is inevitable, primarily due to energy costs impacted by Russia. Inflation in the country could hit as high as 18% in early 2023 as fuel prices continue to rise.
India’s economy overtakes the United Kingdom
According to The New York Times, India’s economy is on track to grow by 7%, potentially more, in 2022. India’s domestic economic demand facilitated the growth. Another significant factor is the country’s public policy. According to The Times, public investment, debtor relief, and credit guarantees to small and medium-sized businesses kept inflation in check.
The UK’s energy crisis
The Bank of England reports that heightened energy costs could spike inflation up to 22% in the UK. Incoming Prime Minister Liz Truss told the BBC she would address the situation within a week as of September 5. In addition, labor strikes broke out throughout the UK due to the increased cost of living.
Energy costs have risen 54% in the United Kingdom this year and should spike another 80% in October. As a result, the average UK household will pay about £3,500 (about $4,100) for annual energy costs in October. However, by April 2023, that could more than double to £7,700 ( nearly $9,000). These unsettling prices sparked the largest wave of labor unrest in the United Kingdom since the late 1970s.
Incoming Prime Minister Truss’s response
In July, incoming Prime Minister Truss told Sky News she would take a “tough line” on labor movements. A 2016 bill tightened labor union strike laws in the United Kingdom. To legally go on strike, at least half of a union’s membership must vote on the matter. And at least 40% must vote yes to the walkout. Truss proposed raising the 40% threshold to 50% amid the current unrest.
