This may get a little complicated – so stick with me. I’m going to explain it all, just as I understand it.
RHDI ( Real Household disposable Income)
It all boils down to the RHDI which stands for the Real Household disposable Income.
Which is used to measure the living standards of people living in a country.
The UK living standard in 2023 and 2024 are going to decrease by 4.3%.
4.3% may seem like a small number, but it’s the biggest fall since 1956 – which was when they started to track the living standards.
Its not predicted to increase for at least 2 years after that.
This long term decrease has happened before in 2008 but not as much.
In effect its like turning back time to 2013 to how the standard of living was back then.
Losing 8 years of the economy growth.
The bank of England has released a statement expecting the longest recession the UK has ever seen.
Predicting that Europe could possibly follow.
What about the rest of the world? The UK being one of the big players as the 6th largest economy in the world behind –
India
Germany
Japan
China
And the biggest The United States.
UK cant be the only one in trouble with living standards right now?
The UK has always been know as expensive, with how much it costs to own a property in the middle of London.
The pound sterling has always been pretty strong against other currencies all over the world.
Has been in the past! Currently its became a lot weaker.
In the nest 2 years its predicted that 500,000 people will lose their jobs. Then the people who do actually have a job, the income wont stretch as far as it used to.
With less people buying less houses the value of property will also come down.
This could be seen as a good thing for people who can afford the interest rates that have also gone up on barrowing.
But this is why the RHDI (Real Household disposable Income) is going down, because the income people with a job do earn – its buying them a lot less, pushing the living standards down.
To fight the rising cost of inflation in the UK, the Bank Of England raised its interest rate from 0.75% TO 3% - The biggest rise in 33 years.
So how did the UK get to be in this terrible situation?
Its no surprise it has something to do with Brexit, the UK voted to exit the European union.
The EU or European union was formed in 1992 that was an agreement between countries, so that they can all trade with each other without expensive taxes.
Also to let each other travel in the Europe without and special visas.
In addition the euro was born. Witch gave the European union stability in the financial markets.
However the UK decided to opt out of the euro currency to be completely independent.
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