PERI - The Political Economy of the Cost of Living Crisis in the UK: What Is to Be Done?

February 20, 2023 | Conference Paper

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Headline: The United Kingdom’s Cost of Living Crisis
Intro Text: Ozlem Onaran analyzes the political economy of the cost-of-living crisis in the United Kingdom. Onaran presents the long-term trends in the wage share, wealth inequality, labor’s bargaining power, and real wages in the UK. She also analyzes trends in UK corporate profit margins within the context of the first and second waves of inflation in 2021-22. The policy responses by the conservative governments and the Bank of England to the rise of inflation are then analyzed, and their limitations are assessed. The paper concludes with short-run and medium-run policy alternatives to the cost-of-living crisis.
Type of publication: Conference Paper
Research or In The Media: Research
Research Area: Finance, Jobs & Macroeconomics
Publication Date: 2023-02-20
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Authors:
- Add Authors: Özlem Onaran
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The Political Economy of the Cost of Living Crisis in the UK: What Is to Be Done?

This paper was presented as part of the "Global Inflation Today" conference at PERI, December 2022. For the full set of conference papers and conference commentary, video, and interviews, click here.

This paper analyzes the political economy of the cost of living crisis in the context of the United Kingdom. The paper presents the long-term trends in the wage share, wealth inequality, labour’s bargaining power, and real wages in the UK. The first and second waves of inflation in 2021-22 are discussed presenting the trends in the profit margins. The policy responses by the conservative governments and the Bank of England are analyzed, and their limitations are assessed. The paper concludes with short-run and medium-run policy alternatives to the cost of living crisis