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