Inflation and higher energy bills could lead to sharpest fall in UK living standards since 1956
These are challenging times. The reconstruction job from Covid-19 had barely begun when Russia invaded Ukraine. Now the international consensus to build back better from the pandemic has been replaced by an urgent need to prevent the conflict from escalating.
With such high stakes, economic sanctions, not bombs, are the western weapon of choice, limiting Vladimir Putin’s ability to muster guns and butter. But while there will be harsher consequences for Russia, made a pariah under the Putin regime, it is a battle not without economic collateral damage. European leaders will this week announce a strategy to cut Europe’s reliance on Russian energy – a plan in the works before the first tank rolled into Ukraine, now given added urgency. With Russia accounting for 40% of EU gas imports – rising to 65% in Germany and 100% for some eastern European states – it is a prudent move. Yet it is a process likely to take years. In the meantime, the shock of war will drive up energy prices across the continent – adding to what was already the worst squeeze on living standards in decades.
