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The cost of living has been rising in the past year with the increase food and energy prices, which has had a noticeable and devastating effect across Exeter and the UK. According to Russell Group Cost of Living Survey, 81% of students have been negatively impacted in various ways due to increased rental price, energy bills, and food prices. Debt repayments are predicted to be four times higher than they were in 2021, and unemployment is set to increase in-line interest rate increases by the Bank of England. This follows the Global economy experiencing decade-high inflation and a sharper-than-expected slowdown following the lingering Covid-19 pandemic and Ukraine War.
Despite these events, a YouGov report highlighted encouraging signs of improvement with economic growth being greater than expected. Consumer confidence has remained resilient despite rising prices and increased borrowing costs, wages have seen a rise for the first time in two years. As well as rental prices being predicted to go down by 4%, and commodity prices to fall 5% in 2024 (Deloitte).
However, the recent political events of the Hamas attack and the Israel-Gaza War have led to concerns about the future of the Global economy, with worries about the potential escalation of violence in the Middle East. The interdependence of geopolitical events and economic instability is not a new phenomenon. Nonetheless, optimism for a better economic future has been overshadowed by these concerns of additional economic turmoil.
Economists believe that the Global economic impact of this conflict is dependent on how future events unfold. Even if the conflict is contained within the region, Bloomberg predicts that oil prices would rise by approximately $4 per barrel, global GDP would drop by 0.1%, and global inflation would increase by 0.1%. This would be worsened by external countries entering the conflict. For example, through concerns surrounding Iranian-backed militant group Hezbollah engaging in conflict on the Lebanese border, after decades of clashing and their rejection (alongside Hamas) of Israel’s right to exist. Analysts believe that oil prices could rise by $8 per barrel, global GDP could fall by 0.3%, and inflation could increase by 0.2%. However, there are greater fears of a 1970s Israel-Arab parallel where an oil-embargo is implemented, causing a period characterized by inflation and recession.
Additional sources:
https://www.ons.gov.uk/economy/inflationandpriceindices/articles/costofliving/latestinsights
https://www.bbc.co.uk/news/business-67104734
https://www.bbc.co.uk/news/business-57764601
Image: Woman Holding Child, 2021, CC BY 2.0 DEED
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