Inflation is a global crisis
The UK is sliding into a social and economic crisis, the likes of which its people have not seen for decades. Household fuel bills are on course to top £2,400 by this autumn, while the price of a grocery shop is rocketing. Meanwhile, the economy is flatlining and the average employee’s pay keeps falling behind inflation, which hit 7 percent in March, the highest rate since 1992. No wonder that the charities and analysts that work on poverty and inequality are issuing such dire warnings. On one projection, one in three Britons — 23.5 million people — will be unable to afford the cost of living this year.
The rest of the world is being buffeted by the same storms: COVID, followed by soaring prices for food and fuel, and then Russia’s invasion of Ukraine, which has led to another massive rise in the cost of basics. The difference is that most other countries do not have our wealth, or social security system, or infrastructure. So imagine the devastation felt elsewhere, in countries less wealthy, less stable and less powerful. In Somalia, the
UN’s Food and Agricultural Organization (FAO) predicts, more than 6 million people will fall into “crisis, emergency, or catastrophic levels of hunger” within the next two months.
Add in southern Ethiopia and Kenya, and the total facing “crisis or worse” jumps to 16 million. A terse, bureaucratic, economical phrase — “crisis or worse” — denotes unimaginable human trauma: selling all you have to feed your children, leaving your family home and wandering miles for sustenance. You need a lot of luck to survive such rigors.
Now imagine this fate befalling families from Africa to Asia to Latin America, because that is what lies ahead. Oxfam projects that 260 million people will be pushed into extreme poverty this year alone — that is to say, living on $1.90 a day or less. These are vast numbers that so far have gone largely ignored.
Some basic things can be done, both in the UK and internationally. The chancellor, Rishi Sunak, could immediately restore the billions that he has cut from the aid budget. This week, finance ministers from around the globe are flying into Washington for the spring meetings of the IMF and World Bank. There, they could agree to make up the humanitarian aid needed in the Horn of Africa, Afghanistan and elsewhere. They could restructure the debt of poorer countries, cancelling those loans that are simply unpayable, and suspending interest payments on others. And they should increase the financial reserves or strategic drawing rights provided by the IMF, while stipulating that they must go to poorer countries without the usual conditions imposed by economists from Washington.
It remains an outrage that the rich world hasn’t waived patents on COVID vaccines or supported poorer countries in manufacturing them. And it is high time that a wealth tax was introduced across countries, taking from those who prospered wildly during the pandemic, then spent their proceeds on space travel or shares in troubled social media firms.
The cost of not doing at least some of the above will be high: in human lives, in geopolitical stability, in financial markets.