People around the UK are struggling to pay for basic necessities as prices are rising. Cost of living keeps going up at an extremely rapid pace but the UK is not the only country that is facing such a crisis.
According to the 2022 Global Report on Food Crises, almost 200 million people around the world are currently in need of urgent assistance.
Inflation rates are hitting record highs around the world and energy products are becoming unaffordable for many. While prices are going up, salaries have hardly grown, which means that people’s quality of life is gradually decreasing.
Most affected parts of the UK
Although all of the UK can feel the impacts of the cost of living crisis, there are certain areas of the country that are struggling the most. Data shows that the most and the least affected parts of the UK are:
| Most affected areas of the UK | Least affected areas of the UK |
| Manchester Newcastle Upon Tyne Leeds Glasgow Birmingham Northampton Aberdeen Bradford Nottingham Kingston Upon Hull | Reading London Sutton Southampton Birkenhead Southend-on-sea Luton Newport Cardiff Brent |
So, based on these findings it can be concluded that those who live in Manchester struggle the most with the cost of living. Apparently, in Manchester locals search for the cheapest energy suppliers more than in any other part of the UK.
Extreme situation in Africa
While global price increases are negatively affecting the UK and Europe, there are parts of the world where the effects of that are even more disastrous. In Africa, for example, the situation was already dire before the recent price increases. Now, millions are on the brink of famine.
The Guardian reported that ‘as the war in Ukraine rages, the combined effect of three failed rainy seasons has pushed parts of Kenya, Somalia and Ethiopia to the brink, killing livestock, forcing people to leave their homes and increasing levels of child malnutrition. The Russian invasion has exacerbated the situation, pushing up the price of staples such as wheat and sunflower oil, as well as fuel.’
Africa has not only been affected by the ongoing Russia-Ukraine war but also by weather extremes many of which have been exacerbated by climate change.
‘The Democratic Republic of Congo, Ethiopia and Nigeria are among the ten countries with the highest number of people in crisis,’ writes SciDev.Net’s Sub-Saharan Africa English desk.
Sadly, not many people in the UK are aware of how serious the problem in Africa is. While, of course, people in the UK have the right to be worried about their own situation, it is important not to forget about others who need help and assistance.
US struggling too
When the cost of living crisis first started in Europe, the US claimed to be well prepared for it. Now, however, ‘almost half (47%) of Americans believe that cost of living is the biggest threat to their financial security,’ CNBC reports. The country has been seeing supply shortages and rising gas prices. And, in May, the annual inflation rate reached 8.6%, which was the highest it has been since 1981.
Unfortunately, for the time being no one knows how to solve the global cost of living crisis. Inflation is expected to keep increasing and so are prices of food and energy. Everyone is concerned but, if it is any consolation, we are all in it together.
What does the cost of living crisis mean for small business owners?
The cost of living crisis has been affecting not only regular people but also business owners. As inflation in the UK reached 9% in April, the highest level in 40 years, SMEs are worried about their future.
‘A survey of 1,000 small business owners in the UK by PayPal found that one in 10 (12%) do not expect to be in business within the year, with a further 15% unsure about the future of their business,’ ZDNet reported.
Some business owners reported that it is more difficult for them to deal with the rising costs of food, energy products, and fuel than with the economic downturn caused by the COVID-19 pandemic.
What are SMEs doing to deal with the crisis?
Amid soaring global prices, SMEs have been raising their prices. Although worried about the impact that can have on the relationships with their customers, this is the only way for them to get enough money to keep operating. If they keep their prices at the same level, they will simply not see any profit.
Many SMEs have also been ending third-party contracts with, for example, marketing agents, photographers, or freelancers. As they are already struggling to pay their regular employees, they have no money to pay for additional services. That, however, can harm the quality of their services in the long run.
Finally, business owners have also been trying to switch suppliers and find cheaper energy deals. SMEs now have to spend a big proportion of their monthly budget on their energy supply, which is something they simply cannot stop paying for. But as energy prices are going up, energy tariffs are becoming increasingly expensive.
What can SMEs do to better manage their finances during crisis
While there is nothing business owners can do to stop the cost of living crisis, there are a few things that can help them budget for high costs more effectively.
- Switch to a remote working policy
If employees are working from home, costs associated with operating a physical office decrease. This can be a temporary measure implemented for the duration of the cost of living crisis. Of course, not all businesses are able to implement a remote working model but it is something worth considering if the industry allows for it.
- Do an energy audit
An energy audit is an assessment of how much energy a building needs and how much energy it uses. Thanks to an energy audit, it is possible to find opportunities for reducing our energy consumption and consequently lowering our energy bills. Those who are interested in doing an energy audit should get in touch with a reliable energy broker.
- Review materials
As prices are going up, it might be a good idea to consider swapping certain materials for cheaper equivalents. While that of course might negatively affect the quality of products the business offers, it might be a necessary measure in times of the cost of living crisis.
Experts say that the situation will worsen in the next few months but will then slowly start getting better. Until then, SMEs can follow these few tips and try to look for other opportunities to reduce running costs to survive these challenging times.