Cost-of-living crisis: a disaster years in the making

The cost-of-living crisis has little to do with Brexit, climate change, Covid-19 or war, says Tim Lee

'Occupy Wall Street' Protesters
Policymakers should have changed course after the 2007-2009 shock
(Image credit: © Alamy)

The news has been dominated by the war in Ukraine and the cost-of-living crisis. Sometimes it might seem as though the latter is entirely the result of the former, but in truth the cost-of-living crisis was already a fact of life long before Russia invaded.

The huge increase in financial and housing wealth has masked the way that the real “economic cake” has been stagnant for some time and is now getting smaller. The very wealthy have been gaining a larger share, so the “slice of cake” left for the rest of us is shrinking.

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Tim Lee is an economist and a co-author, together with Jamie Lee and Kevin Coldiron, of The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis (McGraw-Hill, 2019)