Classrooms with no textbooks. Lessons cut short to slash the cost of running the school. And for 800,000 students living in poverty, no food at lunchtime.¹

For children across many parts of the UK, it is a grim start to the school year. This is the cost of living crisis and almost every area of life is affected. The price of basic necessities like food and energy are soaring. Household gas and electricity bills in Britain are expected to rise by 80% in October, raising the prospect of a mortally cold winter which could kill thousands.

Some believe the crisis is a failure of the international order. The causes are complex, but Russia's invasion of Ukraine has exacerbatedMade worse. a looming crisis. Now, Russia has cut its gas imports to Europe, causing global price hikes and foreshadowing a deep energy catastrophe. 

According to experts, this could have been mitigatedMade less serious. if rich countries had more proactively weaned themselves off Russian fuel supplies and, even better, committed to renewable sources.

For others, it is a symbol of a long-standing economic wave across Europe, which has forced those on lower incomes to shoulder economic uncertainties whilst firms see soaring profits.

Europe has been hit by a series of protests and strikes. In the UK, fears about the rise of living costs have led to a wave of unionisation, strikes and an unexpected turnaround in the polls.²

But the crisis is not limited to Europe. In Sri Lanka, authorities have issued work-from-home orders due to fuel shortages. And Pakistan was forced to trim its working week to alleviate accelerating pressure from fuel blackouts.

Now, experts say a lethal cocktail of circumstances are leading the UK towards a crisis. Shortages of both cheap and skilled labour due to Brexit and the Covid-19 pandemic have pushed up inflation³, whilst political uncertainty has suffocated economic confidence. 

Additionally, once the world's "productivity frontier", since 2009's great recessionA period of economic decline. A recession occurs when a country's Gross Domestic Product falls for six months in a row.  Britain's productivity is now growing at one of the slowest rates in Europe.

New British prime minister Liz Truss has proposed solving this issue by turning the UK into a low-tax economy. This means cutting tax rates for higher earners. Truss believes her plan will boost economic growth through encouraging spending, a theory called "supply side economics". 

Others know it as "trickle-down economics", the controversial policy associated with Margaret ThatcherBritain's first female prime minister and the longest-serving prime minister of the modern era., which many consider responsible for the vast inequalities in UK society today. Some ask why normal people are once again being asked to "tighten their belts" whilst high earners and companies get financial support.

International relations, politics, a mixture of both: for now, the great debate on the cause of this crisis continues. But there is one thing experts agree on: the question of who should shoulder its burden must be answered now.

Yes: Higher earners and those with more disposable income need to shoulder the burden of the cost of living crisis. It is the only fair option, and supply-side policies are proven to be unsuccessful.

No: We need to prioritise economic recovery, not short-term solutions like taxing firms more. Tax relief for the higher brackets will boost spending in the long term.

Or... A mixture of policies is the right approach. If we offer temporary relief to high-performing businesses, we need to match it with policies to protect those on low incomes, such as price ceilings and subsidies.