The British nation is already burdened by crushing energy costs and is bracing for a dramatic increase in that load. To gauge the impact of coming energy price rises in Britain, you must first understand what is sometimes called the “unriching” of the UK. This is a supposedly wealthy country which no longer feels wealthy. Real wages have barely risen in real terms since before the Great Financial Crisis of 2008. Brits have been through the longest pay freeze since the Napoleonic Wars.
So the average family was already feeling pretty miserable even before the latest energy shock caused by the war in Iran. The IMF has forecast that the UK is going to be hit especially hard by Iran’s stranglehold on the Strait of Hormuz. It expects rising prices to create a “large and sudden tax on income”.
But here’s the thing: The UK is already taxed to the hilt, and incomes have been squeezed for years. Britons are already sick to death of cutting back.
UK GDP per capita is around 30 percent lower than that of the U.S.—$65,000 against $90,000—according to IMF purchasing power parity figures. The intergenerational contract whereby the younger generation should be wealthier than their parents’ has been broken. Generation Z Britons are emerging into a world where they can no longer expect to own a house, have a family or enjoy a secure pensioned job.
Burdened with student debt, it is the credentialed classes that feel most cheated. Graduate recruitment has flatlined, leaving many educated Britons doing relatively menial jobs. Schooled by the left-wing academics who dominate UK universities, many of the fragile “precariat”, as they are called, are attracted to the Robin Hood politics of the Green Party leader Zack Polanski. He thinks that by abolishing billionaires Britain will somehow become richer. He also used to say he could enlarge women’s breasts by hypnosis.
Those on the lower income deciles are, to a certain extent, insulated from impoverishment by huge wealth transfers from middle and high earners. Britain spends more on welfare benefits than the total revenue raised by income tax.
But lower middle-income Britons are still the most directly affected by the energy crisis, which has landed with devastating effect, plunging some seven million families into “fuel poverty,” defined as paying more than 10 percent of disposable earnings on energy.
Average energy bills, currently capped at £1,700 a year for a typical household, are already 50 percent higher than before the Ukraine war. They are forecast to leap again to around £2,500 a year. That may not seem vastly greater than bills in America, but British houses are much smaller. The average U.S. household gets a lot more energy per buck. UK domestic electricity costs twice as much as in the U.S.: $0.40 per kWh against $0.18.
For millions of Britons, especially the elderly living on the UK state pension of £12,548 ($16,600) a year, it is often a choice between heating and eating. In 2025, Age UK claims that 41 percent of older people had to cut back on heating their homes last year. Inadequate heating has allegedly been causing thousands of premature deaths every winter, especially in colder regions such as Scotland. So energy is literally a matter of life and death in the UK.
But it is perhaps the less dramatic impact of high energy costs on families that is the most politically salient. Put simply, Britons can’t enjoy life anymore. The press is full of accounts of two-earner families on average incomes being unable to afford family outings, not least because of the cost of gasoline. Zoo trips, beach holidays, or even visits to the movie theater have become luxuries. Half of parents, according to polls, can no longer afford a summer holiday.
Britons already pay more than £100 ($133) to fill up a small family car—that’s if they can afford the cost of insurance and vehicle taxes. UK gasoline costs are nearly double those in the U.S., and they are set to increase rapidly because of the disruption to supplies. In the 1970s, after the last great energy price shock, the UK was saved by North Sea oil and gas revenues. Not this time.
A lifestyle that is taken for granted in the U.S. is no longer available to tens of millions of Britons. It is hardly surprising, therefore, that the political parties, Labour and the Conservatives, which presided over the Great Stagnation are being punished at the polls.
Populist parties like Reform UK on the right and the Greens on the left have been on the rise. Nigel Farage’s anti-immigration party has been leading opinion polls for the last year. The Green Party won the recent crucial Gorton and Denton by-election. Yet neither of those parties has any really coherent idea of how to make Great Britain great again. Cutting net immigration to zero or abolishing billionaires are not the answer.
But there can be no solution that does not start with energy. Heating is unaffordable, factories are closing and transport is becoming a luxury. The NHS is suffering because of the increased cost of pharmaceuticals. Shortages of fertilizer, dependent on natural gas, are going to push food prices ever higher. Not surprisingly, Britons are voting with their feet and emigrating for a better life in record numbers, according to the Office for National Statistics.
An appeal for calm by the Labour Prime Minister Keir Starmer, who is already more unpopular than any of his Tory predecessors, has not eased voter frustration. The UK government is, according to many commentators, asleep at the wheel. Unable to lower energy costs without compromising climate policies, and addicted to public spending, Labour politicians have stopped making sense. Britain used to be a relatively tranquil land, not given to political extremes. That could be about to change.
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