UK | Food prices

Hard times for fish and chip stores

Many fish-and-chips stores in the UK may soon face closure due to the fallout from the war on Ukraine.
IMAGO / Sportimage
Many fish-and-chips stores in the UK may soon face closure due to the fallout from the war on Ukraine.

In a rare as well as dramatic move, the head of Britain's central bank has warned of "apocalyptic" food prices. The statements by Bank of England chief Andrew Bailey are likely to heighten the worries of millions of people in the UK about how they will make ends meet in the face of rampant inflation and exploding living costs. Especially since Bailey did nothing to calm the situation - on the contrary, he appeared helpless before members of parliament in view of the effects of the Russian war against the agricultural country Ukraine.

"We can't predict things like wars, that's not in anyone's power," Bailey said. Most recently, food prices in the U.K. had already climbed 5.9 percent, and experts expect them to rise further. This is also affecting the catering industry - and endangering a national dish: Many fish-and-chips stores could soon be facing closure due to the consequences of the war against Ukraine, Andrew Crook, head of the National Federation of Fish Friers (NFFF) industry association, told the Deutsche Presse-Agentur.

Because of all four ingredients - flour, sunflower oil, fish and potatoes - are particularly hard hit. For example, the "chippies," as the popular stores are called, used to source half of their sunflower oil from Russia or Ukraine. Flour for the breading has also been imported to a large extent from Ukraine. Prices for both have risen sharply since the war began. Now, snack bar owners fear further losses because of the sanctions against Russia. About 40 percent of fish are caught by Russian trawlers. Punitive tariffs will soon send prices skyrocketing here, too. And because Russian fertilizers are becoming more expensive, potatoes are also likely to cost more soon.

The rising prices come on top of a significant increase in energy costs. Crook, the head of the association, is calling for the government to reduce the VAT rate for the catering industry again - as it had already done temporarily because of the pandemic. Currently, prepared food in the U.K. is again subject to 20 percent VAT. "Without change, many good employers will have to fight for survival," Crook said.

It could also be a fight for survival for many people who already have little money for fish and chips. That's because BoE chief Bailey not only expects further food price increases, which in turn contribute to the inexorably climbing inflation. Here, the central bank is likely to announce another significant increase this Wednesday; so far, it is expecting up to 10.25 percent in the fourth quarter. Bailey also fears a "very large real wage shock." Between March 2021 and 2022, real wages already fell by 68 pounds (81 euros) a month, according to calculations by the TUC union. As a result, Bailey said, domestic demand will fall - and ultimately unemployment will rise again.

Government politicians expressed irritation at Bailey's warnings. Finance Minister Rishi Sunak on Tuesday cheered the lowest unemployment rate in nearly 50 years. For the first time ever, there are now more jobs available than there are job seekers. But experts warn. Economic inactivity and labor shortages would have a lasting impact on growth, said Suren Thiru of the BCC Chamber of Commerce Association.

In fact, recent studies do not bode well: rising prices could cause millions of people to slip into poverty and debt. Many would have to consider whether to spend their money on food or heating. The watchdog Office for Budget Responsibility predicted living standards would fall faster than at any time since the mid-1950s.

So far, the government has no real answer. Experts believe that measures designed to relieve poor households are inadequate. An emergency budget, as called for by BCC economist Thiru, for example, has not yet been planned. Rather, Conservative MPs caused outrage: MP Lee Anderson suggested that people who receive their food from food banks merely cannot cook. And his colleague Rachel Maclean suggested that those affected should just work more or switch to better-paid jobs.