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Everyone has an opinion on the cost-of-living crisis. Depending on who you ask, chances are the information you receive will be inaccurate, and sadly this will create more confusion. You can improve your knowledge by studying for an MSc in Accountancy and Financial Management. Before discovering how the degree will help you, here are the basics of the cost-of-living crisis and how it affects world financial markets.
What is the Cost-of-Living Crisis?
A cost-of-living crisis is when the price of everyday essentials like food, utilities and healthcare rises faster than your average disposable income and it has to affect the majority for it to be a crisis.
The pandemic brought the entire world to a near standstill. Most countries managed it poorly, with many people suffering physical and mental health issues leading to economic disruption. Subsequent lockdowns forced businesses to pause investments, lay off employees, and, in extreme cases, shut down completely.
Supply Chain Disruptions
Once countries got things in order, consumer spending went up, with people rushing to stock on essentials. However, companies could not meet the demand due to supply chain disruptions. Travel restrictions meant import and export companies could not deliver goods, leading to price increases.
Russia's Invasion of Ukraine
Ukraine supplies most of Europe's grain and sunflower oil, so countries are having to look for expensive alternative sources, whilst Ukraine is focusing on defending her territory.
With Russia already being a major gas supplier, and with sanctions already being in place, this means that UK consumers are spending more on their utilities. There is also a high influx of refugees to neighbouring countries, which causes these countries to divert more resources to cater for them. This strains the already dwindling resources causing price increases for most commodities.
Lower-income countries are suffering the most from the cost-of-living crisis. The United Nations Development Programme identifies ten developing countries facing the worst effects of the crisis across all poverty lines. Chronic debt and mismanagement leave these governments unable to care for their citizens, resulting in hunger, civil unrest, and recurring poverty.
Developed countries are also suffering due to increasing inflation. For example, the UK's at around 13%, meaning that residents cannot afford basic commodities.
Decline in Consumer Spending
A domino effect of rising inflation is that consumers are spending less to manage their current situation. Consumer spending is a key driver of economic health, and with wage increases still a fantasy, the crisis will continue to persist.
Government generates revenue through taxation, and this makes it difficult for it to meet its revenue targets with most people out of work. Other effects of declining consumer spending is that government has to introduce subsidies and stimulus packages, which reduce its reserves.
Increasing Interest Rates
The UK's current interest rate is 3.5%, from 0.10% pre-COVID. As inflation persists and consumer spending declines, banks are losing customer savings. This forces them to increase interest rates to remain profitable. However, even if some customers decide to make deposits, they receive poor returns making their efforts inconsequential. #
Why Study for an MSc Accounting and Financial Management Degree?
Global governments and businesses require accounting and financial management specialists to help devise remedial policies. Despite several subsidies and stimulus packages for their populations, the initiatives could be more robust. The University of Bolton’s MSc Accounting and Financial Management degree develops your critical awareness of the principles and techniques for effective financial decision-making.
- Students get to take advantage of excellent study spaces; calling the £4 million Institute of Management building home
- Students benefit from a teaching-intensive, research-informed approach to their lectures, which are delivered by experienced lecturers
- You will learn from actual case studies using mathematical and statistical techniques to solve business and accountancy problems. This positions you as a trusted advisor to individuals and businesses, improving your employability
You can view the full course details.
To speak to one of our faculty members, contact us at firstname.lastname@example.org or call 01204 903807. At Bolton, we are proud to put our students and their needs first.