Cost of living crisis: how does UK compare with rest of Europe?

Cost of living crisis: how does UK compare with rest of Europe?

Britain has taken steps to ease the impact of rising prices . But other countries have gone further

The German government launched a €9 euro-a-month ticket scheme to help those who rely on public transport.

As the cost of living crisis continues to bite, millions of households are in need of help. And the problem has spread across Europe. In the UK, more than 8 million households, who are on income-related benefits and tax credits, are eligible for a £650 cost of living payment, while there is also a £300 pensioner payment and a £150 disability payment. In the winter, there will be a £400 discount on electricity bills for all households. A £150 rebate on council tax for bands A-D has been paid to many households, but it is understood some families are still waiting to receive it.

There have been other schemes, too, such as the government-backed “Great British Rail Sale” announced in April, which saw a million off-peak, mostly advance, train tickets discounted by up to 50%. A cost of living package unveiled a few days ago, initially includes a mix of new and pre-existing discounts on meals, mobile tariffs and theatre tickets from businesses including Asda, Morrisons, Amazon and Vodafone.

But how does the UK compare with other European countries?

Ireland

Ireland has given out energy credits, reduced tax on gas, electricity, petrol and diesel, and cut bus and train fares in one of the EU’s most expensive countries. Measures introduced since the start of 2022 have put an extra €480 (£403) in the average person’s pocket.

Households were given a €200 energy credit in April, followed by 9% to 13.5% cuts in VAT that will save households approximately €50 on gas and €70 on electricity. Fares on public transport were cut by 20% in April, and halved for those aged 19 to 23. Fuel duty cuts amount to 20 cents per litre of petrol, and 15 cents per litre of diesel.

The government says measures in last October’s budget, such as increasing the weekly pension by €5 and a modest de facto income tax cut, anticipated the cost of living crisis.

Leo Varadkar, the tanaiste, or deputy prime minister, claimed Ireland was doing “a lot more” than the UK, although fact-checkers have struggled to verify, or debunk, the assertion.

Germany

Germany passed various measures to alleviate the cost of living crisis in July. A €9 a month ticket scheme, covering travel on all modes of urban and regional transport, was designed to nudge commuters and holidaymakers into leaving the car at home, and aid those who are reliant on public transport. High-speed ICE trains are exempt from the offer, which runs until 31 August.

From June through to August, the government is also cutting taxation on fuel, which makes up about 50% of the total fuel price. While studies suggest that fuel companies have largely passed these cuts on to consumers, rather than pocketing them as initially feared, prices remain considerably higher than this time last year, especially for diesel.

There are also a series of one-off payments: people in gainful employment are to be paid an energy price lump sum of €300 through their employer’s payroll, which companies can reclaim from the government. For freelancers, it will show up as a €300 reduction in their advance income tax payment.

People on social welfare will receive €200. One-person households on housing benefits will be subsidised with €270 a month, rising to €350 for two-person households and at €70 per extra person thereafter.

To further assist larger households with spiralling gas and electricity bills, families are being paid a one-off €100 per child in July.

Spain

Spain arguably went one step further than Germany earlier this month when its socialist-led coalition government declared that travel across certain parts of the state-owned rail network, Renfe, would be free from 1 September to the end of the year. This was in addition to a previous policy where the government agreed a 30% discount on all public transport, including metros, buses and trams.

The price cuts are being implemented to cushion the impact of inflation and rapidly rising energy prices. The 100% rail discounts apply to multi-trip ticket journeys on commuter services, and medium-distance routes of less than 300km.

While it is mainly aimed at Spanish season ticket holders, tourists can take advantage of it if they buy multi-journey tickets.

Last year, Spain cut VAT on electricity bills from 21% to 10% and last month announced another drop to 5% in a bid to dampen the effect of price rises on consumers.

A package of measures announced in late June include a 15% rise in pensions for the most vulnerable, including widows and the disabled, and a €200 payment to some categories of people on incomes of less than €14,000.

The price of gas canisters will be fixed until the end of the year.

France

The French government, keen to prevent energy bills from going up even more than they have done, is poised to spend billions of euros on fully nationalising energy company EDF in an attempt to tackle the energy crisis and shore up domestic supplies.

By bringing the company into full state ownership, it aims to make investments to reduce dependence on imported fossil fuels. In January this year the government announced it would force EDF to take an €8.4bn financial hit by limiting bill increases to 4% this year.

Meanwhile, every citizen whose monthly income was €2,000 or less before tax, got a one-off “inflation allowance” of €100 last year following the surge in energy prices.

A rebate of 15 cents per litre on petrol and diesel was also brought in earlier this year.