While the United Kingdom begins to get back to normality after its recent riots, the news in the finance sector shows no slowing in the way in which the Middle East’s civil disturbances affect our costs as British residents. Everything from inflation, travel costs and, of course, global credit ratings for a number of sectors feeling the effects of this year’s strife in Tunisia, Egypt and Libya.
When there are problems in this region, there are predictably problems getting supplies of their key export – oil. Wheras we may think that an increase in the cost of oil would just influence fuel costs, in actuality, Middle Eastern oil can be used in tens of hundreds of our products here in the UK. From food additives and plastics to dyes and fertilizers! With this in mind, spiralling rates of inflation are no surprise! The recent turmoil in North Africa and the Middle East has seen oil prices sky rocket and concerns that unrest in neighboring nations could see oil prices peak above those of the UK’s own economic recession have been vindicated. The government’s Energy Secretary Chris Huhne wishes that altering fuel costs, forced by circumstances elsewhere, may see the United Kingdom help themselves as a response. He confirms that increasing use of renewable energy substitutes is essential in response to increasing oil costs.
As oil prices hike, travel costs across the world is affected. Although petrol prices makes travel more pricey for any motor owner, holiday costs out of the United Kingdom are also buoyed. In 2011 a number of tour operators, including Thomas Cook and Tui Travel, added fuel supplements in addition to the holiday costs to deal with the rising fuel costs. Holidaymakers are now charged £40 per long haul flight, twenty five pounds per mid-haul and fifteen pounds per short-haul journey. The forecast for airline industry’s profits for 2011 were trimmed down earlier this year by a staggering $500m.
There are also the rising military costs payable by the British taxpayers. The Libyan conflict is guesstimated to cost around £260 million! This is a stunning figure which has been accumulated since this March, it is thought that £120 million of this is on fuel costs alone – a factor many will be irritated to see reported in this year’s financial market news, especially with so many budgeting difficulties being out of the UK government’s control.
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