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Politics

Here’s what other countries are doing to ease the cost of living crisis

Rishi Sunak has been criticised for failing to support the UK’s poorest as the cost of living rises. But what are other governments across the world doing?

Chancellor Rishi Sunak’s Spring Budget has been roundly panned for doing next to nothing to help low-income families through the worst cost of living crisis in decades. 

According to analysis from think tank the Institute for Public Policy Research, the poorest will get just £120 worth of help from the measures announced, while the richest will benefit to the tune of £480.

The Joseph Rowntree Foundation has accused the chancellor of “abandoning many to the threat of destitution”, with costs set to soar in April when the energy price cap is raised by £693 and national insurance contributions go up.

A cut to fuel duty, for instance, won’t affect people too poor to own cars, while the national insurance rise won’t help those out of work or unable to work.

Sunak also failed to answer calls for an increase in benefits or pension payments, which will rise 3.1 per cent in April – half the rate of current inflation, which has hit 6.2 per cent. 

While most countries around the world are facing high costs of living, different approaches have been taken to cushion the blow. Here’s how other governments have handled the situation. 

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France 

From April, households in the UK will see their energy bills rise by as much as 54 per cent as the price cap limiting what suppliers can charge is lifted.

In essence, this is because energy companies are passing along the high cost of wholesale gas onto ordinary consumers. 

Not all countries have passed along these costs to consumers, however. In France, state-owned energy company EDF has been forced to take a €8.4bn (£7bn) financial hit to cap household bill rises to just 4 per cent. 

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In December, low-income households also received a one-off payment of €100 to help with rising energy costs. In the UK, households will receive a £200 loan as energy prices are set to rise again in October.

This loan will be paid back in instalments on future bills. 

From April, France will also be introducing a 15 cent-per-litre reduction on fuel at petrol stations. 

Germany 

This week, Germany passed a raft of measures to help households cope with the cost of living crisis, including a cut to tax on fuel for three months by 30 cents for petrol and 14 cents for diesel.

Alongside this, the government is launching a large-scale programme to replace oil and gas furnaces in households with electricity-powered heat pumps to help homes decarbonise and protect against high energy bills in future.

All taxpayers in Germany will receive a one-off 300 euro payment to help with the rising cost of living, with a further 100 euros for each child and an additional 100 euros for anybody receiving state benefits. 

The cost of a 90-day public transport ticket will be slashed to just nine euros to encourage take-up of lower carbon travel.

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Spain 

Late last year, Spain levied a windfall tax on energy suppliers and generators to prevent them from reaping “extraordinary benefits” as a result of the rising cost of wholesale energy prices.

This has been extended this year, and will cushion the high costs of energy for consumers.

Bulgaria, Italy and Romania have all also introduced taxes on energy suppliers.

In Spain, household energy bills will also be lower thanks to a lowering of VAT on bills from 21 per cent to 10 per cent until June, while taxes on electricity have been cut from 7 per cent to 0.5 per cent.

In the UK, Labour called for a windfall tax on energy giants like BP who made record profits last year, but no such measure was announced in the Spring Budget.

New Zealand 

New Zealand is another country which has chosen to cut taxes on fuel, with petrol excise duties slashed by 25 cents per litre. At the same time, the country has cut public transport fares by 50 per cent to encourage use of greener transport options.

In addition to this, around 60 per cent of families with children will benefit from an increase in tax credits, with benefits also due to increase.

The New Zealand government is also restarting its “Winter Energy Payment” on May 1 to subsidise the rising costs of energy for households across the country. 

Ireland

The Irish government has planned a €200 energy rebate which will be awarded to every household from April. 

People already claiming fuel allowance will receive an extra  €125 (£105) on top of this. 

Public transport fares in Ireland will be slashed by 20 per cent until the end of the year to help ease spiralling travel costs.

North of the border in Northern Ireland, public transport fares have been frozen. In the UK, rail fares rose by 3.8 per cent at the start of March.

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