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We’re entering unfamiliar territory.

Across the UK, people are noticing that life is getting harder in ways that don’t make sense if you’re still thinking in terms of normal economics. Prices are rising, but the economy isn’t booming. Wages are flat or falling behind. Public services are creaking. And while government figures talk about recovery, it doesn’t feel like recovery for most of us.

What we’re living through is stagflation – a mix of stagnation and inflation – but with a new twist: it’s happening in an economy that’s no longer growing at all. In fact, in many places, the economy is quietly shrinking.

What is stagflation?

Stagflation used to be rare. Economists once believed that if inflation rose, it meant the economy was overheating. However, we are now witnessing a simultaneous rise in prices and decline in living standards.

In plain terms, that means:

• Your bills go up, but your pay doesn’t.
• Jobs become harder to find or more insecure.
• The weekly shop gets more expensive even as the packets get smaller.
• Councils cut services while tax rises eat into your pension or take-home pay.

The causes are complex, but the direction is clear. The old model of growth, based on cheap fossil fuels, mass consumption, and global trade, is no longer effective. The government’s response so far has primarily involved printing money, raising interest rates, and hoping for the best.

What does this mean for ordinary people?

It means life is going to feel tougher, especially for those on lower or fixed incomes. And it also means that many of the systems we’ve relied on – housing, healthcare, transport, and food – will become less dependable over time.

You may already feel it: buses disappearing from rural routes. GP appointments are becoming harder to book. Rent is rising faster than wages. Local shops are closing. Savings are being eroded.

For families, it often means saying no to things that used to be normal – holidays, heating, hobbies. For younger generations, the promise that hard work will bring stability is eroding.

But there is another story here. One that doesn’t just leave us as victims of a failing system.

Because when the formal economy retreats, the informal economy begins to matter more.

How we respond: seven local actions that matter

Stagflation is serious. But it doesn’t mean helplessness. In fact, it’s a wake-up call – a chance to rethink how we live and support each other. Here are seven ways that communities and households can respond:

1. Grow more of what we eat
With food prices rising and extended supply chains at risk, local food matters more than ever. Home gardens, community plots, and small farms can make a difference – and reconnect people with land and seasons.

2. Rebuild informal networks
Mutual aid isn’t just for crises. Time banks, skill swaps, neighbour help – these are the lifelines of a post-growth world. They don’t show up in GDP, but they keep communities alive.

3. Waste less, share more
From mending clothes to swapping tools, a culture of resourcefulness is re-emerging. Frugality, once looked down on, may become a new kind of wealth.

4. Local energy resilience
Energy bills will keep rising. Local solar panels, shared heating schemes, and community energy cooperatives can give people more control and buffer against shocks.

5. Trade skills, not just money
When cash is tight, practical skills become currency. Fixing bikes, making clothes, cooking, growing – these are the trades of a more grounded, resilient economy.

6. Reclaim local decision-making
Councils and parishes need the power to act locally, not just carry out orders from above. When central systems falter, it’s the neighbourhood that holds things together.

7. Talk honestly about the future
This isn’t just a blip. It’s a turning point. And we need to be honest about that – with our families, our communities, and ourselves. A smaller economy can still be a good society – but only if we build it deliberately.

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In summary

Stagflation in a shrinking economy may sound like something only economists worry about. But for ordinary people, it’s already shaping the way we live. The challenge is real – but so is the opportunity.

We cannot return to the old model of endless growth. But we can go forward into a different kind of economy – one that values people over profits, place over global reach, and resilience over illusion.

And that begins not with waiting for someone else to act – but with small, determined steps close to home.

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