Displaying items by tag: cost of living

The UK could be heading for a recession. The economy contracted by 0.1% in March, and higher prices are ‘really beginning to bite’, the Office for National Statistics said. People are spending less in shops and cutting down on car journeys; the impact of higher energy bills in April has also yet to be seen. Many price rises are just starting to hit households now. Last week the Bank of England forecast that inflation could reach more than 10% by the end of the year. It warned the UK faces a ‘sharp economic slowdown’. The chancellor has threatened to hit energy companies with a one-off ‘windfall’ tax if they don't invest enough in new projects. Opposition parties want to tax the soaring profits of oil and gas firms to help families grappling with rising bills. Treasury officials have been ordered to examine a potential tax, and Boris Johnson said the Government would have to look at the windfall proposal if not enough investment was made.

Rishi Sunak delivered his mini-Budget against a backdrop of rising fuel, energy and food costs. He cut fuel duty by 5p but resisted calls to scrap April's National Insurance rise of 1.25p in the pound; instead the start threshold will rise from £9,600 to £12,570. He warned the UK's post-pandemic recovery has been blown off course by the war in Ukraine, but he promised an income tax cut in 2024 when the economy would be in better shape. The Office for Budget Responsibility painted a bleak picture of the immediate prospects, saying that living standards are set to take the biggest hit since records began in the 1950s. It said inflation was set to peak at 8.7% at the end of this year and this - combined with rising taxes - will ‘weigh heavily on living standards in the coming twelve months’. The UK's tax burden will be the highest level since the 1940s.

Price increases are making it tougher for households to make ends meet, and unlicensed lenders offer loans to the desperate at astronomical interest rates. Last year the Centre for Social Justice (CSJ) researched 3,363 people. One in forty were borrowing from unlicensed lenders. CSJ thinks there are about a million people in England doing this. ‘Overwhelmingly, people borrow when they're desperate. For everyday costs of living, like a gas or electricity bill, or a pram, and then they get exploited by those seeking to extort them for as much money as they can get out of them, offering arbitrary terms, little to no paperwork and an extortionate repayment rate.’ ‘It's just endless,’ one victim said: 'I went from a £150 loan to owing £6,000 in months'. The CSJ report highlights separate data from 1,252 victims, questioned last year by the Illegal Money Lending Team, which prosecutes loan sharks in England. The figures suggest the borrowers are among the poorest in society.