The Bank of England yesterday boosted with another rate hike – the third in a row. In another blow to households facing the crisis, Boris Johnson returns from Saudi Arabia empty-handed.
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Households face rising borrowing costs, just as nearly eight million people have had to pay at least one essential bill.
Despite warnings from campaigners, the Bank of England yesterday boosted with another rate hike – the third in a row.
Most mortgage borrowers will not be affected by the base rate increase from 0.5% to 0.75% because they are doing fixed rate transactions but it will affect those with conditions change.
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Online broker Trussle says the increase could add £316 to the average annual mortgage bill and means the typical repayment for those affected has risen to £972 a year. since December.
Millions of long-term savers could benefit, but experts say banks are not under pressure to adopt the new rate.
The Bank of England insists increases are needed to try to cool soaring inflation, already at a 30-year high of 5.5% and forecast yesterday to hit 8% or higher in the coming months. the coming months.
Kate Bell, chief economist at TUC, said: “In the midst of a cost-of-living crisis, this is the last thing struggling families need. The Bank of England made the wrong call but the Government must not hide behind it”.
The pressure is growing on the Prime Minister Rishi Sunak delayed the increase in National Insurance, announced a subsidy increase and provided assistance to households affected by the energy price hike in April.
Meanwhile, a study by the Money Advice Foundation found that 1 in 7 adults – or 7.9 million people – has been delayed with at least one bill.
“Millions of households are facing a cost of living crisis,” said executive director Joanna Elson. The Prime Minister has the opportunity to change course and help relieve some of this pressure. ”
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Citizens Advice said around five million adults said they didn’t have enough to cover the average £60-a-month energy bills in April.
But with warnings that average bills could rise by £145 a month from October, the charity says 14.5 million people may no longer be able to pay.
And after the Prime Minister’s failed mission in Saudi Arabia, Tory MP Robert Halfon warned Britain was “moving towards a de facto shutdown” as parents “can’t afford to send their children to school ” and gas prices forcing car-dependent workers to stay home.
A Government spokesman said: “We recognize the pressures people are facing with the cost of living, which is why we have launched a broad package of support worth 21 billion pounds”.
What Sunak has to do in Wednesday’s Spring Statement
Professor Richard Murphy, Professor of Accounting Practice, University of Sheffield School of Management and Director of Tax Research UK
The country is currently facing the biggest financial crisis I have ever known.
Not because of Covid, or the national debt (which is well controlled), or war. That is due to a rise in energy and other prices that households across the UK are facing.
In 2021, the average household energy bill is just under £1,200. This April, that figure will rise to almost £2,000.
Worse, it is suggested that oil and gas shortages because of the war in Ukraine will increase this cost by £3,000 from October this year.
In addition, the cost of petrol and diesel is increasing rapidly and could hit £3 per liter in 2022 – double in price.
Food prices are also increasing due to wheat shortages because of the war in Ukraine.
Add all these factors together and the average UK household could see their monthly cost of living increase by £300 a month over the course of a year, which is an amount that most people would not expect. everyone can’t have it. And, as my research has shown, much of this is due to massive corporate profiteering that is driving up food and energy prices to exploit the shortages that exist in the world today. .
Julian Hamilton / Daily Mirror)
So what can Sunak do?
1. Be bold next week. The tinkering won’t do. Adjusting benefits isn’t enough either, although reinstating the £20 universal credit cut would help. Too many households receiving little or no benefit will also be affected
difficult by this.
2. So Sunak must first declare a crisis and say that he will spend whatever it takes to prevent UK households from going bankrupt with their millions. That means spending whatever it takes, as we did during Covid, and generating money to pay for it using quantitative easing. None of this needs to pay taxes on anything, just as Covid did not.
3. He must then lower the price of road fuel to prevent them from driving up all other prices. That means cutting VAT and other taxes to keep these prices at 2021 levels. That’s the price we need to pay to beat inflation.
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4. Then he had to join the energy company. He must introduce a tax on excess profits. Energy companies must be made to pay.
5. And then he has to be really radical. We need subsidized household energy prices. That means the average household’s energy price requirement must be brought back to 2021 levels. The government must subsidize to cut costs. If this were to be done then only larger homes would be required to pay market rates for any energy they consumed above average usage. This will encourage their energy-saving measures and align with the green agenda. That makes this fair, affordable and green.
If we do these things we have a good chance of balancing the finances of most UK households within the next year. Without these measures, the pain would plunge millions into debt, and worse. If Sunak cares about that then he has to act now.
https://www.mirror.co.uk/money/brits-face-rise-borrowing-costs-26495734 Britons face rising borrowing costs as one in seven adults has at least one bill.