Displaying items by tag: cost of living

‘We have a low-wage, high-welfare economy, which means people depend continuously on tax credits and all sorts of other welfare help in order to get by. That is not a sustainable situation for millions of households up and down the country’, says Christian economist Professor Adrian Pabst. As the cost of living crisis continues, the prospect of corporations engaging in increasing the cost of items at the shopping till to keep their profits high is facing investigation by the Competition and Markets Authority (CMA) amid ‘ongoing concerns about high prices’. The CMA is looking at whether increases are linked to ‘any failure in competition’. Recently, Tesco’s chairman said it was ‘entirely possible’ that food producers are hiking prices more than necessary. Professor Pabst asks, ‘Do workers deserve a pay rise to match inflation? Christians should be on the side of the dignity of labour, not siding with private profit.’

Independent Christian economist Bridget Rosewell, previously economic advisor to the Greater London Authority, said, ‘I'm expecting the economy to be in an uncomfortable place and we shouldn't lose sight of the long term, in the short term.’ The Bank of England has raised interest rates twelve times in a row and believes inflation will fall slower than predicted as food prices stay stubbornly high. Interest rates take a while to feed through into prices but more stable prices will eventually come through. People with mortgages should expect their interest payments to rise. Pray for people to not overextend themselves or take out loans if they are not sure how they will repay them. Ask God to remove envy and the love of mammon across the UK so that people do not think that they have to have everything that others have. 

The amount suppliers charge for energy was cut by Ofgem to £3,280 as wholesale prices fell. But bills will still rise in April as government help eases. Ofgem's announcement does not affect each household’s payment for energy units but it reduces costs that the government faces. Average household bills will rise from £2,100 to £3,000 annually in April because government help (Energy Price Guarantee) becomes less generous and a £400 winter discount on bills ends. The TUC’s general secretary said, ‘Energy bills are out of control. The government must cancel April's hike. As costs of wholesale gas plummet, ministers have no excuse for not stepping in.’ Under the government guarantee, a household using a typical amount of gas and electricity in England, Wales and Scotland is paying £2,500 a year. Without state support, that annual bill would have been £4,279 since January.

After a wild few months in the UK economy, the Government wants to raise more money to cover a big black hole in its accounts. Jeremy Hunt, the Chancellor, has said everyone must pay more tax. Meanwhile, a group of economists have questioned whether the ‘black hole’ in public finances must be filled with austerity and tax rises. They said that the £50bn hole entirely disappears if debts are calculated differently. When Rishi Sunak was chancellor two years ago, he used a different accountancy rule to arrive at a government debt figure. Changing it back to what it was before the 2021 Autumn Statement completely removes the black hole, according to the economists' analysis, and will put government debt back on a sustainable footing. Pray for Jeremy Hunt and all members of the treasury to be wise regardless of the accountancy rules they choose to follow.

The Chancellor announced targeted payments to help with the cost of living. The national wage will jump from £9.50 to £10.42 an hour from April; help for energy bills will be extended, but less generous. There will be cost of living support for pensioners, the disabled, and those on low incomes. Means-tested benefits, including Universal Credit, and pensions will rise in line with inflation. Social sector rent rises will be capped at 7% in the next financial year. However, the cap on social care costs due next October will be delayed by two years. A ‘temporary’ 45% tax on companies generating electricity will be applied from January, and windfall taxes on oil and gas company’s profits will increase from 25% to 35% and extend until 2028. The NHS budget will increase in each of the next two years by an extra £3.3bn, and schools will receive £2.3bn extra in 2023 and 2024.

Christmas adverts have started on TV conjuring up sentimentality, nostalgia, and joy. But as the cost of living soars, some have opted for a more muted approach to campaigning this year. John Lewis’s advert, featuring a foster family, was less about buying things and more about kindness to someone else who might need it. But some retail experts warned scenes of bountiful buffets in other ads were out of touch as families struggle with rising prices. Tesco and Lidl have both put an emphasis on price and affordability in their messaging, at a time when many families are facing rising grocery bills. ‘There clearly is a more muted tone this year, which is fitting for the time we're going through,’ said a spokesperson for Mintel.

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.