Category Archives: UK cost of living crisis

Risk of UK recession at next general election is 60%, says thinktank

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Economic experts say it will take until third quarter of 2024 for output to return to pre-pandemic peak

Rishi Sunak will fight the next election against a backdrop of an economy suffering from five years of lost growth and a widening of the gap between the prosperous and less well off parts of Britain, a leading thinktank said on Wednesday.

The National Institute of Economic and Social Research (NIESR) said it would take until the third quarter of 2024 for UK output to return to its pre-pandemic peak and that there was a 60% risk of the government going to the polls during a recession.

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UK retailers forced to slash prices after July washout and interest rate rise

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British Retail Consortium and KPMG report shows steep annual drop in volume of sales and a rise in promotional offers

Britain’s hard-pressed retailers are being forced to slash their prices to drum up business after dismal summer weather and ever-higher interest rates combined to depress consumer spending in July.

The monthly health check of high street and online spending patterns from the British Retail Consortium and the consultancy KPMG reported a steep annual drop in the volume of sales and an increasing number of retailers offering promotional offers to woo consumers reluctant to part with their cash.

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More pain in store – tough-talking Bank raises UK interest rates and a few eyebrows

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Rise to 5.25% comes as no surprise but Bank of England’s language will frighten many

If it isn’t hurting it isn’t working. That was the message from John Major, then chancellor, in 1989 during a previous period when interest rates were being used to combat high inflation. And it was the message rammed home by the Bank of England on Thursday.

Any hard-pressed households or struggling business looking for comfort from Threadneedle Street would have been disappointed by news that the pain will continue and is likely to intensify. Interest rates may not yet have peaked.

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Asda publishes daily petrol prices online after pressure from watchdog

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Other retailers say they are working with government on implementing industry-wide comparison service

Asda has begun publishing local fuel prices at its forecourts online, becoming the first retailer to launch the service following pressure from the competition watchdog and MPs over widened profit margins at the pump.

The Competition and Markets Authority (CMA) has called on the government to introduce legislation to ensure fuel retailers provide up-to-date pricing for a new industry-wide comparison service.

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Private rents outside London have risen by a third in four years, data shows

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Rightmove says average advertised rent in Great Britain is at all-time high of £1,231 a month outside the capital

Private rents in Great Britain have soared to fresh all-time highs and the average amount being asked for outside London is now a third higher than four years ago, figures from Rightmove show.

Despite rental growth running well ahead of inflation, the property website said homes were continuing to be let quickly, with many landlords “still being met with long queues of prospective tenants wanting to view and rent their property”.

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Exceedingly good news? Mr Kipling owner says UK food inflation has peaked

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Premier Foods reports 21% rise in sales but pledges no more price rises this year

The maker of Mr Kipling cakes, Oxo cubes and Bisto gravy granules has said it believes recent food cost inflation has peaked, and it is not planning any more price rises for its food products for the rest of the year.

The news came as owner Premier Foods reported a 21% increase in sales in the first quarter of the financial year, compared with a year earlier.

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Who has been offered what? A breakdown of public sector pay deal

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The government has offered rises of between 5% and 7% to workers including teachers and doctors

Millions of public sector workers ranging from teachers to prison offers are in line for pay rises of between 5% and 7% as part of a government offer that could head off some strikes.

Before the announcement, ministers had stressed the need for “discipline” at a time of rising inflation. Rishi Sunak said pay increases could not “fuel the fire” of inflation running at 8.7%.

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‘It’s like a hostile environment’: London’s creative core at risk as artists in poverty quit

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UK capital as ‘huge generator of wealth’ under threat as a third of visual artists struggle to pay for studios

What makes Britain’s capital city so magnetic? Familiar landmarks? The nightlife? Or its financial, fashion and art trades? Maybe. But behind the glamour and money a network of artists is giving London the crucial appeal of a place where new things happen, while working on the edge of poverty.

A survey released on 13 July is to reveal just how close many of London’s visual artists are to giving up on a career that has pushed them to the bottom of the pile. Close to a third of those asked said lack of funds might force them out within five years. And just under half said they cannot afford to build savings or pay into a pension plan.

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Keir Starmer refuses to commit to free school meals pledge

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Labour leader says ‘money is a big factor’ as he also declines to promise 6.5% pay rise for teachers

Keir Starmer has refused to commit to supporting free school meals for all primary school children, as he stuck to a tough fiscal position despite pressure from inside and outside of his party.

The Labour leader also declined to commit to a 6.5% pay rise for teachers as he urged the government to resolve the dispute at the centre of strike action.

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M&S offers money off children’s clothes in exchange for used school uniforms

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Promotion is designed to help parents who are struggling to afford clothes amid cost of living crisis

Families are being offered money off children’s clothes in Marks & Spencer if they donate school uniform hand-me-downs, as part of a push designed to help parents struggling to afford them amid the cost of living crisis.

The second-hand uniform collected will be sold via Oxfam’s high street chain as well as via a new “back-to-school” eBay shop. The tie-up is an extension of M&S’s existing “shwopping” partnership with Oxfam, in which customers drop off old clothing in exchange for loyalty card perks.

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Bank of England’s quantitative easing scheme let ‘inflation take root’

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UK economy became reliant on cheap money due to the Bank’s actions, warns former permanent secretary to the Treasury

The Bank of England’s quantitative easing money-printing programme enabled high inflation to take root in Britain, while creating “windfall gains” for the rich, a former Treasury mandarin has warned.

Nick Macpherson, who was permanent secretary to the Treasury under the last Labour government and during David Cameron’s premiership, said the central bank’s £895bn bond-buying stimulus programme had gone “too far” and made the inflation shock hitting Britain worse.

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‘We’re kicking ourselves that we didn’t do a five-year mortgage fix in 2021’

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Anguished families talk about how the Bank of England’s 13th consecutive interest hike is affecting them – and their fears for the future

Liam, 36, a senior IT manager and married father-of-one from Newcastle upon Tyne, is one of millions of homeowners whose mortgage payments will rise even higher after the Bank of England on Thursday put up the base interest rate to 5% – a 15-year high.

Together with his husband, Liam bought his four-bedroom house in 2019 for £269k, and the couple’s three-year mortgage deal, refixed at 1.64% in 2020 just before the first lockdown, expired in March.

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From Brexit to Beyoncé: why UK inflation is still so painfully high

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The cost of living is falling in Europe and the US but is still rising in Britain. We look at the major culprits

The Bank of England has struggled to understand why inflation remains high in the UK. It has fallen in France, Germany, the US and especially Spain, where inflation dropped to 2.9% in May compared with the UK figure of 8.7%. Here we look at the many reasons for the current crisis.

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Ever-higher mortgage rates will leave Rishi Sunak feeling low

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Tories are likely to bear the brunt of homeowning voters’ anger in marginal constituencies in next year’s election

As the former chancellor who warned presciently during last summer’s leadership contest that Liz Truss would crash the economy, Rishi Sunak’s calm competence was meant to be his key electoral selling point.

But after Thursday’s half-point rate rise by the Bank of England left thousands of voters facing eye-watering mortgage hikes, a shirt-sleeved Sunak was reduced to insisting he was “totally, 100% on it” when it comes to fighting inflation.

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Rishi Sunak says he is ‘totally, 100% on it’ in battle against inflation – UK politics live

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Prime minister says he knows people will be anxious about rate rise but ‘it is going to be OK’

Rishi Sunak has posted a thread on Twitter setting out what the government is doing to help people with the cost of living. It starts here.

He ends by saying “if we can hold our nerve” he is confident the plan will deliver.

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Why is inflation in the UK worse than in other major economies?

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While the rate has fallen from its October peak of 11.1%, the figure for May is expected to stay stubbornly high

UK inflation is expected to have remained stubbornly high in May despite a string of forecasts earlier this year predicting a sharp fall in response to tumbling energy prices.

Official figures are expected to show on Wednesday that the UK’s consumer prices index (CPI) eased slightly last month, to 8.4%, from 8.7% in April.

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Grocery inflation in Great Britain eases to 16.5% but remains high

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Supermarket inflation slows to lowest rate this year, although households still under pressure

Supermarket inflation in Great Britain has eased to its lowest level this year but remains high, forcing people to change how they eat and cook as household budgets are strained, according to the data firm Kantar.

Grocery inflation declined to 16.5% in the four weeks to 11 June, down from 17.2% last month and a record 17.5% in March. It remains at its sixth-highest level since the financial crisis in 2008, Kantar said.

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Ban on two-for-one junk food deals to be delayed for two more years

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Rishi Sunak says he is suspending anti-obesity measure to avoid restricting consumer options during cost of living crisis

The government is to delay its planned ban on two-for-one junk food deals – a key anti-obesity measure – for another two years amid the cost of living crisis.

Rishi Sunak will shelve the expected measure targeting multi-buy promotions on products high in fat, sugar or salt (HFSS) to avoid restricting consumer options while prices remain high.

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UK government urged to outline plans to help with winter energy bills

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Report by cross-party MPs criticises previous ‘lack of urgency in addressing market failures’

MPs have urged the government to set out its plans to protect households from high energy bills this winter as they said about 1.7 million people, including some of the most vulnerable groups, had been left waiting too long to receive previous support.

The public accounts committee (PAC) said that although schemes were introduced quickly, the government “did not have the bandwidth” to make sure help reached all groups in a timely fashion.

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Rise in UK breweries going bust amid thirst for cheaper craft beers

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45 breweries, mostly smaller makers, enter insolvency in last 12 months, up from 15 the previous year

The number of UK breweries going out of business has tripled in the past year, with smaller craft beer manufacturers most at risk as consumers opt for cheaper options during the cost of living crisis, according to research.

In total, 45 breweries entered insolvency in the 12 months ending 31 March, compared with 15 in the previous year, according to the most recent official Insolvency Service statistics analysed by Mazars, an audit, tax and advisory firm.

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