UK pledges to help families facing cost of living crisis | national politics

By DANICA KIRKA – Associated Press

LONDON (AP) – Britain’s finance chief vowed to respond to Russia’s war in Ukraine and a cost-of-living crisis hitting working families when he delivers his spring budget statement on Wednesday and faces a new inflation rate, the highest since is 30 years.

Rishi Sunak gave no details on specific policy proposals, but said Britain will continue its “unwavering” support for Ukraine and seek to strengthen the domestic economy to counter the threat from Russia.

“So when I talk about security, yes, I mean the response to the war in Ukraine,” Sunak said in a note released ahead of the statement. “But I also mean the security of a faster growing economy. The security of more resilient public finances. And security for working families as we contribute to the cost of living.”

Sunak has come under increasing pressure to announce more measures to help consumers face what one economist has described as “the biggest annual fall in household incomes in a generation”. Electricity bills are expected to rise more than 50% in April on top of a planned income tax hike and consumer prices accelerating at the fastest pace in decades.

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Inflation rose 6.2% in the 12 months to February, a 30-year high, the Office for National Statistics said on Wednesday. The surge was driven by rising energy, goods and food prices and comes as the Bank of England has hiked interest rates three times since December to try to cool inflation.

Food company Iceland chief executive Richard Walker told the BBC the pressure to keep prices down was “relentless”. He called for measures against the high energy prices.

“It’s incredibly worrying. We’re hearing from some food bank users who are turning down potatoes and root vegetables because they can’t afford the energy to cook them,” he said.

The bad news doesn’t end here. Economists now estimate inflation will peak at nearly 9% this year as the war in Ukraine continues to push up food and energy prices. That’s twice what government advisers forecast in October of 4.4%.

The spring statement Sunak will present to the House of Commons is a mid-year update on public finances. It often contains policy announcements in response to new challenges facing the government. Amid rising tensions between NATO and Russia over the war in Ukraine, some politicians are calling for increased defense spending.

The economic and security picture now looks much bleaker than it did in October, when Sunak published his budget.

Rising inflation is likely to slow down economic growth and put a strain on public finances. Some economists now expect gross domestic product to grow less than 1% next year, compared to the 2.1% forecast by the Office of Budget Responsibility when Sunak released its fall budget.

Politicians and consumer advocates have suggested the government could help ease the cost-of-living crisis by delaying a planned 1.25% income tax hike due to take effect next month.

Other proposals include cutting taxes on gasoline and diesel, increasing benefits for low-income households and more action to help people pay utility bills, which are set to rise 54% over the next month due to rising natural gas costs.

But the bleak economic outlook means Sunak will have little room for maneuver, according to Paul Johnson, director of the Institute for Fiscal Studies, an economic think tank.

“Whatever he does, we can be sure it won’t be enough to insulate us all from all the pressures on our budgets. And I think he’s probably going to be somberly honest,” Johnson wrote on Sunday. “World events have made us poorer. No Chancellor can wave a magic wand and shield us from this reality forever.”

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed or redistributed without permission.

Updated: March 23, 2022 — 12:39 pm

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