Bank of England again raise interest rates while households continue to grapple with cost-of-living crisis

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Bank of England again raise interest rates while households continue to grapple with cost-of-living crisis

Lifetime news

Posted on: 02/02/2023

Just as oil and gas giant Shell announce record profits, and UK households continue to struggle amid the harsh reality of a historic cost-of-living crisis, the Bank of England (BOE) has raised interest rates for the 10th time in a row.

The BOE also admits that the UK economy will ‘fall slightly’ in 2023 but the ‘recession’ will be shorter than previously thought.

The half a percent interest rise – a decision taken by the Monetary Policy Committee on Thursday – has lifted the rate to 4%, the highest since the autumn of 2008.

That will lead to another increase in costs for those UK people – approximately 2.2 million – who are on a variable rate mortgage.

It will also in all likelihood result in a significant jump in bills for more than a million other UK households who must renew their fixed-rate mortgage deals sometime this year. Their repayments could be considerably more than what they are ‘shelling out’ currently.

And talking of Shell….there is fierce public anger that while the UK population – including businesses – are struggling to pay their bills, as the cost-of-living crisis cuts deeply into household budgets, the global oil and gas company posted a profit of $9.81 billion in the final quarter of 2022, compared with $6.4 billion at the same time in 2021. It is their highest profit return in its 115-year history.

The surge in wholesale gas prices, which many people have linked to the continuing war in Ukraine, has boosted Shell’s profit margin, as it has many other energy companies.

Energy prices began to climb after the end of the Covid-19 lockdowns, but rose sharply in March 2022 after the Russian invasion of Ukraine led to worries over supplies.

Meanwhile, the Bank of England’s reasoning for raising the UK interest rate is to combat inflation. The UK consumer price inflation did ease slightly to 10.7% in November 2022, down from 11.1% in October.

The BOE’s Monetary Policy Committee convene eight times a year to decide on interest rates. The next meeting is scheduled for March 23rd.

It has also been announced that in April 2023 households in England and Wales are facing the biggest increase to water bills in almost 20 years.

Industry body Water UK has said that the ‘typical’ water bill will increase by 8p a day, or £31 a year, to an average of £448 per year (a 7.5% rise). However, Water UK has pointed out that the increase is less than current inflation figures.

The respected consumer group Which released research this week that showed 2.3 million UK households defaulted on some sort of bill payment in the first month of 2023. That was up from 1.9 million in December 2022.

And according to the Consumer Insight Tracker approximately six out of every 10 UK households have made at least one adjustment with their finances, such as cutting back on food or fuel, dipping into any savings, or selling stuff that is no longer deemed essential.

  • If you need any help with your finances, such as budgeting, saving wherever possible, and putting together a financial plan that could aid you in avoiding potential pitfalls then please telephone Lifetime on 01226 208600 or take a look at our website, lifetime-fm.com
  • A mortgage is also a key part of your overall financial plan. If you need any help and guidance with your mortgage needs then please get in touch with Lifetime Mortgage Adviser Scott Kershaw, telephone: 01226 206800.


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