Advertisement
Social Justice

The Bank of England says the cost of living crisis will last until 2023

Cost of living pressures on households will not ease until 2023, the Bank of England governor said – and will not stabilise until 2024.

The cost of living crisis won’t ease for another year and could last until 2024, according to the governor of the Bank of England.

Andrew Bailey, speaking to the BBC after the bank doubled interest rates to 0.5 per cent, said workers will face real-terms pay cuts.

“We’re going to start coming out of it in 2023, and two years from now, we expect inflation back to a more stable position,” he said.

Subscribe to The Big Issue

From just £3 per week

Take a print or digital subscription to The Big Issue and provide a critical lifeline to our work.

“It is going to be a difficult period ahead, I readily admit, because we are already seeing, and we’re going to see, a reduction in real income.”

Household budgets are facing unprecedented pressure after inflation hit a 30-year high in December, despite stagnating wages. Soaring energy bills forced people to choose between heating and other essentials such as food – which is already increasing in price. Two-thirds of British adults have already been affected by the cost of living crisis in 2022, according to new data

And after Ofgem announced the energy price cap would rise by 54 per cent this April – adding £700 to the average annual fuel bill – people in the UK will face the biggest drop in living standards since 1990, when records began.

Advertisement
Advertisement

Post-tax incomes will fall by two per cent this year, the bank said. But Bailey – who was paid more than £575,000 in 2020 – warned workers against bargaining for pay rises to counter the rising cost of living because employers would pass on their higher costs to customers in the form of price rises, driving inflation up further.

“We do need to see a moderation of wage rises,” Bailey said. “That’s painful. I don’t want to in any sense sugar that message, it is painful.

“I’m not saying ‘don’t give your staff a pay rise’. This is about the size of it.”

Stop Mass Homelessness

Help us stop mass homelessness

Unless we act, the UK is facing a homelessness crisis 
this autumn.

This week chancellor Rishi Sunak announced a support package to help families through the cost of living crisis.

It includes April council tax rebates of up to £150 for people living in bands A-D and a £200 “discount” on October energy bills for all households, which will function as a loan to be paid back in £40 instalments over five years.

Analysts warned the proposals are “poorly targeted” and would not be effective enough to help low-income households avoid destitution.

Advertisement

Bigger Issues need bigger solutions

Big Issue Group is creating new solutions through enterprise to unlock opportunities for the 14.5 million people living in poverty to earn, learn and thrive. Big Issue Group brings together our media and investment initiatives as well as a diverse and pioneering range of new solutions, all of which aim to dismantle poverty by creating opportunity. Learn how you can change lives today.

Recommended for you

Read All
Labour would bring in free breakfast clubs at every primary school in England
Childcare

Labour would bring in free breakfast clubs at every primary school in England

Child poverty in the UK: the definitions, causes and consequences in the cost of living crisis
Child poverty

Child poverty in the UK: the definitions, causes and consequences in the cost of living crisis

Anti-poverty organisations demand 'direct support' for UK's poorest households
Social Justice

Anti-poverty organisations demand 'direct support' for UK's poorest households

UK poverty: the facts, effects and solutions in a cost of living crisis
Poverty

UK poverty: the facts, effects and solutions in a cost of living crisis

Most Popular

Read All
How much will the Queen's funeral cost?
1.

How much will the Queen's funeral cost?

The internet's best reactions as Kwasi Kwarteng cuts taxes and lifts the cap on bankers' bonuses
2.

The internet's best reactions as Kwasi Kwarteng cuts taxes and lifts the cap on bankers' bonuses

From benefit claimants to bankers: Here’s what the mini-budget means for your pay packet
3.

From benefit claimants to bankers: Here’s what the mini-budget means for your pay packet

5 ways anti-homeless architecture is used to exclude people from public spaces
4.

5 ways anti-homeless architecture is used to exclude people from public spaces

To mark our new Arctic Monkeys exclusive interview, we’ve picked out some of our best band and musician interviews from the past, featuring Arctic Monkeys (2018), When Jarvis met Bowie, The Specials, Debbie Harry and more. Sign up to our mailing list to receive your free digital copy.