Key points
- New energy price cap set at £2,074 from July
- What should you do now?
- Bill payers warned they won't save money this winter
- Cost of living crisis is starting to abate - so why are economists not happy and what could happen next? | Ed Conway
- Another interest rate rise now 'firmly on table'
- Who's making money from rising food prices?
- Your dilemmas:I am paying my dad's mortgage, how do I get added on formally?
- Budgeting Mum: Saving for your children | Do food subscriptions save you money?| Holiday spending money| Best broadband deals
Is the government doing enough to ensure high energy bills aren't a long-term problem?
The answer, according to Energy Saving Trust chief executive Mike Thornton, seems to be no.
The country needs to use less energy and do more to secure its supply, he says - while also cutting carbon.
These are his thoughts...
"The UK government must not lose the acute sense of urgency needed to address the root causes of the energy and climate crises for the long-term while ensuring that proper support remains in place for those that need it now.
"Energy prices are still around twice as high as they were just over two years ago.
"Despite setting a target of 15% reduction in energy demand by 2030, the UK government has not set out a plan about how it will be delivered.
"They need to drive forward the systemic changes required to minimise bills, cut carbon and increase energy security for the long term. We cannot afford to wait any longer for the urgent action required."
Europe's biggest economy enters recession
Germany has formally entered a recession after its economy suffered an unexpected dip in the first quarter of the year.
The country's gross domestic product (GDP) fell by 0.3% in the period from January to March, data released by the Federal Statistical Office shows.
The figures will be a blow to the government, which last month boldly doubled its growth forecast for this year, saying GDP will rise by 0.4% - up from a 0.2% expansion predicted in late January.
Economists said high inflation hit consumer spending, with prices in April 7.2% higher than a year ago.
GDP reflects the total value of goods and services produced in a country.
What should people do now?
If you've been following along you'll see this is our second such post - we're doing a fresh one as we have a few new expert contributions, including from Uswitch.
Call your provider
Uswitch says that anyone in a fair amount of credit come July should contact their energy provider to discuss lowering their direct debit.
Natalie Mathie, energy expert at the comparison site, says: "The average household can expect monthly direct debits to be set at £173, although typical seasonal usage may only see you spend £110 a month over the summer."
A note of caution
It is also worth noting that there will be no government help this winter - such as the £66 monthly payments most people received late last year and into this one.
Still, Ms Mathie says the price cap reduction is "good news" but people should be aware that now the government's Energy Price Guarantee is going (from the end of June), "volatility" reigns as the price cap is updated every three months.
Switching deals?
There is now a feeling among analysts that fixed-rate deals could start returning to the market - so you might be able to get a deal cheaper than the price cap.
"This is a watershed moment for energy suppliers who can now look to start offering fixed deals again, given the market conditions - and would help to encourage genuine competition in the retail energy market," says Ms Mathie.
"After a long spell of having no option but to try to reduce their usage at home, now is the time for energy customers to start paying attention to the market again."
Alice Haine, personal finance analyst atBestinvest, agrees: "While there are no fixed deals available right now, that may change in the days and weeks ahead if suppliers start offering deals though any decision to fix needs careful consideration."
Energy price cap 'marks a major milestone' in inflation bid, says Sunak
Rishi Sunak has shared his view on today's energy price cap reduction, hailing it a "major milestone" in the government's work to halve inflation.
"Welcome news that the energy price cap is coming down, reducing energy bills from July by nearly £430 on average per year," the prime minister tweeted.
"It marks a major milestone in our work to halve inflation."
Mr Sunak has pledged to reduce inflation to 5% this year - but ONS figures released this week shows inflation is coming down less quickly than economists expected.
Inflation fell into single digits - 8.7% down from 10.1% - for the first time since last summer yesterday. But core inflation, which excludes volatile elements such as energy, food and tobacco prices, and therefore gives a clearer picture of what's going on beneath the surface, rose to 6.8% - the highest rate since March 1992.
Business round up: Cineworld, Pets At Home and Youngs
Moving to wider cost of living and business news now, and we have some updates from a few household names...
Cineworld is expecting to exit bankruptcy in July after it secured further backing from lenders for its restructuring plan.
The troubled cinema chain said the plan now has support from lenders controlling around 99% of its legacy lending facilities and at least 69% of its outstanding debt.
The group is moving forward with plans to restructure its roughly $5bn (£4bn) debt pile in an effort to exit the Chapter 11 bankruptcy during the first half of this year.
Pets At Home has seen its annual profits rise after animal owners splurged on expensive toys and essentials for their furry companions.
The company, which also offers grooming and veterinary services, said it expects its 2024 underlying profit before tax to come in at £136m.
Youngs has hailed positive sales, saying some of the cost inflation weighing on the sector, such as soaring food prices, is "starting to ease".
The pub group, which runs 227 venues, saw sales rise by almost a fifth over the year to 3 April and have remained buoyant in recent weeks.
It warned that it still faces "challenging times" as a result of high inflation and the resumption of train strikes, but that the Rugby World Cup will an opportunity to boost sales.
Where are gas prices now?
We know the energy price cap reduction is down largely to falling wholesale gas prices.
This chart shows the price of wholesale gas in the UK has fallen from record highs, but remains above pre-crisis levels
What could be done to bring bills down to previous levels?
By Paul Kelso, business correspondent
There are several options that might bring household bills down but none that avoid someone having to meet the real cost of energy.
Ofgem supports the introduction of a "social tariff" that would offer a reduced rate to the least well-off households.
The regulator is already talking to the water industry and local authorities about identifying households that struggle with paying for basic utilities and ministers have made encouraging noises, but it would have to be underwritten by the taxpayer, or by an additional charge on other bill payers.
There are other technical changes that could remove some cost.
So-called "green levies" applied to electricity costs could be switched to gas, more accurately reflecting the environmental impact of generation, but the taxpayer would have to fill the gap.
Ultimately elevated energy prices are the price ofremoving Russian oil and gas from our energy mix, a hole we cannot yet fill from the growing renewables sector and cost of war that we may have to get used to.
Read more of Kelso's thoughts on today's price cap news here...
Millions of households trapped in fuel poverty
Millions of households will still be trapped in fuel poverty despite the energy price cap reduction, a charity has warned.
In case you're just joining us, the cap will be lowered from the current £3,280 per year to £2,074 as of 1 July.
But for National Energy Action, the decrease does not go far enough and prices remain "more than two-thirds higher than the start of the energy crisis" with "two million more households trapped in fuel poverty."
Below it demonstrates some of the rises we have seen since October 2021...
"More than two and a half million low income and vulnerable households are no longer receiving any government support for unaffordable bills," says its chief executive Adam Scorer.
"For them, the energy crisis is far from over."
Is there any extra support available if you're struggling to pay?
The £400 discount which all households in England, Wales and Scotland received to offset soaring winter bills has ended.
Only those in receipt of means-tested benefits, pensioners and those with disabilities are currently set to receive further help with their energy bills, amounting to £900, £300 and £150 respectively.
This is how the price cap has changed since 2018
Ofgem's reduction has significantly decreased the energy price cap from its April level, but if you look at the chart below you can see it's still a lot higher than before the pandemic...
FAQs
Will the cost of living go down UK? ›
The Office for Budget Responsibility is warning of a big drop in living standards over the next two years. Once inflation is taken into account, household disposable income is set to fall by 5.7% between 2022 and 2024. That is the largest two-year fall since records began in the mid-1950s.
What is the cost of living crisis in the UK? ›The 'cost of living crisis' refers to the fall in 'real' disposable incomes (that is, adjusted for inflation and after taxes and benefits) that the UK has experienced since late 2021. The government has responded to the crisis with several packages of support throughout this and last year.
Is UK more expensive to live than USA? ›The average rent per month for a one-bedroom flat in the UK is £700. In the USA it is $1,169, which works out to around £940 per month, making the UK a clear winner here.
Is it more expensive to live in England than the US? ›Overall, the cost of living in the U.K. is 0.49% lower than in the United States. Rent overall is about 22.55% lower in the U.K. You would need $4,700 per month to finance a modest lifestyle in London, compared to $5,822 for the equivalent lifestyle in New York City.
Is the UK becoming too expensive to live? ›The cost of living increased sharply across the UK during 2021 and 2022. The annual rate of inflation reached 11.1% in October 2022, a 41-year high, before easing in subsequent months. It was 10.1% in March 2023, the seventh successive month of double-digit inflation.
Why is UK cost of living so high? ›Many of the reasons are the same - increased energy costs, shortages of goods and materials and the fallout from Covid. The annual inflation rate for countries which use the euro is estimated to be 6.9% for March, down from 8.5% in February. Inflation has been falling in the US too.
Why is Britain facing a cost of living crisis? ›This is caused in part by a rise in inflation in the UK, as well as the economic impact of ongoing issues such as the COVID-19 pandemic, Russia's invasion of Ukraine, and Brexit. While all in the UK are affected by rising prices, it most substantially affects low-income persons.
Is it safer to live in UK or USA? ›Is the UK safer than the USA? The UK has a lower overall crime rate than the US, but the US has a lower rate of certain types of crime, such as property crime. In terms of violent crime, the US has a higher rate than the UK.
Which country is better to live in UK or USA? ›The UK has a more developed economy than the US, which means that it's easier to find a job there. Also, you'll have access to better salaries and benefits in general because there are more companies looking to hire foreigners with skills that they don't have themselves.
Is US food cheaper than UK? ›Cost of Food
Generally speaking, the USA tends to be a little more expensive when it comes to grocery shopping. Bread, rice, and many fruits and vegetables are mostly less expensive in the UK. However, keep in mind that foods such as milk, chicken breasts, and eggs will cost you between 20-40% more in the UK.
Can I live in England as an American? ›
Contrary to popular belief, you need a visa to move to the UK if you are an American citizen. The only exception to this is that if you are visiting with no long-term plans, you can stay in the UK without a visa for six months – but you cannot work during your visa-free stay.
Is it cheaper to live in Canada or UK? ›While the cost of living in Canada is on the whole higher than the UK, the national average salary of both countries is broadly similar.
Is it cheaper to live in Ireland or the US? ›At a country level, the cost of living in Ireland, including housing, is only 10% lower than the cost of living in the USA.
How much money do you need to live a good life in UK? ›The average wage that was seen as a sum on which people could live comfortably is £16,300 more than the £33,000 median annual pay for full-time employees in the tax year ending in April 2022, according to Office for National Statistics (ONS) figures.
Which state is cheaper to live in UK? ›Durham is a popular, one of the cheapest places to live in the UK., especially for students. Durham has many good law schools and universities, and living costs are reasonable. The average rent of a 1BHK apartment in in County Durham is £650 per month, while outside the city it is £360 per month.
How much money is enough to live in UK? ›The average cost of living as a family of four is around $3,135(£2,268) without house rent. As a single person or student, the estimated cost of living per month in the UK is $900(£651) without rent.
Where is the most expensive country to live? ›Monaco is the most expensive country to live in, with a cost of living of $3,585 per month. Other expensive countries to live in include the Cayman Islands, Switzerland, and Singapore, all of which have a cost of living of over $2,000 per month.
Why is income so low in the UK? ›In short, UK salaries tend to be lower than the UK due to a number of factors. These include pension benefits, holiday benefits, and, most significantly, healthcare and social welfare. In the UK, we pay higher taxes because a number of things in the UK are subsidised or free, such as healthcare.
Why is UK inflation higher than Europe? ›Gas prices
Rising energy prices hit UK households and businesses hard - harder than in other European countries. According to Reuters, Britain's high rate of energy inflation shows it's over-reliant on gas for heating homes. It also reflects the poor energy efficiency of its housing stock.
For instance, the inflation rate in the United States has hovered between 8 and 9 percent in the past months, signifying a rising cost of goods across the country. A rising cost of living causes pain even in wealthy countries.
Is inflation worse in the UK than elsewhere? ›
"Inflation in the UK has risen further and stayed higher than elsewhere as the UK has experienced the worst of both worlds: a big energy shock like the euro zone and labour shortages - even worse than the U.S.," said Ruth Gregory, deputy chief UK economist at consultancy Capital Economics.
Will food prices go down in 2023 UK? ›Food retailers have said they expect prices to rise in 2023 overall but with the rate of inflation declining through the year and some products which have seen the sharpest rises falling in price.
Will the cost of living go down 2023 UK? ›Global recovery from the coronavirus (COVID-19) pandemic is putting further pressure on prices. In the UK, the price of consumer goods and services rose at the fastest rate in four decades in the year to October 2022. The annual inflation rate fell to 7.8% in the 12 months to April 2023, down from 8.9% in March 2023.
Will inflation go down in 2023 UK? ›We expect inflation to fall quite quickly, to around 5% by the end of this year and then meet our 2% target by late 2024. Why is inflation expected to fall quickly during 2023? What is the Bank of England doing to help bring inflation down? How does raising interest rates lower inflation?
Is it wise to move to UK in 2023? ›There are many developmental possibilities for growth and career enhancements within the country. Employment in the country has seen steady growth, providing better lifestyle prospects. This factor and many others add to the demand for the country, making it an ideal place to migrate from India to the UK in 2023.
Why is the UK in a cost of living crisis? ›This is caused in part by a rise in inflation in the UK, as well as the economic impact of ongoing issues such as the COVID-19 pandemic, Russia's invasion of Ukraine, and Brexit. While all in the UK are affected by rising prices, it most substantially affects low-income persons.
How bad will inflation be in 2025? ›After hitting a new high of 5%, UK interest rates are expected to fall sharply in the coming two years with rates possibly between 3.5% and 4% in 2024 before falling to between 3% and 3.5% in 2025. UK interest rates are expected to stabilise between 3.0% and 3.5% between 2025 and 2027.
What will inflation be in 2023 to 2024? ›Global inflation is expected to fall from 8.8 percent in 2022 to 6.6 percent in 2023 and 4.3 percent in 2024, still above pre-pandemic (2017–19) levels of about 3.5 percent.
Is food cheaper in America than UK? ›Cost of Food
Generally speaking, the USA tends to be a little more expensive when it comes to grocery shopping. Bread, rice, and many fruits and vegetables are mostly less expensive in the UK. However, keep in mind that foods such as milk, chicken breasts, and eggs will cost you between 20-40% more in the UK.
Why are things more expensive in UK than us? ›
Tax rates are important for goods like alcohol, petrol and cigarettes with UK tax rates higher than European / US rates. However, although the UK is expensive in some areas, in other areas it is cheaper. e.g. US is much cheaper to eat out, but in US you have to pay private healthcare insurance.