The cost of living has increased exponentially in the UK and it is not just one aspect of life that has increased but it is all parts. Petrol and diesel is on the rise, energy bills are soaring through the roof and even pints are going up! It is a tough time for many Brits considering wage is not flowing the same suit for many people and it is getting harder to make ends meet.
The big wigs in charge of the country and outspoken out of touch celebrities or “influencers” of the world will tell you otherwise and life is easy if you just make cut backs on Netflix or sausage rolls. The average Brit is not irresponsible with their money, they just cannot afford everything in the world that we are told we are supposed to do.
So the big question is, will it be stopping anytime soon and how will interest rates be now we have seen increases on modern day living?
What are the interest rates?
Interest rates in the UK have been massively low since the banks crashed in 2008. This was done to encourage people and firms to borrow money or spend money but avoiding prices rising on every day goods. However, since the pandemic started in March 2020 the interest rates have grown. In March 2020 they jumped from 0.1% to 0.5%. A huge hit for the UK person.
Now in March 2022 there seems to be no stopping. They have once again risen and are now at 0.75%.
Why the increase?
The increase was announced a day after the US for the first time since 2018; with many trading forex online it was huge news. The US and UK are closely linked and with the UK now out of the EU, they will follow the movements are the US a lot more in the market.
There is also the ongoing situation with Russia. Since the unnecessary invasion of Ukraine by Vladimir Putin, the rest of the world has reacted and placed sanctions on the Russians. With this comes the oil and gas that the UK get from Russia hence a massive increase.
Could it affect me?
Obviously, many will be affected if they have borrowed from the bank in terms of mortgages if they do not have fixed rates but it does look like interest will be hitting them the hardest
Many economists expect inflation to reach 7% this year, which would be its highest level since March 1992.
Even if you do not have a mortgage, it can still affect you if you have a credit card, a bank loan or a car loan.
Is there any way out?
It seems like a desperate situation with everything on the rise but this is where the government can control it. Energy prices, interest rates and fuel prices can all be helped and subsidised by the government. It might seem idealistic but if you look at France they charged EDF the company for the energy increase and with regards fuel prices, the people protested and the government listened.
It is unlikely that this Conservative government will be as understanding.
