Unchanged bank rate is a blow to people struggling with squeeze on living standards

Responding to today's Bank of England decision to keep the interest rate at 4.5%, JRF Senior Economist Rachelle Earwaker said:

“Today’s announcement that the interest rate remains unchanged represents a blow to everyone struggling with the squeeze on living standards. Higher rates for longer mean bigger mortgage repayments and paying back more in loans through interest. 4 million low-income families currently hold loans because they cannot afford the basic essentials any other way.

“We projected, as a result of the last budget, that the average family will be £770 worse off in real terms by October 2029, with housing costs playing a big role in this decline in living standards. The economic conditions since have worsened and become more uncertain. Families will feel this fall in living standards sharply next month when a flurry of cost increases, from council tax to energy bills and water bills, all come into effect. The road ahead looks very dire for the Government's own living standards milestones.

“The last thing the Government should have done, with living standards under threat, is move to restrict the incomes of disabled people even further through £5 billion worth of planned disability benefits cuts. Amid speculation that further huge spending cuts are on the cards for next week's Spring Statement, ministers should instead look at the other levers available if they want to stay within their self-imposed fiscal rules. They should look to the tax system before taking from the services or income people desperately need right now.”