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More fear and unease for those on lowest incomes - JRF responds to Bank of England projections and interest rates

Rebecca McDonald, Chief Economist at the Joseph Rowntree Foundation responds to Bank of England projections and interest rates

“The combination of rising prices and higher interest rates make this an anxious time for everyone, but this is much more serious for those on the lowest incomes, already facing impossible choices between heating their homes and feeding their families. The spectre of much higher unemployment and a prolonged downturn adds to the sense of fear and unease about the next year or so, which is why a swift and firm decision to uprate benefits in line with inflation, before April, is crucial.

On inflation:

“Inflation staying high and continuing uncertainty around energy support combines to present people with a frightening prospect – especially as we know that food prices are now rising faster than at any point since 1980. Today’s projections point to a prolonged period of pain with little hint of relief.

“It’s very difficult for those on the lowest incomes to plan how they will get through this, but the Government can give some certainty by uprating benefits in line with inflation, as he promised to do as Chancellor. As well as upholding that pledge the uprating should now be brought forward rather than expecting people to struggle on until April before their income reaches anything approaching their costs”.

On interest rates:

“Higher interest rates are a necessary step to help to tackle rising inflation but do bring significant pain in the here and now. With interest rates reaching their highest point for a generation, people who are already in poverty could be pulled in deeper due to the cost of getting into expensive debt to afford essentials. There is also a larger group of people at risk of being pulled into poverty due to the impact that rate rises have on housing costs.

“We need to see a clear plan in the fiscal statement on the 17th to bring true stability to lives which are currently being lived on shifting sands. Without clear, consistent action this will be an anxious winter followed by extremely lean years for many on low or even middle incomes.”

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