London Daily

Focus on the big picture.
Tuesday, Nov 18, 2025

Cost of living for UK’s poorest could be 10% higher by autumn, thinktank warns

Cost of living for UK’s poorest could be 10% higher by autumn, thinktank warns

Resolution Foundation says prolonged Russian invasion of Ukraine would drive up food and energy prices
The poorest households in the UK could see their cost of living jump by as much as 10% by this autumn if Russia’s invasion of Ukraine leads to a prolonged conflict, a thinktank has warned, as Rishi Sunak faces mounting pressure to tackle the cost of living crisis.

The chancellor will deliver his spring statement on 23 March. He is reluctant to commit to significant extra spending, but Treasury sources concede he has acknowledged the necessity to take some limited action.

Options could include increasing benefits in April by more than the planned 3.1%, a new cut in the taper rate for universal credit so that claimants keep more of their earnings, or an increase in the national insurance threshold.

Labour and many Conservative MPs have urged Sunak to scrap the 1.25 percentage point rise in national insurance contributions, earmarked for health and social care, but government sources insist it will go ahead as planned next month.

The Resolution Foundation said the public finances look healthier than expected at the time of the autumn budget, with borrowing on course to be £30bn lower than forecast.

However, the economic outlook has deteriorated significantly. At the time of the budget, inflation was expected to fall back later in the year. Instead, the Resolution Foundation said food and energy prices were likely to continue to be driven higher, pushing inflation to a “second peak” above 8% in the autumn.

With the poorest tenth of households spending twice as much of their budget on food and fuel as the richest, they are likely to be hardest hit, experiencing an inflation rate of perhaps 10%.

James Smith, the research director at the thinktank, said: “The chances of a living standards recovery this year are receding as rapidly as inflation is rising, and the risk of another recession is looming into view. The chancellor will therefore need to make some tough, and potentially expensive, choices in how to respond.”

Separate analysis by another thinktank, the New Economics Foundation (Nef), suggests that even by April almost half of all children will be living in households that are unable to meet the cost of some basic necessities.

Nef found that a third of households, or 23.4 million people, would have to cut back on some basics, such as food or heating, as their income falls short of what they would need to provide a decent minimum standard of living – typically by as much as £8,000. As many as 48% of all children will fall into households in this category, Nef calculates.

Sam Tims, an economist at Nef, said: “The cost of living is increasing faster than at any point in recent history. While all families are set to feel a squeeze come April, the lowest-income households will be hit proportionately harder. There is little time left for the chancellor to take action to avert the worst real-terms incomes squeeze in 50 years.”

Nef’s projections are based on the minimum income standard – the budget needed to afford what members of the public believe are essentials. It is calculated by Loughborough University’s Centre for Research in Social Policy.

The consumer expert Martin Lewis said last week that some families would “simply starve or freeze” as a result of unmanageable increases in their cost of living, particularly driven by energy prices.

Sunak announced measures in February aimed at cushioning the blow, as the energy regulator, Ofgem, announced that the price cap that puts a ceiling on average bills would rise by almost £700.

His package included a £150 council tax rebate for properties in bands A to D, and a £200 cut in energy bills from October, to be paid back over five years.

However, the scheme was predicated on energy bills falling back again from next year, something that has now been thrown into doubt. It emerged last week that the business secretary, Kwasi Kwarteng, had been asked by Downing Street to draw up options for beefing up the scheme, though these would not be enacted until the autumn.

Meanwhile, the shadow transport secretary, Louise Haigh, warned that rising global oil prices in the wake of Russia’s invasion of Ukraine meant the average family would spend an extra £386 on petrol in the year ahead.

“This is a savage extra cost for millions of working people,” she said, renewing Labour’s call for the government to impose a windfall tax on oil companies profiting from surging prices.

“The Conservatives could help working people being hit hard by soaring prices; instead they’ve rejected the choice of a one-off windfall tax on oil and gas producers raking in billions. And to add insult to injury, within weeks they want to clobber families with a huge tax hike,” she added.

The Liberal Democrat leader, Ed Davey, used his speech at his party’s spring conference in York on Sunday to renew his call for a VAT cut as a response to surging inflation.

“The war in Ukraine has turned a cost of living crisis into a cost of living emergency. That’s why I’ve called for an emergency measure,” he said. “I’ve called for a cut in VAT, right now. A fair tax cut – worth £600 a household. To help families. To help businesses. To help our economy.”
Newsletter

Related Articles

0:00
0:00
Close
UK Unveils Sweeping Asylum Reforms with 20-Year Settlement Wait and Conditional Status
UK Orders Twitter Hacker to Repay £4.1 Million Following 2020 High-Profile Breach
Popeyes UK Eyes Century Mark as Fried-Chicken Chain Accelerates Roll-out
Two-thirds of UK nurses report working while unwell amid staffing crisis
Britain to Reform Human-Rights Laws in Sweeping Asylum Policy Overhaul
Nearly Half of Job Losses Under Labour Government Affect UK Youth
UK Chancellor Reeves Eyes High-Value Home Levy in Budget to Raise Tens of Billions
UK Urges Poland to Choose Swedish Submarines in Multi-Billion € Defence Bid
US Border Czar Tom Homan Declares UK No Longer a ‘Friend’ Amid Intelligence Rift
UK Announces Reversal of Income Tax Hike Plans Ahead of Budget
Starmer Faces Mounting Turmoil as Leaked Briefings Ignite Leadership Plot Rumours
UK Commentator Sami Hamdi Returns Home After US Visa Revocation and Detention
UK Eyes Denmark-Style Asylum Rules in Major Migration Shift
UK Signals Intelligence Freeze Amid US Maritime Drug-Strike Campaign
TikTok Awards UK & Ireland 2025 Celebrates Top Creators Including Max Klymenko as Creator of the Year
UK Growth Nearly Stalls at 0.1% in Q3 as Cyberattack Halts Car Production
Apple Denied Permission to Appeal UK App Store Ruling, Faces Over £1bn Liability
UK Chooses Wylfa for First Small Modular Reactors, Drawing Sharp U.S. Objection
Starmer Faces Growing Labour Backlash as Briefing Sparks Authority Crisis
Reform UK Withdraws from BBC Documentary Amid Legal Storm Over Trump Speech Edit
UK Prime Minister Attempts to Reassert Authority Amid Internal Labour Leadership Drama
UK Upholds Firm Rules on Stablecoins to Shield Financial System
Brussels Divided as UK-EU Reset Stalls Over Budget Access
Prince Harry’s Remembrance Day Essay Expresses Strong Regret at Leaving Britain
UK Unemployment Hits 5% as Wage Growth Slows, Paving Way for Bank of England Rate Cut
Starmer Warns of Resurgent Racism in UK Politics as He Vows Child-Poverty Reforms
UK Grocery Inflation Slows to 4.7% as Supermarkets Launch Pre-Christmas Promotions
UK Government Backs the BBC amid Editing Scandal and Trump Threat of Legal Action
UK Assessment Mis-Estimated Fallout From Palestine Action Ban, Records Reveal
UK Halts Intelligence Sharing with US Amid Lethal Boat-Strike Concerns
King Charles III Leads Britain in Remembrance Sunday Tribute to War Dead
UK Retail Sales Growth Slows as Households Hold Back Ahead of Black Friday and Budget
Shell Pulls Out of Two UK Floating Wind Projects Amid Renewables Retreat
Viagogo Hit With £15 Million Tax Bill After HMRC Transfer-Pricing Inquiry
Jaguar Land Rover Cyberattack Pinches UK GDP, Bank of England Says
UK and Germany Sound Alarm on Russian-Satellite Threat to Critical Infrastructure
Former Prince Andrew Faces U.S. Congressional Request for Testimony Amid Brexit of Royal Title
BBC Director-General Tim Davie and News CEO Deborah Turness Resign Amid Editing Controversy
Tom Cruise Arrives by Helicopter at UK Scientology Fundraiser Amid Local Protests
Prince Andrew and Sarah Ferguson Face Fresh UK Probes Amid Royal Fallout
Mothers Link Teen Suicides to AI Chatbots in Growing Legal Battle
UK Government to Mirror Denmark’s Tough Immigration Framework in Major Policy Shift
UK Government Turns to Denmark-Style Immigration Reforms to Overhaul Border Rules
UK Chancellor Warned Against Cutting Insulation Funding as Budget Looms
UK Tenant Complaints Hit Record Levels as Rental Sector Faces Mounting Pressure
Apple to Pay Google About One Billion Dollars Annually for Gemini AI to Power Next-Generation Siri
UK Signals Major Shift as Nuclear Arms Race Looms
BBC’s « Celebrity Traitors UK » Finale Breaks Records with 11.1 Million Viewers
UK Spy Case Collapse Highlights Implications for UK-Taiwan Strategic Alignment
On the Road to the Oscars? Meghan Markle to Star in a New Film
×