London Daily

Focus on the big picture.
Wednesday, Jan 14, 2026

Rishi Sunak: What will the new PM mean for my money?

Rishi Sunak: What will the new PM mean for my money?

Much has changed in the last few months beyond the revolving door of 10 Downing Street.

Inside ordinary homes across the UK, more attention may have been directed at the rising cost of groceries. Over the past year, vegetable oil went up in price by 65%, pasta by 60% and chips by 39%.

Almost half of adults who pay energy bills and 30% paying rent or mortgages say they are struggling to afford these bills, according to the Office for National Statistics.

Of course, our personal finances cannot be disentangled from what is happening in Westminster.

And the arrival of a new prime minister - Rishi Sunak - will have an impact on our money.


Prices are still climbing


Mr Sunak immediately made reference to the "profound economic crisis" faced by the UK. That belief is centred on the soaring cost of living, and a gap in the UK's public finances.

Prices are rising at their highest rate for 40 years - driven primarily by energy and food. Those two necessities are pushing up that inflation rate, which forecasters say is yet to peak.


Remember, even when the inflation rate starts to come down, it is not that prices are actually falling but that the rate of price rises is slowing.

So, people who receive benefits, such as universal credit or the state pension, will want to know whether their payments will go up in line with inflation in April.

Mr Sunak, in his previous role of chancellor, promised that benefits would match prices rises but - according to Sarah Coles, analyst at Hargreaves Lansdown - "there are no guarantees at this stage".

In his opening speech in Downing Street, Mr Sunak gave little away, saying there are "difficult decisions to come" but that they will be tackled with "compassion".

He also said he would deliver on the 2019 Conservative manifesto, which explicitly says the pensions triple-lock would remain in place. That would see the state pension rise in line with inflation in April.

The state pension for people retiring now is currently worth £185.15 a week. If it goes up in line with prices, it will be £203.85 a week from April. If it rises in line with earnings, it will be £195.35 a week.

The basic state pension, for those who reached state pension age before April 2016, is currently £141.85 a week. This would go up to £156.20 if it rises in line with prices, and £149.65 if it rises in line with average earnings. This is topped up with Pension Credit for some low-income pensioners.

"Pensioners need clarity from the new prime minister over what the state pension is likely to rise by next year, so they have the certainty to plan ahead of a difficult winter," says Tom Selby, head of retirement policy at investment firm AJ Bell.

Families will also watch closely to see what the new administration decides to do regarding the long-standing issue of social care, and the impact that has on people's finances later in life.


Support with energy bills


The impact of some of the policies implemented by Mr Sunak as chancellor some time ago are being seen now on household energy bills.

The universal discount of £400 is cutting this winter's domestic bills, and more cost-of-living payments will be made to those on low-incomes receiving benefits in November, and to nearly all pensioners in the next couple of months.


A government policy introduced by Liz Truss which caps the cost of each unit of gas and electricity, and means the typical household's annual domestic energy bill will be £2,500, will be in place this winter.

A decision is needed, if not immediately, on what happens after that.

As it stands, energy bills are likely to rise sharply from April. When chancellor, and during the summer's leadership contest, Mr Sunak focussed on the idea of financial support with bills for the most vulnerable. Those on middle-incomes, worried about the cost of gas and electricity, will hope that support is relatively broad.


Mortgage costs bite


Mortgages have been getting more expensive throughout the year, as the Bank of England increased the benchmark interest rate. After the mini-budget, there was a further surge, with borrowers now paying about 6.5% on a new, typical two- or five-year fixed-rate home loan.

Mr Sunak's arrival at 10 Downing Street comes as the cost of government borrowing has eased, and therefore the cost to lenders to finance mortgage deals has also fallen.

Of course, we will never know how high mortgage rates would have risen without the mini-budget. The expectation in the industry now is that the picture is likely to improve for mortgage borrowers from the current situation, but slowly.

"Rate decreases by lenders are always a gradual thing," says Chris Sykes, of mortgage broker Private Finance.

That will feed through to landlords too, and what they charge their tenants.

Renters may finally get some certainty too on whether no-fault evictions will be banned - another manifesto commitment which at times has looked under threat.


Taxing decisions to be made


When challenging for the leadership against Ms Truss, Mr Sunak pledged to cut the basic rate of income tax from the current 20% down to 19% in April 2024, and then to 16% by the end of the next Parliament.

That ambition seems a very long way off now.

More relevant than tax cuts now is whether there will be any tax rises to repair the public finances. Remember, that manifesto of 2019 ruled out any increase to National Insurance, income tax and VAT.

One rumour that has been swirling is that the threshold at which people pay different rates of income tax may be frozen for longer. That means, even if workers receive a below-inflation pay rise, they could still be drawn into paying income tax at a higher rate.

That remains speculation, among a host of questions that the new prime minister and his chancellor will soon have to answer.

Newsletter

Related Articles

0:00
0:00
Close
UK Intensifies Arctic Security Engagement as Trump’s Greenland Rhetoric Fuels Allied Concern
Meghan Markle Could Return to the UK for the First Time in Nearly Four Years If Security Is Secured
Meghan Markle Likely to Return to UK Only if Harry Secures Official Security Cover
UAE Restricts Funding for Emiratis to Study in UK Amid Fears Over Muslim Brotherhood Influence
EU Seeks ‘Farage Clause’ in Brexit Reset Talks to Safeguard Long-Term Agreement Stability
Starmer’s Push to Rally Support for Action Against Elon Musk’s X Faces Setback as Canada Shuns Ban
UK Free School Meals Expansion Faces Political and Budgetary Delays
EU Seeks ‘Farage Clause’ in Brexit Reset Talks With Britain
Germany Hit by Major Airport Strikes Disrupting European Travel
Prince Harry Seeks King Charles’ Support to Open Invictus Games on UK Return
Washington Holds Back as Britain and France Signal Willingness to Deploy Troops in Postwar Ukraine
Elon Musk Accuses UK Government of Suppressing Free Speech as X Faces Potential Ban Over AI-Generated Content
Russia Deploys Hypersonic Missile in Strike on Ukraine
OpenAI and SoftBank Commit One Billion Dollars to Energy and Data Centre Supplier
UK Prime Minister Starmer Reaffirms Support for Danish Sovereignty Over Greenland Amid U.S. Pressure
UK Support Bolsters U.S. Seizure of Russian-Flagged Tanker Marinera in Atlantic Strike on Sanctions Evasion
The Claim That Maduro’s Capture and Trial Violate International Law Is Either Legally Illiterate—or Deliberately Deceptive
UK Data Watchdog Probes Elon Musk’s X Over AI-Generated Grok Images Amid Surge in Non-Consensual Outputs
Prince Harry to Return to UK for Court Hearing Without Plans to Meet King Charles III
UK Confirms Support for US Seizure of Russian-Flagged Oil Tanker in North Atlantic
Béla Tarr, Visionary Hungarian Filmmaker, Dies at Seventy After Long Illness
UK and France Pledge Military Hubs Across Ukraine in Post-Ceasefire Security Plan
Prince Harry Poised to Regain UK Security Cover, Clearing Way for Family Visits
UK Junk Food Advertising Ban Faces Major Loophole Allowing Brand-Only Promotions
Maduro’s Arrest Without The Hague Tests International Law—and Trump’s Willingness to Break It
German Intelligence Secretly Intercepted Obama’s Air Force One Communications
The U.S. State Department’s account in Persian: “President Trump is a man of action. If you didn’t know it until now, now you do—do not play games with President Trump.”
Fake Mainstream Media Double Standard: Elon Musk Versus Mamdani
HSBC Leads 2026 Mortgage Rate Cuts as UK Lending Costs Ease
US Joint Chiefs Chairman Outlines How Operation Absolute Resolve Was Carried Out in Venezuela
Starmer Welcomes End of Maduro Era While Stressing International Law and UK Non-Involvement
Korean Beauty Turns Viral Skincare Into a Global Export Engine
UK Confirms Non-Involvement in U.S. Military Action Against Venezuela
UK Terror Watchdog Calls for Australian-Style Social Media Ban to Protect Teenagers
Iranian Protests Intensify as Another Revolutionary Guard Member Is Killed and Khamenei Blames the West
Delta Force Identified as Unit Behind U.S. Operation That Captured Venezuela’s President
Europe’s Luxury Sanctions Punish Russian Consumers While a Sanctions-Circumvention Industry Thrives
Berkshire’s Buffett-to-Abel Transition Tests Whether a One-Man Trust Model Can Survive as a System
Fraud in European Central Bank: Lagarde’s Hidden Pay Premium Exposes a Transparency Crisis at the European Central Bank
Trump Announces U.S. Large-Scale Strike on Venezuela, Declares President Maduro and Wife Captured
Tesla Loses EV Crown to China’s BYD After Annual Deliveries Decline in 2025
UK Manufacturing Growth Reaches 15-Month Peak as Output and Orders Improve in December
Beijing Threatened to Scrap UK–China Trade Talks After British Minister’s Taiwan Visit
Newly Released Files Reveal Tony Blair Pressured Officials Over Iraq Death Case Involving UK Soldiers
Top Stocks and Themes to Watch in 2026 as Markets Enter New Year with Fresh Momentum
No UK Curfew Ordered as Deepfake TikTok Falsely Attributes Decree to Prime Minister Starmer
Europe’s Largest Defence Groups Set to Return Nearly Five Billion Dollars to Shareholders in Twenty Twenty-Five
Abu Dhabi ‘Capital of Capital’: How Abu Dhabi Rose as a Sovereign Wealth Power
Diamonds Are Powering a New Quantum Revolution
Trump Threatens Strikes Against Iran if Nuclear Programme Is Restarted
×