London Daily

Focus on the big picture.
Thursday, Dec 25, 2025

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 Mortgage Rates Edge Lower as Bank of England Base Rate Cut Filters Through Lending Market
U.S. Supermarket Gives Customers Free Groceries for Christmas After Computer Glitch
Air India ‘Finds’ a Plane That Vanished 13 Years Ago
Caviar and Foie Gras? China Is Becoming a Luxury Food Powerhouse
Hong Kong Climbs to Second Globally in 2025 Tourism Rankings Behind Bangkok
From Sunniest Year on Record to Terror Plots and Sports Triumphs: The UK’s Defining Stories of 2025
Greta Thunberg Released on Bail After Arrest at London Pro-Palestinian Demonstration
Banksy Unveils New Winter Mural in London Amid Festive Season Excitement
UK Households Face Rising Financial Strain as Tax Increases Bite and Growth Loses Momentum
UK Government Approves Universal Studios Theme Park in Bedford Poised to Rival Disneyland Paris
UK Gambling Shares Slide as Traders Respond to Steep Tax Rises and Sector Uncertainty
Starmer and Trump Coordinate on Ukraine Peace Efforts in Latest Diplomatic Call
The Pilot Barricaded Himself in the Cockpit and Refused to Take Off: "We Are Not Leaving Until I Receive My Salary"
UK Fashion Label LK Bennett Pursues Accelerated Sale Amid Financial Struggles
U.S. Government Warns UK Over Free Speech in Pro-Life Campaigner Prosecution
Newly Released Files Shed Light on Jeffrey Epstein’s Extensive Links to the United Kingdom
Prince William and Prince George Volunteer Together at UK Homelessness Charity
UK Police Arrest Protesters Chanting ‘Globalise the Intifada’ as Authorities Recalibrate Free Speech Enforcement
Scambodia: The World Owes Thailand’s Military a Profound Debt of Gratitude
Women in Partial Nudity — and Bill Clinton in a Dress and Heels: The Images Revealed in the “Epstein Files”
US Envoy Witkoff to Convene Security Advisers from Ukraine, UK, France and Germany in Miami as Peace Efforts Intensify
UK Retailers Report Sharp Pre-Christmas Sales Decline and Weak Outlook, CBI Survey Shows
UK Government Rejects Use of Frozen Russian Assets to Fund Aid for Ukraine
UK Financial Conduct Authority Opens Formal Investigation into WH Smith After Accounting Errors
UK Issues Final Ultimatum to Roman Abramovich Over £2.5bn Chelsea Sale Funds for Ukraine
Rare Pink Fog Sweeps Across Parts of the UK as Met Office Warns of Poor Visibility
UK Police Pledge ‘More Assertive’ Enforcement to Tackle Antisemitism at Protests
UK Police Warn They Will Arrest Protesters Chanting ‘Globalise the Intifada’
Trump Files $10 Billion Defamation Lawsuit Against BBC as Broadcaster Pledges Legal Defence
UK Says U.S. Tech Deal Talks Still Active Despite Washington’s Suspension of Prosperity Pact
UK Mortgage Rules to Give Greater Flexibility to Borrowers With Irregular Incomes
UK Treasury Moves to Position Britain as Leading Global Hub for Crypto Firms
U.S. Freezes £31 Billion Tech Prosperity Deal With Britain Amid Trade Dispute
Prince Harry and Meghan’s Potential UK Return Gains New Momentum Amid Security Review and Royal Dialogue
Zelensky Opens High-Stakes Peace Talks in Berlin with Trump Envoy and European Leaders
Historical Reflections on Press Freedom Emerge Amid Debate Over Trump’s Media Policies
UK Boosts Protection for Jewish Communities After Sydney Hanukkah Attack
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
×