As the UK grapples with recession and cost of living crisis, Chancellor Jeremy Hunt’s budget measures and the Bank of England’s inflation management are put to the test, amidst efforts to support low-income families and address rising living costs.
In March 2024, concerns regarding the economic situation in the UK, characterized by a recession and an ongoing cost of living crisis, have underscored the importance of financial support for low-income families. Chancellor Jeremy Hunt’s introduction of a 2p National Insurance tax cut and adjustments to Child Benefit, as part of the spring Budget, have been clarified by the Resolution Foundation as benefiting those earning above £50,000 disproportionately, amidst these challenging times.
With financial strains and food insecurity impacting families, the relevance of state financial aids such as Universal Credit, State Pension, and Disability Living Allowance becomes apparent. Notably, these benefits are scheduled for disbursement in March, with a forewarning for earlier payments if they coincide with Good Friday.
The government’s cost of living payment scheme, aimed at assisting those in financial difficulties, ended in February 2024. The last payment, amounting to £299, was distributed between February 6, 2024, and February 22, 2024, benefiting recipients of Universal Credit and similar supports. Furthermore, the extended Household Support Fund (HSF) by local councils stands as another significant aid, alongside budgeting advance loans, charitable grants, and supports from energy providers.
The Department for Work and Pensions (DWP) has announced an uplift in benefits for the 2024/25 financial year by 6.7% in alignment with the inflation rate, addressing the increasing living costs and particularly helping families with energy expenses. This adjustment includes the Employment and Support Allowance (ESA), catering to individuals with health conditions or disabilities limiting work capabilities, with new rates becoming effective from April 2024.
Concurrently, the landscape of UK inflation has necessitated action from the Bank of England, with a recorded 4% rate in January, prompting an interest rate adjustment to 5.25% to mitigate high inflation. Despite a decline from a peak of 11.1% in October 2022, inflation continues to challenge the economy, driven by factors like rising costs in gas, electricity, and food, alongside workforce scarcities. Predictions suggest a potential easing of inflation in 2024, with the UK experiencing a higher inflation rate compared to the EU and the US, presenting ongoing economic uncertainties.