Biggest squeeze since war will cost most of us £800 a year

Households face the worst squeeze on real incomes since World War Two. The average household will be £800 worse off next year as inflation hits the value of incomes, according to analysis by the Resolution Foundation.The loss equates to £66 a month on average, but the poorest 10 percent of households will be hit harder as they spend twice as much as the richest tenth on food and utility bills.The Resolution Foundation also says about 1.2 million households on variable rate mortgages will see their housing costs increase in the near future.It says 400,000 to 500,000 new households will also be affected every quarter as they roll onto new fixed-term deals.By the end of 2024, 5.1 million households will have seen their mortgage costs increase substantially, with an average annual increase of £3,900 relative to Autumn 2023. Some households will be £800 worse off next year, analysis shows (Image: Getty) The Resolution Foundation says households will be £800 worse off next year (Image: Getty) Bank of England Governor Andrew Bailey (Image: Getty) A woman walks past rundown closed shuttered shops in Romford, Essex (Image: Getty)’The Bank also made clear the cost-of-living crisis is set to get far deeper and not just for those with a mortgage. Everyone will be affected by prolonged double-digit inflation, but poorer households will be hit hardest by the surge in food prices and energy bills.’This provides a sobering backdrop for the Autumn Statement, where the Government will need to both calm the markets, while also protecting households from the worst of the cost-of-living storm.’Meanwhile, on Friday Prime Minister Rishi Sunak said inflation is the “number one enemy”, as he vowed to rebuild trust in the Government following Liz Truss’s tenure in No 10.Mr Sunak said he is doing everything he can to “grip” the issue and limit rises in mortgage repayments, as the Bank of England was forced to put up interest rates to curb rising prices.DON’T MISS: British tourists freed after being held hostage on boat by Peru tribe [REPORT] Putin’s drone plot foiled [REVEALED] Putin set to lose all territory gained since 2014 [LATEST] How Bank Rate has changed over time (Image: Express)With many families now facing crippling rises in their monthly mortgage bills, Mr Sunak told The Times he understood their concerns as they worried how to make ends meet.He said: “I absolutely recognise the anxiety that people have about mortgages. It’s one of the biggest bills people have.”So what I want to say to people is that I’m going to do absolutely everything I can to grip this problem, to limit the rise in those mortgage rates.”I think inflation is the number one enemy, as Margaret Thatcher rightly said. Inflation has the biggest impact on those with the lowest incomes. I want to get a grip of inflation.” A pedestrian walks past a shuttered jewellery store with a closing down sale poster in Chester (Image: Getty)With the UK facing an estimated £50billion black hole in the public finances, Mr Sunak said it was important the Government was honest with voters about the “trade-offs” the country faced in the Autumn Statement.He said: “Everyone appreciates that the Government cannot do everything. How does government do everything? It just does it by borrowing money which ultimately leads to, as we saw, high inflation, a loss of credibility, spiking interest rates.”Among the measures Mr Sunak and Mr Hunt are considering to address the deficit are a further two-year freeze on the lifetime pension allowance and the imposition for the first time of VAT on electric vehicles, The Telegraph reports.Mr Sunak acknowledged after the turmoil of Ms Truss’s premiership, the Conservatives urgently needed to rebuild trust with the public.He pointed to his own record as chancellor – when he introduced the Covid furlough scheme – as to why people should trust him when it comes to running the economy.The PM said: “I completely acknowledge that trust has been damaged over the past few weeks and months. I realise that trust is not given, trust is earned. My job is to regain people’s trust.”The only thing that people will take away from the summer – hopefully from my track record as chancellor – I’m someone they can trust understands the economy.”I’m someone they can have confidence in, who will manage us through what will be a difficult economic time. I’ve got a track record in doing it.”