Cost of living – live: Interest rates rise prompts urgent advice to mortgage holders; Amazon workers walk out over low pay – Sky News

Cost of living latest as the Bank of England announces its largest interest rate rise in almost 30 years as the UK faces soaring inflation.
People are cutting back on food, gas and electric, and non-essential journeys as 46 million people say the cost of living has increased, according to the Office for National Statistics (ONS) cost of living survey.
The most common reasons reported by adults for their increased cost of living were an increase in the price of their food shop (94%), an increase in gas or electricity bills (82%) and an increase in the price of fuel (77%).
More than a third cut back on spending on food and essentials (35%).
It also found 57% said they were spending less on non-essentials, 51% on gas and electricity and 42% on non-essential journeys.
The survey also noted just over one in 10 (13%) of people in England reported using credit, such as credit cards, loans or bank overdrafts, more than usual to cope with the cost of living.
However, the rate rose to almost one-fifth (18%) among those living in the most deprived areas.
A recession is “inevitable” despite Conservative Party leadership candidate Liz Truss suggesting it is not the case, former Cabinet minister Liam Fox has said.
Dr Fox, who supports Rishi Sunak in the contest, told Sky News: “I think it’s inevitable given what’s happening in the global economy.
“As I said, the United States is in its second quarter now of contraction. So, technically, by the UK definition, the US is in recession. That clearly is going to have an effect on everyone else.
“What Liz seems to be saying is, at a time when we are already spending £85 billion on debt interest, twice as much as we’re spending on defence during a conflict in Europe, we should be borrowing even more money.
“That’s been tried before. If there was an easy way to get out of the inflationary problem and growth, don’t you think it would have been done here or the United States or in Europe?”

The governor of the Bank of England has said rocketing inflation “concerns me most” amid a political debate over the speed of actions taken by the bank to tackle the economic turmoil.
“We are in the centre of things because of what is going on in the world at large and the impact that is having on inflation, and that’s what concerns me most at the moment,” he told BBC Radio 4’s Today programme.
“Central bank independence is critically important in our view, but our job is to get inflation back down to target.
“I think it’s important that there is a full debate during this process to choose the next prime minister of this country.
“It is clearly very important that public officials like I do not intervene in this debate and I am not doing that.
“We have strong views, of course, but I look forward to working with the new government and new prime minister, and sure we will have substantive exchanges on this.”

There is a “strong argument” interest rates should have been raised “slightly sooner,” the business secretary has said.
Asked on Sky News how the Bank of England has handled the current situation, Kwasi Kwarteng replied: “There is an argument – and I think it’s a strong one – to say that inflation was an issue that was identified at the beginning of last year.”
He added: “The job of the Bank was to deal with the inflation. They have got a 2% inflation target. That’s actually their mandate. And now inflation is hitting double digits.
“So, clearly something has gone wrong and I think there is an argument to suggest that rates should have probably gone up slightly sooner.”

Amazon warehouse workers have staged a walk out in protest over low pay.
The GMB union said hundreds of employees in Tilbury, Essex, stopped work today after being given a pay rise of 35p an hour.
The union said workers were seeking a £2-an-hour rise to better match the demands of their job and cope with the cost-of-living crisis.
Steve Garelick, GMB regional organiser, said: “Amazon is one of the most profitable companies on the planet. With household costs spiralling, the least they can do is offer decent pay.
“Amazon continues to reject working with trade unions to deliver better working conditions and fair pay. Their repeated use of short-term contracts is designed to undermine workers’ rights.
“The image the company likes to project, and the reality for their workers, could not be more different. They need to drastically improve pay and working conditions.”
An Amazon spokesman said: “Starting pay for Amazon employees will be increasing to a minimum of between £10.50 and £11.45 per hour, depending on location.
“This is for all full-time, part-time, seasonal, and temporary roles in the UK.
“In addition to this competitive pay, employees are offered a comprehensive benefits package that includes private medical insurance, life assurance, income protection, subsidised meals and an employee discount among others, which combined are worth thousands annually, as well as a company pension plan.”
You’ve been submitting your money saving or cost of living dilemmas for personal finance expert Gemma Godfrey. The question form is now closed while she deals with some of the hundreds of your queries, like this…
Ollie: I have some savings that are making no interest. What can I do for a better return? Thank you.
Even though the Bank of England has been increasing interest rates, they’re still at historic lows and banks are slow to pass on increases to savers. So, there are millions of savers in the UK who are disappointed with the returns they’re earning.
Nevertheless, there’s a general rule that the longer savings don’t need to be accessed, the better the return. It’s therefore important to consider how soon savings might need to be cashed in. 
Another rule to keep in mind is to have enough savings readily available to cover at least three months of living expenses, in case, say, a boiler breaks. Savings accounts that might cover this type of scenario are called instant access savings accounts and they often offer lower interest rates.
For savings that don’t need to be accessed for a while, some fixed-rate savings accounts can offer a higher return. They pay interest at a fixed rate and the money can’t be accessed until the end of the term, which can range from months to years. Some accounts offer a degree of access, but check the rules in the terms and conditions.
It’s also worth checking the terms and conditions when it comes to regular savings accounts. They can pay more attractive returns because they require money to be saved into the account each month, restrictions can apply and they can be limited to existing customers of the bank. Also, watch out for introductory rates dropping after a year.
Savings accounts across the UK are in general still struggling to beat inflation, meaning living costs are often rising faster than savings are growing. The final way to try and beat this, if savings aren’t needed for five years or more, is to consider investing. Although this comes with the risk of losing money along the way.
For all of these options, it’s important to shop around for the best rate of return and make sure the account is protected by the Financial Services Compensation Scheme and regulated by the Financial Conduct Authority.
Gemma is a business advisor, finance expert and TV host, an ambassador for the charity Surviving Economic Abuse, and a former boardroom adviser to Arnold Schwarzenegger on The Apprentice.  
New and existing borrowers should “seriously consider” locking a fixed term deal to protect them from any further rate rises, the Mortgage Advice Bureau has said.
Speaking on the interest rate rise, Brian Murphy, head of lending at the company, said while the Monetary Policy Committee aimed to rein in inflation, higher rates and soaring prices would put “further substantial strain on mortgage borrowers”.
With economists predicting inflation to soar even higher, Mr Murphy has now advised new and existing borrowers to consider locking a fixed term deal to protect them from any further rate rises. 
He said: “Approximately two million people are on variable rate mortgages and will subsequently see an immediate impact on their monthly mortgage repayments.
“While those on fixed rate deals will be sheltered from interest rate rises for the duration of their mortgage term, around half are expected to expire in the next two years. 
“Some may therefore consider lengthening their mortgage terms or even overpay on their mortgage to help them with payments over the long term. Speaking to a whole of market mortgage broker, however, can help figure out the best options based on your personal circumstances.”
Chancellor Nadhim Zahawi said he was confident the country was taking the right actions to overcome global economic challenges after the Bank of England announced the biggest interest rate hike since 1995.
In a statement, Mr Zahawi said: “Along with many other countries the UK is facing global economic challenges and I know that these forecasts will be concerning for many people.
“Addressing the cost of living is a top priority and we have been taking action to support people through these tough times with our £37bn package of help for households, which includes direct payments of £1,200 to the most vulnerable families and a £400 discount on energy bills for everyone.
“We are also taking important steps to get inflation under control through strong, independent monetary policy, responsible tax and spending decisions, and reforms to boost our productivity and growth. 
“The economy recovered strongly from the pandemic, with the fastest growth in the G7 last year, and I’m confident that the action we are taking means we can also overcome these global challenges.”
Earlier today, the Bank’s base interest rate was raised to 1.75% from 1.25%.
The Bank’s forecasters also said Consumer Prices Index inflation would hit 13.3% in October, the highest for more than 42 years, if regulator Ofgem hiked the price cap on energy bills to around £3,450.
The energy price will push the economy into a five-quarter recession – with gross domestic product (GDP) shrinking each quarter in 2023.
Homeowners whose mortgages directly track the Bank of England base rate are set to see around £50 per month added to their costs typically, industry calculations indicate.
The Bank of England raised the base rate by 0.50% today, taking it from 1.25% to 1.75%, marking the biggest single rate jump since 1995.
The £50.43 increase was calculated by trade association UK Finance and is based on average mortgage balances.
This adds up to an extra £605.16 in mortgage costs over the course of a year.
Simon Gammon, managing partner at Knight Frank Finance, said: “Mortgage rates are now changing on a daily basis and lenders are giving borrowers and brokers little notice about repricing.
“We’re seeing two significant impacts on borrowers. Firstly, some homeowners who are nearing the end of their terms are facing a shock when they come to refinance, because they are unable to borrow as much as they hoped.
“Secondly, those who are looking to buy are realising once obtainable properties are now out of reach.”
The decision to raise interest rates has been welcomed by the Institute of Directors (IoD) – the organisation for company directors, senior business leaders and entrepreneurs in the UK.
Commenting on the Bank of England’s announcement today, Kitty Ussher, chief economist of the IoD, said that with energy prices continuing to rise “strong intervention” was needed.
She said: “We welcome this decisive action by the Bank of England. Concern about inflation is causing firms to hesitate before committing to essential long-term investment. 
“With energy prices continuing to rise, strong intervention is needed to increase confidence that we will soon be through the worst, so that boardroom decision-makers can plan ahead with greater certainty.  
“At the moment two-thirds of our members believe the inflation rate will continue to rise until at least the spring of next year, with a large number thinking the peak will come even later. 
“We will be watching carefully to see if today’s rate rise brings business expectations more into line with the Bank of England’s central forecast that inflation will peak before the end of this year.”
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