The cost of living in the UK is coming down as Bank of England meets – business live

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Will reduce the cost of living in the UK bank of england There is much to consider today as the central bank gets to set interest rates.

Yesterday two energy companies failed, affecting another 800,000 households, as ministers admitted they were considering an unexpected tax on companies profiting from record gas prices.

Avro Energy, with 580,000 domestic customers, became the largest energy supplier to fail and Green, which has 255,000 customers, also stopped doing business – Artha More homes will face higher energy bills within weeks.

Around 1.5 million households are now facing transfer to new suppliers probably at higher tariffs, which means they could face paying hundreds of pounds more per year for their gas and electricity.

As we report this morning:

Ministers are under increasing pressure to find ways to provide some financial support for households, which are set to be hit next month due to a £139 increase in bills – some of the most expensive energy bills on record.

With a £20 universal debt cut and rising inflation, Labor and some Tory lawmakers have warned of a potentially devastating cost of living crisis.

On Wednesday, the Joseph Rowntree Foundation estimated that a typical low-income family would be worse off by £1,750 by next April.

Energy market shocks have raised concerns for Britain’s struggling consumer supply chains and heavy industries such as steel, fears of empty supermarket shelves ahead of Christmas and a return to a three-day week for factories.

Green’s Chief Executive Officer, Peter McGirr, told the Guardian that there would be a “tsunami of more” [collapses] are to come” because smaller suppliers do not have deep pockets to cope with the cost escalation without burdening their customers.

McGir explained:

“We are an independent company.

“Finance is hard to access and nothing has been done to help.”

He said crisis talks held last weekend by the trade secretary, Quasi Quarteng, failed to include smaller suppliers who are most vulnerable to energy market shocks and added that his company’s call for help from the industry regulator ” fell on deaf ears

So all of this gives the Bank of England a headache, as policymakers ponder whether to continue with its QE stimulus program, and when interest rates may need to be raised to calm inflation.

Inflation rose above the bank’s target of 3.2% last month, and is expected to climb.

While a rise in energy prices will drive inflation, pressure on the household budget means an increase in borrowing costs will be painful.

Rising prices in stores, an impending £20/week cut in Universal Credit, and the end of the furlough scheme next week mean that many families are facing a life crisis this winter.

New estimates from the Joseph Rowntree Foundation, As seen by the Guardian this week, found that a typical low-income UK household will be spoiled by £1,750 by April 2022 as factors combine to a rising cost of living crisis.

The BoE is therefore expected to leave borrowing costs at a record low this afternoon – while the minutes of the meeting will reveal whether its Monetary Policy Committee is concerned about the economic situation.

Deutsche Bank Analysts expect ‘no change’ today, but they also expect the BoE to reaffirm that some tightening will be needed over the next few years to keep inflation under control.

Yesterday, BoE’s counterparts in the US said they may soon begin ‘shortening’ their stimulus programme, and end the bond-buying program by next summer.

The Federal Reserve left interest rates almost unchanged at zero after its latest meeting. Rates were cut in March 2020 US economy recovered from the effects of the pandemic. But the Fed also indicated it may soon begin pulling back on the $120bn in monthly asset purchase program it began when the coronavirus hit the US.

“If progress continues as widely expected, the committee decides that asset purchase momentum may soon slow down,” the Fed said in a post-meeting statement.

Still coming today…

New surveys from UK, Eurozone and US companies will reveal how falling energy prices, commodity shortages and record vacancies are affecting firms.

Investors are also watching evergrande Crisis, as the Chinese property developer is facing a major loan interest payment today. Yesterday it struck a deal on a domestic bond and another on debt, which has somewhat reassured the markets – stock markets are expected to rise.

work schedule

• 9am BST: Eurozone ‘flash’ purchasing manager survey for September
• 9.30am BST: UK ‘Flash’ Purchasing Managers Survey for September
• 12 pm: Bank of England interest rate decision, and MPC minutes
• 1.30 a.m. BST: US weekly jobless claims data
• 2.45 a.m. BST: US ‘Flash’ Purchasing Managers Survey for September