NEW Chancellor Jeremy Hunt announced a series of U-turns following weeks of economic turmoil in the markets as a result of Liz Truss’s mini-Budget.
The Chancellor confirmed the public sector will be forced into major spending cuts as part of his plans to stabilise the economy.
Here’s a look at what the latest announcements could mean for households.
What does it mean for energy bills?
Under the previously announced energy price guarantee, the average household would pay around £2500 annually for their energy bill.
However, as the cost was limited per unit and not per bill, some households would pay more, depending on their energy use.
When first announced, this guarantee was due to last for two years. However, Hunt said that although support will continue until next April, a review will be launched to consider how to support households and businesses with energy bills after April 2023.
The review will design a new approach aiming to cost taxpayers less than planned while ensuring support for those in need, the Government said.
Any support for businesses will be targeted to those most affected.
What will it mean for mortgages?
Mortgage rates have skyrocketed in recent weeks amid the wider turmoil in the markets.
Monday’s U-turn announcements aimed to help shore up market confidence which would, in turn, help steady mortgage rates.
The choice of mortgage product remains significantly lower than before the mini-Budget.
Bank of England base rate hikes have also been pushing up mortgage rates in recent months and further base rate rises are expected.
How about pay packets?
The basic rate of income tax was due to reduce next year, meaning people would have had a boost from their April pay packet onwards.
But now the cut from 20% to 19% has been put on hold indefinitely, until economic circumstances allow for a cut.
Had the cut come into place in April 2023, an average UK earner on £30,000 a year would have paid £174 less in tax next year, according to wealth managers Quilter.
But, on the other hand, a previously-announced national insurance (NI) cut will remain in place – and a £30,000 earner could still be around £218 better off annually because of this, Quilter said.
Will there be an impact on alcohol prices?
Plans to freeze alcohol duty rates from February 1, 2023 for a year have been ditched.
The Scotch Whisky Association said the move will add to pressures for the hospitality industry and household budgets as costs inevitably increase.
Mark Kent, the trade body’s chief executive, said: “Business can only work on the basis of certainty and stability.
“That has been stripped from the Scotch whisky industry following the Chancellor’s decision to U-turn on the duty freeze for Scotch whisky announced just over two weeks ago.”
He warned the decision would “add to pressures in the UK hospitality industry, and household budgets as costs inevitably increase”.
“Distillers are facing increasing economic headwinds and rising costs, the duty freeze offered much-needed support,” Kent added.
“We urgently need that commitment to be reinstated.”
Emma McClarkin, chief executive of the British Beer and Pub Association, said: “The Chancellor’s decision today to reverse the alcohol duty freeze is a huge blow to brewers and pubs."
