Focus on personal finance as inflation rises in the UK
Amid soaring inflation and soaring food and fuel prices, terms like financial literacy and spending management have emerged as some of the biggest buzzwords in recent months.
The concept is simple. Healthy spending habits and financial prudence can help protect families from falling into unmanageable debt and ensure they have some sufficient savings as a buffer against further economic shocks.
In the United Kingdom, for example, the Office for National Statistics recently announced that the Consumer Price Index (CPI), a well-known indicator of inflation, jumped 10.1% in the year to July, indicating a double-digit rate of inflation for the first time since 1982.
In these unprecedented times, it’s no surprise, then, that financial literacy and family budgeting have become pressing issues, both on the national agenda and for consumers.
Read more: PYMNTS Intelligence: How Financial Literacy Affects Consumers’ Digital-First Banking Preferences
Rival digital-first banks like Monzo, Revolut, and Starling have stepped in by rolling out new features that help customers manage their money more effectively. These smart tools are designed to give users a clear picture of their spending patterns so they can save and budget with detailed spending reports.
Related: Revolut’s “Pockets” tool aims to help people organize payments
These digital banking apps can also provide notifications to help keep budgets on track, and bill management features like Revolut Pockets and Monzo Pots enable users to organize payments and set aside a portion of their monthly budget for recurring payments.
A difficult task awaits the next British Prime Minister
For Brits living on the bread line, no amount of budgeting is likely to absorb the impact of price hikes that have already increased the average UK grocery bill by £380 year on year.
Read more: UK shoppers feel the pressure as average annual grocery bill rises by £380 year on year
But to provide some relief, the country’s Department of Work and Pensions (DWP) took the initiative last month and made the first batch of two-part payments to recipients of the Financial Resources and Disability Test benefit, as well as retirees. Eligible citizens received a direct bank transfer of up to £326 ($384), with a second payment expected in the autumn.
See more: The UK government will pay $43.6 billion to support families
However, much more will be needed to help struggling British households keep their heads above water, and strong financial management will become increasingly important in the coming months.
This is all the more important as households are expected to be hit hard this fall by rising energy bills that will push inflation above 13%, according to the Bank of England (BoE). estimates.
The Bank of England also expects the UK to enter recession in the fourth quarter of 2022, while unemployment is expected to rise in 2023 as the bank pursues monetary policies to bring inflation down to its 2% target.
Amidst a looming recession and the Bank of England playing a delicate balancing act between controlling inflation and unemployment, Britain’s next prime minister has a heavy task.
Indeed, the UK’s cost of living crisis has come to dominate the ongoing Tory leadership election that will decide the next UK prime minister, with rivals Rishi Sunak and favorite Liz Truss laying out competing visions of how best to manage the country’s financial struggles.
Learn more: Crypto champion Sunak takes on Truss Digital International in the UK leadership race
But no matter how the race begins, the questions of how the proposed tax cuts will be financed and whether or not the government will commit to more spending to help cover higher prices will need to be addressed urgently by whoever takes the helm of British diplomacy and moves towards it. 10 Downing Street next month.
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