What's driving the cost of living crisis?

Soaring bills, inflation and tax rises are about to squeeze household incomes. And it doesn’t seem that there is much the government can do about it.

Rishi Sunak
Chancellor Rishi Sunak: the Treasury’s options are limited
(Image credit: © Ian Forsyth/Getty Images)

What’s happening?

A triple whammy of soaring energy costs, galloping inflation and tax rises is about to whack UK households, with some economists predicting a cut in real incomes worse than that seen during the financial crisis of 2008. Inflation as measured by the consumer price index (CPI) was 5.1% in the 12 months to November 2021 (up from 4.2% in October, and more than twice the Bank of England’s target rate). The old retail price index measure of inflation is already at 7.1% – one reason why ministers insist it is “no longer an official measure”.

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Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published Customers.com, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.