The 3 nightmares haunting Andy Burnham and John Healey before crunch Budget

The 3 nightmares haunting Andy Burnham and John Healey before crunch Budget You may have hoped the cost of living crisis was over, but it's only getting worse Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Add us as preferred source Comments ANALYSIS By Jonathan Walker , Whitehall Editor 07:00, Sat, Oct 24, 2026 Prime Minister Andy Burnham and Chancellor John Healey (Image: Getty) Cash-strapped households face a cost-of-living “triple whammy” set to continue well into 2027. Energy bills, mortgage payments and checkout prices are all set to soar. And experts are warning that the cost-of-living crisis that began in 2021 shows no sign of ending – and instead will get worse. It means Chancellor John Healey faces a massive challenge as he prepares for this week’s Budget. Along with Prime Minister Andy Burnham, he wants to give people “breathing space” to help with rising bills. And just this week, a scheme to cut £150 off heating bills for every household on means-tested benefits came into effect. But the Government has massive debts, meaning it would be hard to find money for tax cuts. Article continues below ADVERTISEMENT Tom Wernham, senior research economist at the Institute for Fiscal Studies, said: “Household incomes have barely grown since 2019, and we’re not expecting a substantial uptick any time soon. The latest Office for Budget Responsibility forecasts from March predict incomes will grow slowly by historical standards in the coming years – less than half a percent annually – and they don’t yet take into account the hit to households’ purchasing power from the Iran war and the inflationary pressures it has contributed to.” Get personal finance news, money saving tips and advice plus selcted offers and competitions I would like to receive emails from the Daily Express featuring our latest products, services, offers, and promotions from across the Reach Plc family . Subscribe Invalid email You agree you are 18 or over. We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. This may include adverts from us and third parties based on our knowledge of you. You can unsubscribe at any time. More Info . The 9 items Brits must stockpile after new warning Households told to stockpile food, water and medicine in new warning Food bills The Food and Drink Federation has forecast that food inflation will reach nearly 4% by Christmas and peak at 6.4% in July 2027, as a result of the conflict in Iran and the impacts of extreme weather on the global food supply chain, including El Niño and this summer’s droughts across the UK and Europe Food prices have risen by nearly 40% since 2020. A £100 weekly shop in 2020 would cost nearly £140 today and will approach £150 by next summer. Article continues below ADVERTISEMENT Commodity prices have risen across the globe, with wheat up 45% in the past year, cocoa up over 100%, rice 60%, sugar 27% and coffee 22%. Article continues below ADVERTISEMENT The British Retail Consortium has also highlighted rising food costs, as well as higher electrical prices amid the ongoing AI boom, which is forcing up the price of memory chips and storage. James Walton, chief economist at the Institute of Grocery Distribution, said: “Shoppers have already adapted to repeated periods of high food price inflation. Many have changed how and where they shop, switched products or reduced discretionary spend, leaving fewer options available to absorb any further price rises.” Fruit and vegetables are expected to rise in price, reflecting their shorter production cycles and high sensitivity to weather. Other foods and non-alcoholic drinks are also expected to become more expensive. Mortgages Mortgage experts warned that interest rates are set to increase throughout 2027, leading to soaring monthly payments for many homeowners. The average two-year fixed mortgage rate is already up by 0.89% since March, adding £131 to monthly mortgage repayments on a £250,000 mortgage repaid over 25 years. But the Bank of England is expected to hike interest rates next year. And even the expectation of higher rates to come will lead to high street banks and building societies charging higher interest rates on they deals they offer, using a process known as “swap rates”. Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said: “A second wave of mortgage rate hikes has begun from the major banks in reaction to growing concerns surrounding inflationary pressures. “Swap rates have climbed, leading lenders such as NatWest, Santander, HSBC and TSB to increase selected fixed rates.” While the Bank of England held interest rates steady in September, experts believe it could push them up in November, and may impose a series of rate hikes next year. This belief is already having an impact on mortgage rates, increasing monthly payments for homeowners on variable rates, or renewing fixed rate deals. Energy costs Regulator Ofgem has announced a 4% increase in the domestic energy price cap coming into effect in October. Cornwall Insight’s new forecast (on August 26) shows no relief in sight for January, with bills forecast to rise a further 9% in the new year. This would put an average January bill up to £1,872 a year, £149 higher than the £1,723 October price cap announced in August. The January figure will not be confirmed until November. Experts at Cornwall Insight predicted the average dual fuel energy bill will rise by 16% to £1,999 a year on January 1, up by £276 on the level between October and December and the biggest rise since January 2023. The analysts said the increase is driven by the escalating conflict in the Middle East, which has disrupted gas supplies to the UK and worldwide as the vital Strait of Hormuz shipping route has been effectively closed since the Iran war began in February. Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “These prices are going to hit households hard.” Voters fear the worst New polling showed 44% of the public report feeling more fearful about how announcements in the upcoming Autumn Budget might impact their own financial situation. It revealed that eight in 10 Brits describe the current state of the British economy as poor. Alex Bogdan, research director at Ipsos in the UK, said: “The Burnham Bounce may have provided a temporary cushion for the new Government, but this goodwill is not yet translating into an improved economic mood or ‘hope’ among households and businesses just yet. “Brits remain deeply anxious about their personal finances and these underlying worries continue to dictate consumer sentiment where we see that expectations of higher energy bills and other cost-of-living factors already driving saving and spending decisions in people’s lives. “While the Prime Minister and Chancellor enter their first major fiscal event with a degree of ‘breathing space’, voters simultaneously are demanding clear signals of improvement, without showing a clear willingness to accept painful compromises on tax, spending, or other economic trade-offs.” Inflation Interest rates Cost of living Energy bills Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Add us as preferred source Comments