(Bloomberg) — Britons are about to discover just how much living costs are set to rise, how painful the squeeze on incomes will be this year and what the government plans to do about it.
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The energy regulator Ofgem is likely to announce the biggest increase in household energy bills on record at 11 a.m. in London on Thursday. An hour later, the Bank of England is expected to respond to the highest inflation in 30 years by delivering the first back-to-back rate hikes since 2004.
Those two decisions will highlight a cost-of-living crisis that’s quickly moved up the political agenda, forcing a response from Prime Minister Boris Johnson’s government. Ministers are set to unveil a multi-billion pound package of measures to cushion households from the blow.
“People are looking at everything going up — prices, interest rates, even taxes — which is a problem for households,” said George Buckley, European economist at Nomura. “And that’s a problem for the government, which will have to act.”
The central bank is alarmed that inflation jumped to 5.4% in December and will likely rise to more than triple the pace of its 2% target. Investors and economists anticipate the key rate will hit 0.5%. That’s the threshold where policy makers can start paring back the 895 billion pound ($1.2 trillion) asset portfolio, which ballooned during more than a decade of stimulus to tamp down market borrowing costs.
Johnson himself called attention to plight of…
