Thread by @EdConwaySky

Landmark day in the cost of living crisis:
- Ofgem to confirm energy bills will go up by £hundreds from Apr
- @bankofengland expected to raise interest rates further
- New forecasts showing inflation to hit highest level since early ‘90s
- Chancellor to step in with £££ measures

According to my calculations, the rise in the energy price cap to around £2k will push up the energy bill burden (eg share of average household spending going on heat/power) to the highest level since the late 1980s:

https://twitter.com/EdConwaySky/status/1483512346861621248?s=20&t=wFuz0Hpd0G6WH1TPDoq4bw

If they go up further later this yr, as is widely expected, the energy bill burden gets to the highest level since at least the 1970s. Possibly even earlier. Eg in terms of the immediate domestic impact this could be worse than any modern energy crisis

https://twitter.com/EdConwaySky/status/1483512353194975237?s=20&t=wFuz0Hpd0G6WH1TPDoq4bw

The great problem is that it’s not just energy: taxes are also going up in April (Health & social care levy; more being dragged into higher tax brackets). And mortgage rates are getting more expensive. Roughly 40% of the average household’s costs are going up:

And while those increases are painful for everyone, they are unbearable for the lowest income groups, for whom an increase in all these non-discretionary costs is far greater.
So while the top 10% could see bills representing 4% of spending, for the bottom 10% it’s 13% or more

For more about the backdrop to this, do watch this video I made a week or two running through the numbers. It’s a wee bit longer than our usual ones but a) this is a big issue b) it contains all the key charts on the impact of this on households

This is part of a much bigger issue, which is that the cost of energy, which infuses pretty much every activity in domestic and industrial life, is close to unprecedented highs
This is not a side issue
It’s everything
Consider how closely energy consumption & GDP are correlated:

Or consider food prices.
Going up rapidly too.
But food prices are high in large part because the cost of a) transporting and b) fertilising those foodstuffs. Both a and b are dependent on ENERGY.
Most fertiliser is made with natural gas!
Most roads lead back to energy…

Nomura's @georgebuckley forecasts that this year UK households will face a fall in their real incomes as big as the very worst year of the post-financial crisis squeeze.
And NB this is BEFORE you add on the impact of higher taxes and interest rates