Sage Sunak told the cabinet that interest rates are expected to rise to 2.5 per cent next year as he warned ministers against borrowing more to fund public spending.
The chancellor told colleagues Tuesday that homeowners could increase their mortgage payments by more than £ 1,000 a year if they do not enter into a fixed-rate agreement.
He said financial markets have already set a price target for interest rate hikes, which could reach 2.5 per cent, adding that borrowing poses a risk of further rise in inflation.
An increase of 1 percentage point over a common mortgage is equivalent to £ 700, he said, adding that cutting deficit is important to keep interest rates low.
Sunak is under pressure from Tory MPs and some cabinet ministers to do more with the cost of living. He told Momsnet: “I want to make sure that. . . I don’t think the problem is worse. That’s why I can’t always do what people want, because it can actually make things worse, especially in the case of mortgages with rising interest rates. “
The chancellor has rejected calls from Labor and Tory MPs to come up with a plan to address the crisis over the cost of living. He is planning a major intervention in his autumn budget, before the energy price cap rises.
The forecast says energy bills could rise by about 40 percent in October to about £ 3,000 a year. Sunak argued that it would be “stupid” to intervene now.
He said: “It would be foolish to do this now, or last month or a month ago, when we do not know what the autumn situation is going to be.”
He defended himself against the accusation that he was too rich to understand people’s struggles with the cost of living in the face of a dispute over his wife’s non-resident tax status.
“Judge me over my actions,” he said. “I don’t judge people by how much money they have in their bank accounts, I look at their character, their values and how they are performing.”
Challenged by allegations that as a millionaire he is far from the consequences of the decisions he struggles to make for voters, Sunak said: “Of course I’m in a lucky position now, but I didn’t start that way. “
He described his accomplishments as “the result of the kindness, hard work and sacrifice of many people throughout my life”, referring to the rare arrival of his grandparents in Britain. He added: “I have never forgotten the values I grew up with, and in fact, what I try to do and do is express those values through this work.”
Sunak said he was working “day and night” and coming into politics was “my way of trying to use the things that have been given to me”.
During the cabinet meeting on Tuesday, a number of ministers presented ideas to help meet the cost of living so that no extra money is spent. However, doubts were raised yesterday about the effectiveness of the plan.
Transport Secretary Grant Shaps said there were “many roads to be covered” before safety rules were relaxed and drivers were allowed to test only one MOT per year.
Carl McCartney, a Conservative member of the Commons Transportation Committee, said it was “absolutely ridiculous” to suggest that changing the rules at the MoT would significantly help with the cost of living. He said the money saved on the £ 54.85 test was “a drop in the ocean” for drivers.
Chapps told the committee that “cars have clearly become much more reliable than installing a MOT named after the transport ministry”, but said a change would have to meet “very strict safety standards”.
Anne-Marie Trevelyan, secretary of international trade, poured cold water on a plan to reduce tariffs on imported food, saying it would have little effect on the bill. He told lawmakers at the International Trade Commission that a unilateral reduction in tariffs would allow other countries to reduce their own leverage in trade negotiations.
Trevelyan was reportedly aware of a plan drawn up by Brexit Opportunity Minister Jacob Rees-Mug and told MPs that “in each section we are all focused on thinking … where we can find ways to reduce costs”. The rules fell into legal complications.