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This season sees several announcements that could affect the amount of money you have to spend. Here’s what to look out for.
There's a host of important financial announcements and policy changes this spring. These not only include the Spring Budget, but also the Bank of England’s Monetary Policy Committee (MPC) meeting, which may sound like it has nothing to do with you, but its decision on interest rates could affect monthly mortgage repayments and savings rates. Here’s our guide to what to look out for.
15 March: Spring Budget
This was Chancellor Jeremy Hunt’s first Spring Budget where he announced his tax, welfare and spending plans.
He announced extra cost-of-living support, including a three-month extension to the current Energy Price Guarantee. He also said there would be a freeze in fuel duty for a further year, an overhaul of childcare and changes to pensions, among other measures.
23 March: The MPC meeting
Around once every six weeks, The MPC gets together to agree the official interest rate. This helps to set the amount of interest you earn on your savings, as well as the interest you pay when you borrow money with a mortgage, credit card or loan.
After years of rock-bottom interest rates, they rose rapidly during 2022 as a way of tackling rising costs, and the official rate now stands at 4% (as at 7 March 2023). At the start of 2023, experts were predicting that interest rates would rise to between 4% and 5% during the first half of the year.
Rising interest rates are good news for savers, who could earn a better rate on their cash savings, but it may mean that people with mortgages pay more. Unless you have a fixed-rate mortgage, your monthly repayments will likely go up every time interest rates rise.
1 April: The National Living Wage and National Minimum Wage go up
The National Living Wage for people over the age of 23 will rise by 9.7%, taking it to £10.42 an hour. Government estimates suggest this will give more than two million workers a pay rise worth more than £1,600 a year.
For workers under the age of 23, the National Minimum Wage will also go up.
- For 21 and 22-year-olds: a 10.9% increase to £10.18 an hour
- For 18 to 20-year-olds: a 9.7% increase to £7.49 an hour
- For 16 to 17-year-olds and the apprenticeship rate: a 9.7% increase to £5.28 an hour
6 April: The start of the new tax year
If you claim the state pension, payments are set to rise by a record-breaking 10.1% at the start of the new tax year. This is thanks to the ‘triple lock’, a mechanism that guarantees it’ll increase every year by the higher of 2.5%, wage growth or inflation. With inflation at 10.1% in September (the month used by the government to set payments for the following year), pensioners are getting a bumper increase. From 6 April, the full rate for the new state pension will be £203.85 a week, up from £185.15 last year.
People claiming benefits that are linked to inflation, including Universal Credit, will also see their payments rise by 10.1%.
7 May: State-pension age review deadline
The government is currently reviewing changes to the state-pension age and must announce any decision by this date. Currently, the state-pension age is scheduled to rise from 66 to 67 by 2028 and then to 68 between 2044 and 2046 – but after its review, the government may decide to speed up these increases.
Any changes are likely to affect people born since 1970, who may have to work longer before they can claim the state pension.
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This content is for information purposes only and shouldn’t be regarded as financial advice. While we’ve taken every effort to make sure this information is as accurate as possible, it has not been independently verified.