Yahoo Finance Martin Lewis Warns Of The 'Financial Cataclysm' Waiting For Next PM
Martin Lewis has released a plea to the next prime minister (Photo: Twitter)
Martin Lewis shared a stark message on Twitter on Tuesday to the next prime minister about the future of UK finances amid the cost of living crisis.
The MoneySavingExpert, who has regularly criticised the government for dragging its feet over providing any financial relief to the public, did not hold back in this damning message to No.10.
While the impact of the record-breaking heatwave might be occupying Brits today, the financial journalist looked ahead to this winter – and reminded the four candidates still standing in the race to replace Boris Johnson what is at stake.
In a video released on Tuesday morning, Lewis said: “The winter coming is going to be bleak.
“I believe that unless action is taken, we are facing a potential national financial cataclysm.”
He said while individuals can try to take preventative actions, it ultimately comes down to the next prime minister to prevent chaos across the country.
Lewis urged the next prime minister – who will be in No.10 in six weeks – to be aware of “how stark” the future will be for most of the population.
″We are sitting on a financial time bomb, that is due to explode in September.”
He said the current crisis stems from energy bills, but will reach all areas of people’s lives when the energy cap rises again this autumn.
Back in April, Ofgem raised the cap on energy bills (to a record £1,971) meaning the average household’s annual bill would increase by £700, or 54%. It was one of the defining moments which pushed the country into the current cost of living crisis.
Ofgem has since suggested energy price hikes should become smaller, but more frequent – meaning reviews would happen every three months instead of every six.
Inflation has already reached a 40-year-high at 9.1% but it is expected to reach 11% by the end of this year as energy bills will climb again, when the price cap increases once more. This time, it’s expected to rise by 65%.
As Lewis explained, by October 1 this mean the bill for someone on typical use will therefore increase to £3240 a year.
While this is based on forecasts, Lewis said: “What’s crucial to understand is that the future price cap rate is mostly predictable, because it’s dictated by the algorithm published by the regulator Ofgem.”
He said the wholesale rates which count have spiked again in recent weeks – the latest predictions are “frightening”, adding: “And that may be a conservative estimate, because it keeps going up.”
The exact number will be known by the end of August.
Lewis summarised: “Next April we will still be paying on typical use over £1000 more than we are now.
“To put that into perspective, from October typical energy bills will cost over a third of new state pension and more than a third of those of old state pension.”
Acknowledging the measures the government introduced in May in a bid to alleviate cost of living crisis, Lewis said the £400 cut to energy bills has “already been swallowed up”, leaving people “panicking”.
He said this will take people back to that choice between “starving and freezing”.
″To the Conservative Party candidates: you need to understand the level of feeling out there.”
He warned of “civil unrest, primarily in the form of mass nonpayment”, unless the next prime minister takes action.
Lewis added that there would be an “explosion” of credit card debt this autumn too, and said even though inflation rates may drop – that doesn’t mean prices will go down, just that they will flatten out.
Lewis said the remaining candidates, Kemi Badenoch,Rishi Sunak, Liz Truss and Penny Mordaunt, are the “only ones” who might be able to diffuse that catastrophe.
Watch the full video here:
I'm afraid a financial cataclysm will hit the UK roughly the time the new PM starts, devastating lives
This is a video letter to u and Conservative leadership candidates, to help u, and plea for them to prepare and prevent the worst; energy, mortgages, cards & more. Pls share pic.twitter.com/CFBqNtkMwH— Martin Lewis (@MartinSLewis) July 19, 2022
This article originally appeared on HuffPost UK and has been updated.
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