Cost-of-Living Crisis Deepens as Budget Looms — Households Brace for Tax Rise and Bill Shock
LONDON As the UK heads into winter, millions of households find themselves squeezed from all sides: stagnant wages, high borrowing costs and the spectre of tax rises. With the Autumn Budget 2025 scheduled for 26 November, focus is now firmly on how the government intends to ease or intensify the pressure on budgets already pushed to breaking point.
Tax rises in sight
According to recent reporting, Chancellor Rachel Reeves is considering an increase in income tax alongside a cut in employee National Insurance contributions as part of the upcoming Budget. The move is seen as a way to raise more than £6 billion annually while seeking to protect lower-paid workers from the heaviest burden.
Fuel duty relief under threat
The Treasury is also exploring the removal of a 5-pence cut in fuel duty that has been in place since 2022. Industry sources say the change could be announced at the Budget. For households already facing high energy and transport bills, a rise in fuel duty or the removal of relief could add thousands to annual costs.
Wages, bills and borrowing
Though inflation has eased somewhat, average wage growth remains sluggish and many borrowers continue to face high interest payments. Household disposable income is contracting while essentials grow more expensive. The government’s own speech ahead of the Budget warns that productivity is weaker than previously assumed, adding to fiscal pressures.
Impact on households
- Working families: A potential income tax rise means less take-home pay when most already report cutting back on heating or food.
- Borrowers and renters: With interest rates high and mortgage costs rising, households face fewer options to absorb additional tax or duty burdens.
- Low-income homes: Cuts to fuel duty relief and rising energy/transport costs hit hardest those with little savings or flexibility.
What the government says
In her scene-setter speech, the Chancellor said the Budget will focus on “cutting waiting lists, cutting national debt and improving the cost of living.”
Yet policymakers face a dilemma: either raise taxes, cut spending, or accept higher borrowing as inflation and productivity disappointments mount.
What to watch ahead of 26 November
- Final decisions on income tax and National Insurance rates.
- Announcement on fuel duty relief or its removal.
- Any fresh support for households facing energy or transport shocks.
- Whether the Office for Budget Responsibility updates productivity forecasts and how that shapes fiscal policy.
Conclusion
For many Britons, the coming weeks will feel more like a trial than a relief. With wages flat, bills rising and the threat of tax increases looming, the upcoming Budget may determine whether cost of living becomes a temporary slump or a long-term decline in living standards.
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Sources: Reuters, GOV.UK, The Guardian etc.
Date: 10 November 2025 | By: Fidelis News Staff
