Your Guide To How Rishi Sunak And 'The Cost Of Living Crisis' Will Affect You

rishi sunak cost of living crisis effect
The Cost Of Living Crisis And YouMarina Petti - Getty Images

Fifteen years ago, the world faced one of the worst financial crises in history, due to cheap credit and poor lending standards. It prompted the ticking timebomb of a housing bubble that suddenly burst, with devastating effects. While the ‘Great Recession’, as it's now widely known, officially spanned just two years (between 2007 and 2009), its ramifications are still felt to this day, with widespread unemployment, excessive debt, and decreased savings.

Then the pandemic ‘entered the chat’ in 2020, which resulted in GDP declining by 9.7% in 2020 - the steepest drop since records began in post-war Britain. And now, just as the country has started to get back on its feet and people attempt to grapple with the mental, physical and fiscal effects of Covid-19, we're now facing the highest rates of inflation in the last 30 years with rising energy bills, fuel prices, the cost of essential items, debt – the list goes on. For the first time in decades, millions of people in the UK are being forced to choose between heating and eating. Not only does it feel like we’re up sh*t creek without a paddle, but there's now a gaping hole at the bottom of the boat. And it's raining.

In September 2022, former British Prime Minister Liz Truss promised we'd ‘ride out the storm’ of the UK’s economic crisis. ‘We can rebuild our economy, and we can become the modern brilliant Britain that I know we can be,’ she buoyantly told the nation. Weeks later, former Chancellor of the Exchequer Kwasi Kwarteng delivered what’s since been dubbed a ‘reckless’ mini-budget, which immediately sent the sent the pound crashing to its lowest level against the dollar in almost four decades. His plan involved borrowing huge sums at increasingly expensive rates, thus increasing government debt in a post-pandemic, Ukraine-Russian war world, in the blind hope - yes, hope - of improved economic growth, eventually. ‘Mr Kwarteng is not just gambling on a new strategy, he is betting the house,’ Paul Johnson, the director of the Institute for Fiscal Studies, said at the time.

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After just 44 days in office, Truss resigned from her position and days later the Conservative party appointed former Chancellor Rishi Sunak – and previous runner-up to Truss - as prime minister. The same week, Sunak appointed Jeremy Hunt as the new chancellor of the Exchequer, who said that there will be decisions of ‘eye-watering difficulty’ ahead for the country. A new fiscal statement, previously scheduled for October 31, has since been postponed to November 17 to account for new economic forecasts.

On Sunak’s appointment Felicity Hannah, freelance financial journalist, tells ELLE UK: ‘There is only so much that any leader can do to ease the Cost Of Living Crisis because so much of it is caused by overseas issues, like the rising price of food. Sunak says he plans to target support at people on the lowest incomes, which means we’re unlikely to see widespread help – nothing huge and expensive like the furlough scheme. Times are tight but so are the country’s finances.’


Difficult decisions may lie ahead for the government, but they’re not nearly as intimidating as those currently faced by the British public on a day-to-day basis. Last week, the Financial Conduct Authority estimated that six in 10 adults in the UK were finding it hard to keep up with their bills, with around one in 15 disabled adults being behind on their energy bills, compared to one in 25 non-disabled people. The Office for National Statistics (ONS) has found that 87% of adults in Great Britain reported an increase in their cost of living in August-September 2022, and around 24 million people in Great Britain were reducing energy use in their home between March and June 2022, with approximately 16 million cutting back on food and essentials. Among adults who are working, 15% have reported carrying out more hours than usual in their main job, and 4% have been forced to take a second job.

‘I don’t think any government is going to use the word ‘austerity’ just now,’ Hannah says on whether we’re facing a renewed bout of austerity measures. ‘It’s really clear that every government department is struggling, from courts with a backlog, to the length of time it takes to get an NHS appointment. But even without cuts to their budgets, high inflation is putting real pressure on hospitals, schools, prisons and everywhere else, just like it’s hurting households. And there could be further cuts to come – it may well feel like austerity even if it’s not called that.’

Less than a week into Sunak’s premiership, we spoke to experts across several sectors – beauty, fashion, travel, fitness, health and wellbeing and hospitality – to find out how the Cost Of Living Crisis will impact employers, employees and consumers in the years to come.

cost of living crisis rishi sunak effect
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Whether it’s following a break-up or a bad day at work, it’s often tempting to visit a nail salon or book in a massage to cheer yourself up, such is the transformative power of a little TLC. However, the cost-of-living crisis is expected to have devastating implications for the beauty industry, meaning a fortnightly trip for a new set of gel nails might soon become a distant memory. ‘We have very high bills all year round as an industry because we use a lot of energy,’ explains British Beauty Council’s CEO Millie Kendall OBE, listing off what’s required to power everything from hairdryers and lighting, to heating, and backwash units. Hairstylist and GHD global ambassador Adam Reed describes the effect of the Cost Of Living crisis on his business as ‘absolutely petrifying’. ‘Everybody is nervous and waiting to see how it will affect how people feel about doing their hair,’ he adds.

According to the British Association of Beauty Therapy & Cosmetology (BABTAC), almost 94% of salon owners recently said that they’ve experienced a considerable increase in utility rates in the past year, with 40% facing a 100% increase, with a further 10% experiencing a staggering 200% rise. Meanwhile, a recent survey by the National Hair & Beauty Federation (NHBF) found that 77% of hair and beauty businesses are paying more for energy than they were six months ago, leaving almost three-quarters of businesses either partially or completely reliant on Government support. ‘The hike in bills is just another blow to those who have already had to contend with negative impact of the pandemic, which was estimated to be an average financial loss of £11,603 on earnings,’ explains Lesley Blair MBE, CEO and Chairperson of BABTAC.

So, what does this mean for consumers? Well, one of the biggest concerns for the beauty sector is that the Cost Of Living Crisis will lead to low confidence in the economy, and make clients less likely to invest in ‘luxuries’, such as beauty treatments. Worse still, there’s a heightened fear among those working in the industry of the safety risks facing consumers who may feel forced to opt for cheaper, unregulated treatments that may pose serious risks to their health. ‘You pay for standards and unfortunately cheaper treatments could potentially means cheaper quality, be this in terms of qualification, products, or insurance,’ adds Blair.

Reed, meanwhile, expects to see consumers looking for more reasonably priced products, reducing their salon visits, and opting to book in appointments with lower levelled stylists. ‘I think people will still come [into the salon], but spread out their appointments as much as possible,’ he says. Kendall notes that while she expects to see salons increase their prices in the months to come, she hopes consumers will employ the same ‘forgiveness’ they had for salon owners facing financial hardship during the pandemic. ‘If I can afford to have the massage in the first place, is an extra three pounds going to be so awful?’ she asks.

As part of the Energy Bill Relief Scheme, which was announced in September, the government offered a short-term, six-month reprieve from the rising cost of bills for all non-domestic consumers. The news came almost a year after the then-Chancellor of the Exchequer Rishi Sunak exclusively told ELLE UK that the pandemic had proven the beauty industry to be ‘an essential service’. But those working in the industry are now calling for the scheme to be extended, to ensure long-term relief for the sector to survive the financial crisis. ‘I think it’s very easy for people to say we’ve got over the pandemic, but we definitely haven’t,’ says Reed. ‘The government didn’t act fast enough during the pandemic - it didn’t really act at all,’ he adds after salons faced 240 days of lockdown closures in the UK between 2020 and 2021, and operated at 70% capacity when social distancing measures were put into place. ‘The government is really going to have to prove that it can support small businesses.’

Following the British Beauty Council’s tireless efforts last year, which saw it secure a higher amount of money from the Restart Grant for the personal care sector in April 2021, improving the initial grant sum of £6,000 to £18,000 for businesses, Kendall implores the government to ‘not to pull the plug - no pun intended - on an industry that's in a growth phase’. ‘Ninety-five per cent of Britain's hair and beauty businesses are small medium enterprises, with a majority having less than 10 employees. These are exactly the kind of people that need the government support,’ she notes.

cost of living crisis rishi sunak effect
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At a time when Brits are having to choose between heating their homes and a weekly food shop, the fashion industry is facing a bleak future, let alone winter. With the pound dropping to its lowest level against the dollar since 1971, it’s unsurprising EY’s Future Consumer Index recently found that two thirds of the people surveyed don’t feel the need to keep up with trends, while eBay’s ‘Shop for Change’ report found that 60% view cost as the biggest factor when considering to shop.

‘Retailers expect annual sales to fall and profit forecasts have been considerably slashed,’ the British Fashion Council’s Caroline Rush CBE tells ELLE UK. ‘With inflation now at 7%, the slump in the value of the pound has further increased prices since imports have now become more expensive.’ She notes that Next’s Chief Executive, Simon Wolfson, has warned that consumers and the fashion industry now face two Cost Of Living Crises: ‘a supply side led squeeze this year, and a currency led price hike as devaluation takes effect next year’.

Some of the biggest concerns for retailers, she says, are around setting wholesale prices, ‘due to the fluctuating value of the pound and ever-increasing fuel and manufacturing costs’. The Federation of Small Businesses estimates that between February 2021 and August 2022, a store with an energy consumption of 30,000 kilowatt-hours (kWh) a year in London would have seen its electricity bill increase from £4,700 to £21,200. Let that sink in for a moment. That’s a 351% increase in just over a year.

Sinéad O'Dwyer, Founder and Creative Director of her namesake brand, is concerned about the fallout for young designers and emerging brands with tight budgets in need of flexibility. Speaking on behalf of her contemporaries, she tells us: ‘We are concerned that the precarious nature of wholesaling is exasperated by the Cost Of Living Crisis and that we will struggle to make the next season and stay in London. Cashflow is going to be very difficult and borrowing is not always a possibility.’ Given that her business is only in its infancy and third season of wholesaling, O'Dwyer doesn’t feel confident she’s established a strong enough relationship with buyers and factories for them to have leniency if the crisis affects delayed deliveries and deposits. ‘It’s a puzzle!’ she says.

Increased energy prices and cost of garments has resulted in a consumption slowdown, with more consumers wanting to buy less, and switch to lower price options. ‘New research by Metapack and Retail Economics have predicted a 4.4 billion fall in spending this year,’ explains Rush – a figure follows the fashion industries contribution to be valued at £29 billion in 2021 compared to £35 billion the year prior.

The upside of the financial crisis for the fashion industry is that with consumers wanting to watch their pennies, businesses are pivoting to achieve greater cost-efficiency, with many aiming to curb overproduction, rethink inventory, and focus on producing sustainable products made to last the test of time, not trends. (This might explain why Boohoo reported a 94% year-on-year fall in its pre-tax profits in the year to March 2022). While the future will undoubtedly prove to be a challenging time for consumers and brands, it’s never been a better time for the industry to change ingrained habits and ‘lean towards a slower, more meaningful type of consumption’, notes Rush. ‘Consumer trend reports have shown encouraging progression and a mindset shift towards second hand shopping (Etsy, Depop), vintage purchases, and rental apps.’

To help retailers during the Cost of Living Crisis, the BFC has launched a series of initiatives to help bolster long-term change and help support and educate those working in the industry and beyond. One such programme is the 10-year Fashion Industry Sustainable Change Programme, which works to create a world leading circular fashion ecosystem in the UK, led by the BFC, the UK Fashion & Textile Association (UKFT), and Innovate UK. Meanwhile, Rush hopes the recent six-month energy price cap will enable businesses to reconsider their pricing strategy and create ‘robust plans around inventory and cash management for 2023’. ‘The road ahead is undoubtedly ridden with challenges but collaboration and strong communication with the government is key to overcome these,’ she says.

cost of living crisis rishi sunak effect
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Following a pandemic that resulted in the near halting of travel altogether, with quarantine rulings, airlines being grounded and the loss of 62 million jobs in the travel and tourism industry, the sector is facing another heavy blow, but one – thankfully - much less severe.

When money is tight, we expect travel to slip lower down on the list of priorities. For example, in October 2022 the travel association Abta’s Holiday Habits 2022 report found that one in three Britons are cutting holiday spending as living costs rise. However, despite the rise in energy bills, labour shortage, and heightened inflation, it looks like Brits won’t be cutting down on travel altogether, with over two thirds of Abta’s survey respondents still planning to travel abroad in 2023. The statistics support a poll by Go.Compare Travel Insurance, which found that British holidaymakers will be choosing budget breaks in 2023, due to rising costs, with 22% intending to spend less on a holiday next year, 12% searching for cheaper destinations and a fifth reducing the number of getaways they take. What is expected, according to travel experts, is not so much an abolition of travel altogether, but a change in how people travel over the coming years.

‘Although I wouldn’t be bold enough to say that travelling was now a necessity, it’s certainly higher up most of our priority lists and definitely ahead of many non-essential material luxuries,’ Andrew Stembridge, the Executive Director of Iconic Luxury Hotels, which looks after Cliveden Hotel and Chewton Glen, tells ELLE UK. In keeping with UK travel behaviour during and post pandemic, staycations are expected to continue to be a popular choice for those in want of a break without breaking the piggy bank. ‘We are still seeing sustained high demand for short breaks and despite the current Cost Of Living Crisis there is no evidence that this is going to change,’ Stembridge continues, following the news that Go.Compare Travel Insurance’s survey found that the number of Brits booking short stays is expected to triple to 29% in 2023 compared to 2022. Andrew Cook, General Manager at The Lakes by YOO agrees. ‘This is not only due to the "Cost of Living Crisis" but also due to skyrocketing costs for international travel and travellers being more conscious of supporting UK travel and hospitality,’ he explains.

As a result of the crisis, Airbnb has found an increase in users signing up to their service to host holidaymakers and boost their income. With the typical UK Airbnb host earning over £6,000 a year, Amanda Cupples, General Manager for Northern Europe at Airbnb tells ELLE UK that more than a third of users say their reasons for hosting are to afford the rising cost of living. ‘Now is a great time for anybody with the ability to do so, to consider renting out a room or their home to make some much needed additional income,’ she says.

cost of living crisis rishi sunak effect
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The rising cost of living is forcing many of us to reconsider luxury versus necessity, and where possible to make cuts in our day-to-day lives. Unsurprisingly, many people are questioning whether they should divert the money they use for a monthly gym membership and studio towards increasing bills. In April 2021, Lloyds Banking Group said that the UK economy’s ‘uncertainty’ had already led to it seeing customers cancelling approximately 1.2m gym memberships.

According to a new survey conducted by the gym and health club network Hussle, 55% of members have expressed concern that their local workout space may be forced to close due to increased energy costs, while 68% said they wouldn’t be supportive if their gym increased its prices. The figures come amid the news that The Gym Group, which owns over 200 gyms across the UK, has announced its plans to increase membership prices to offset rising energy bills.

Rebecca Passmore, UK Managing Director of PureGym, says she’s already noticed changing member habits as the Cost Of Living crisis becomes a more serious reality. ‘It’s clear that people are looking for more affordable ways to keep fit,’ she says, noting how some will be wanting to swap gym contracts or high-end studios for a lower cost, contract free, gym, while others might opt to invest in flexible gym memberships. While rising energy costs in addition to consumers tightening their purse strings is a challenge for the fitness industry (‘we have no idea how long this inflationary environment will last for, which makes it almost impossible to plan ahead’), Passmore says that, because of the pandemic, more than ever consumers see spending on fitness as an ‘investment in their health’. ‘This is a silver lining from the COVID-19 pandemic - nowadays a gym membership isn’t just a “nice to have” it’s a “must-have” for many, so it won’t be the first thing they give up,’ she adds.

cost of living crisis rishi sunak effect
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When the UK went into lockdown on March 23, 2020, no one could’ve predicted the fierce and lasting grip of the pandemic on everything, from our finances and social lives to our physical and mental health. According to ONS figures in the first year of the pandemic, one in five adults were likely to have experienced depression by June 2020 – double the number from the previous year – and in the year since restrictions began, services like the Samaritans were contacted a staggering 2.3 million times.

Last year, the mental health charity MIND found that around of a third of adults and young people said their mental health had worsened since March 2020, with nine in 10 said that loneliness had made their mental health deteriorate. One of the most damning causes of poor mental health was due to financial concerns, with more than half of young people likely to say that thoughts about money had a negative impact on mental wellbeing. ‘Our volunteers have always provided emotional support to people troubled by their finances – it is by no means a new concern to our helpline, but alarmingly, we are beginning to see an increase in calls for help from people with financial worries,’ Julie Bentley, Samaritans’ CEO, tells us. ‘There’s also a big inequality issue that exists – people on the lowest incomes have a higher suicide risk than those who are wealthier and are also the most affected by issues such as rising prices.’

Bentley says it’s ‘critical’ that the Government makes suicide prevention a priority when tackling this crisis and ‘provides adequate support for those most in need’. ‘At times like this, we need to look out for those around us to check how they are coping and whether they need any support. If you are worried about someone, give them a safe space to talk about how they are feeling, as this could make all the difference.’

Polly Neate, Chief Executive of Shelter, reveals that Shelter is experiencing an increased demand for the organisation’s services, and warns that many charities may see a drop in donations as people feel the squeeze and need to cut back on charitable giving. ‘We are desperately worried that more and more people are going to become homeless this winter as a result of the current crisis,’ she says, noting that Shelter’s emergency helpline receives approximately 1,000 calls a day, with many from people desperately worried about rising living and renting costs. ‘Almost half of private renters have no savings to fall back on, and many of the people we help say they have nothing left to cut back on. When people can’t afford to pay their rent and feed their families, that’s when homelessness becomes a major risk.’ While Shelter is receiving ongoing support from donors, she says frontline services need the government ‘to urgently reverse damaging welfare cuts – like the housing benefit freeze and the benefit cap’ so people will be able to keep a roof over their heads.

cost of living crisis rishi sunak effect
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Despite schemes like Eat Out To Help Out, the hospitality sector was one of the hardest hit during the Covid-19 pandemic, with many being forced to roll down their shutters for good and let members of staff go. According to statistics published by UK Hospitality in February 2022, the industry- which normally generates up to £140bn-a-year - racked up a loss of £114.8bn in sales. ‘Businesses big and small have been left with depleted cash reserves and crippling debt as Covid loans as well as contending with a gaping hole of 400,000 job vacancies, as more than 80% of hospitality businesses report they have roles to fill,’ UKHospitality Chief Executive Kate Nicholls said after the news came to light.

Now, looking ahead to the effect of the Cost Of Living Crisis, the British Institute of Innkeeping has said that energy bills may destroy many pubs, and in July, the accountants UHY Hacker Young had already reported restaurant insolvencies had risen 64% year on year, before calculating last month that a record 60% of the UK’s top 100 restaurants are making a loss, per the Guardian.


Adriana Cavita, chef and owner of newly-opened London restaurant Cavita tells us that when she opened her business in May 2022, their electricity and gas was not in contract. ‘Contract rates were actually higher than the out of contract rates, making it extremely difficult to know what to do and how to protect ourselves,’ she said, noting that the contracted electricity rates at the end of 2021 were around 18/19p per kwh, but by August 2022 her business was being charged over 70p per kwh. ‘This means our projected utility bills went from a forecasted £4,000 per month to over £12,000, meaning that our utility bills were almost equivalent to our rent.’ With six months of financial ‘protection’ under the government’s Energy Bill Relief Scheme, Cavita says business owners like her will need more time for energy prices to stabilise and revert back to ‘normal’ levels. ‘Customers are experiencing unprecedented levels of inflation in their own lives and when disposable income is tight, restaurants will definitely suffer,’ she says, encouraging other businesses to consider their energy strategy as a main priority and focus on using energy-efficient equipment where possible. ‘Even still, the current crisis is proof that sometimes it’s just not in our control.’

For Monica Berg and Alex Kratena, owners of the award-winning London cocktail bar Tayer + Elementary, the Cost Of Living crisis sounds like it’ll be ‘much tougher than surviving the pandemic’ for the hospitality sector. ‘There’s much more panicked tension among the industry than before, and more people thinking of closing down and throwing in the towel,’ they say. ‘What we’re most worried about is losing our business, and having our team become unemployed,’ the note, adding that they’re frustrated with the government’s seeming ‘unwillingness to step in and help the industry with targeted measures rather than token gestures’ . ‘We need the Government to immediately step in and cap the price increase, and prevent the energy companies from this reckless profiteering,’ they add. 'We don’t know what to do right now. Like everyone else, we’re trying to navigate out of this sh*t story as best we can.'

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