Rishi Sunak made it clear the economy is his focus after becoming the UK’s prime minister.

After entering Downing Street last week, he warned that the country faced a "profound economic crisis" - something he has looked to pin on the world’s slow recovery from Covid-19 and the Russian invasion of Ukraine.

While it’s true that global issues have had an effect - on food prices, for example - Sunak is also dealing with problems closer to home, after economic plans announced under his predecessor, Liz Truss, sparked turmoil.

A so-called mini-budget unleashed during Truss’s brief stint in Downing Street shook the confidence of investors in the UK economy and pushed up the cost of borrowing money - for the government and households alike.

Sunak and his chief finance minister, Chancellor Jeremy Hunt, are due to publish a renewed plan for repairing the public finances in an Autumn Statement on 17 November.

The pair met to discuss the plan earlier this week and a Treasury source said spending cuts alone would not be enough to ensure the government meets its targets on spending and debt.

Across-the-board tax hikes were "inevitable," the source said, adding: "It is going to be rough".

The department has not put a figure on what it calls the "fiscal black hole" facing the UK, but the BBC has previously been told it may be at least £50bn.

Emma Pengelly
BBC News

Image source, Carl Wagstaff

Carl Wagstaff is on a variable rate mortgage so his monthly repayments will go up again if the Bank of England does raise interest rates as expected.

The 57-year-old service engineer from Friskney in Lincolnshire says: "Our mortgage repayments were about £800 a month going back six months.

"We've had a letter through saying next month's is going to around £900 a month, not including this latest interest rate increase.

"It's scary. Food prices are going up, everything is going up. I'm on a decent wage as a service engineer for LEV systems, but it's hard. And everywhere I go I see people struggling.”

Mr Wagstaff says he has cancelled Sky subscriptions and cut down on takeaways.

"We go shopping in Aldi and Lidl now instead of Tesco, and we're just looking for bargains. We're looking in the discounted aisles. My wife would go shopping every week and it used to be £50 a week, now it's more like £100 and with not much more in our basket.

"We're lucky this year that we have already paid for our holiday as it's one that was rescheduled due to lockdown. But to be honest, I'm going to struggle getting some spending money for that too.”

Image source, .

The cost of living has been growing at its fastest rate for 40 years - with the rising prices of food and energy prices the main causes.

Demand for oil and gas has grown as the world emerges from the Covid-19 pandemic - but the war in Ukraine has meant resulted in many countries buying fewer supplies from Russia.

The Russian invasion has also led to food price increases, by reducing the amount grain available for export from Ukraine.

The price of food and non-alcoholic drinks rose by 14.6% in the year to September.

It hit its highest level since April 1980, with store cupboard staples such as bread, pasta, butter and eggs all seeing a big increase.

How much are prices rising for you? Try our calculator

Image source, Reuters

The Bank of England governor warned last month that the Bank may need to raise interest rates by even more than previously expected.

Andrew Bailey said inflationary pressures meant a stronger response than had been anticipated in August might be needed,.

The Bank sets the UK’s official interest rate to try to tackle inflation (the rate at which your day-to-day costs are rising).

It has been raising rates from last year’s historically-low levels, and most recently hiked them by half a percentage point to 2.25% on 22 September.

Investors reckon they could be hitched up still further today - to at least 3%.

That would be the largest such rise since 1989. And rates are expected to go up even further. We’re expecting to get the Bank’s latest decision at noon.

We’ve all been worrying about rocketing bills as the prices of basic things like food and energy shoot up.

As part of the BBC’s special cost of living coverage, we’re going to be focusing on the city of Derby today and how people there say they’re coping with things.

And at midday, we expect a decision from the Bank of England on a possible further rise in interest rates - something it does to try to combat the problem of runaway inflation.

Analysts reckon the Bank could announce the biggest hike for 33 years. This would hit people making repayments on things like credit cards, car loans and mortgages.

As well as the latest news and analysis, we’ll bring you support and advice from our cost of living experts. Stay with us.