Cost of living: What do all the words mean?
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You may have heard words or phrases in the news like 'cost of living', 'the economy' and 'budget'.
On Thursday 17 November the government gave details of the Autumn statement, its plan on how to save, spend and get money.
It comes at a time when the country is facing a difficult situation with the economy, the cost of things is going up and people are unable to spend as much money as before.
Whether you're listening to adults talking about the situation or you're keeping updated via Newsround, you might be coming across a lot of new words or phrases that you haven't heard before.
So, here's some of the key terms and what they really mean.
If there are other complicated words relating to the energy crisis and you want to know what they mean, let us know in the comments below.
Budget
A budget is a plan for how the government will save, spend and get money.
Your family or parents might have a budget - working out how much money you make, and then figuring out how much money is affordable to spend on things like food, bills or days out.
Governments also have budgets, but it's on a much larger scale. They can get money in a few different ways, but mostly it's from taxes. This is money paid to the government from adults or businesses.
The government's budget usually only takes place once a year, with sometimes an update if needed.
Jeremy Hunt is the Chancellor of the Exchequer and the man in charge of the UK's money
Chancellor
The chancellor of the exchequer is the person responsible for how the government spends the country's money.
Jeremy Hunt is the current chancellor, and the office (or team) that helps him make the decisions about the country's money is known as the Treasury.
Cost of living
Ricky finds out more about the cost of living crisis
The cost of living is the amount of money that a person needs to buy food, clothing, heat their home or other basic things. At the moment the cost of living is going up, which means it's more difficult for some grown-ups to afford certain things.
Debt
A country has debt when they borrow money to spend on projects or to pay for services and agree to repay it.
The Chancellor, Jeremy Hunt, says he is planning to put taxes up and to restrict government spending to try to reduce the UK's debt.
Economy
The economy involves all the people working and the shops and businesses making, buying and selling products.
A good economy is generally one where there are lots of good-paying jobs, and businesses are selling things, making money and paying money to the government in taxes.
A bad economy is one where people are losing jobs, can't afford to buy things and businesses are struggling to make money.
Energy
Energy is used in homes for things like heating, cooking and the use of appliances such as televisions. Electricity and natural gas are the most-used energy sources in UK homes.
Electricity is used to power things in homes and is created by generators which can be powered by fossil fuels such as gas, coal, oil, or renewable energy such as wind, water or solar power.
Gas is a type of energy used inside homes and businesses for things like heating and cooking. The UK gets more than a third (42%) of its energy from burning natural gas.
At the moment, energy prices are getting higher and higher. There are a number of reasons for that, including the war in Ukraine.
Many countries are no longer using gas supplied by Russia, so there is greater demand and a higher cost for gas supplied from other places.
Inflation
Inflation can mean the cost of things like food can go up
Inflation is a change in the value of products - meaning they cost more and your money doesn't go as far as it used to.
It also means that money people have earned or saved has less value, because with prices going up, it's more expensive to buy items such as food.
Governments don't like inflation as often it makes people poorer.
Interest rates
Interest rates means the cost of borrowing money. Many people or businesses depend on borrowed money, loaned by banks, to help them pay for certain things.
The interest is extra money that they need to also pay back along with the money they have borrowed. The interest rate is normally a percentage of the original amount.
So higher interest rates mean people end up paying much more money back to the bank than they borrowed in the first place.
Recession
A good, healthy or strong economy sees growth, which happens when businesses sell more and as a result the country makes more money.
It usually means there are more jobs, companies are more successful and can pay employees more money. But when an economy shrinks these things can go in reverse.
The economy starts to shrink when people spend less on goods and services, this can happen when they can no longer afford to buy things.
If the economy shrinks for a period of six months in a row, then this is then called a recession.
Strike
A strike, sometimes known as industrial action, is when a group of workers decide to stop working to try and force change.
Employees do this when they want to protest against something they think is unfair where they work, like pay or working conditions.
Strikes often happen because workers want those in charge to listen to what they want.
Employees hope that by stopping working, the people who make decisions about issues that affect them will listen to their demands.
Strikes can have a big impact on people's daily lives. For example, railway strikes can affect people's journey to work or school, and strikes by nurses may affect the ability of the health service to properly treat those needing care.
Taxes
Taxes are one way the government can raise money to pay for things.
Income tax is charged on money earned in wages from jobs. Corporation tax is a charge on a company's profits.
National Insurance contributions pay for things like healthcare, and both employers and employees pay it.
Value-added tax (VAT) is an added charge on sales of goods and services based on the value of the item sold, and is added to the price you pay at the till.
Council tax is a charge issued by local authorities to people living in a certain area, and is based on the value of the home and the number of people in a household. It is used to pay for local services, such as bin collection and street lights.
Universal credit
Universal Credit is a payment given by the government to people who don't earn a lot of money, don't have a job or need extra support in other ways.
Often called a "benefit", the money is used to help with living costs such as bills, food or childcare.
- Published26 August 2022
