Banking trade body UK Finance has revealed that the rapid decline in the use of cash as a form of payment has eased.

A report published by UK Finance found that 40.4 billion payments were made in 2021, which marked a return to pre-pandemic levels. Cash payments accounted for 15% of all payments in the UK.

In 2021 there were 23.1 million consumers who used cash as a form of payment just once a month or not at all. At the same time, there were 1.1 million consumers who mainly used cash when doing their day-to-day shopping.

Debit cards proved to be the most popular form of payment method, making up 48% of all payments.

Adrian Buckle, Head of Research at UK Finance, said:

‘In 2021 we saw the total number of payments return to pre-pandemic levels and a return towards the long-run trends in payment method usage.

‘Contactless continued to be popular, accounting for almost a third of all payments. Cash usage fell slightly, although remained the second most commonly used payment method.’

Internet link: UK Finance website

The Trades Union Congress (TUC) has called on the government to increase the National Minimum Wage (NMW) rates ‘immediately’ in order to guarantee decent living standards for families.

Research carried out by the TUC found that UK poverty levels are ‘likely to get worse’ if ministers continue to hold down pay. Additional financial support for families announced by the Treasury this year will be offset by cuts to real-terms pay and other living costs, the business group added.

The TUC has called for key workers to be given a fair pay rise to meet the costs of living; more funding for the public sector so that all outsourced workers are paid at least the real Living Wage; and a boost in Universal Credit to 80% of the Real Living Wage.

Frances O’Grady, General Secretary of the TUC, said:

‘Every worker should be able to afford a decent standard of living. But millions of low-paid workers live wage packet to wage packet, struggling to get by – and they are now being pushed to the brink by eye-watering bills and soaring prices.

‘For too long workers have been told that businesses can’t afford to pay them more. But again and again the evidence has shown that firms are still making profits and increasing jobs – we can afford higher wages.

‘And higher wages are good for the economy – more money in the pockets of working people means more spend on our high streets. 

‘It’s time to put an end to low-pay Britain. Let’s get wages rising in every corner of the country and get on the pathway to a £15 per hour minimum wage.’

Internet link: TUC website

Trade body Offshore Energies UK (OEUK) has stated that the Energy Profits Levy, also known as the ‘windfall tax’, on UK energy firms should be scrapped by 2025 or it could risk having a ‘detrimental impact’ on investment in the sector.

OEUK said that a new round of windfall taxes would ‘leave the UK facing decades of energy insecurity’ and only serve to ‘heap further costs on consumers’.

The trade body warned that imposing new taxes would ‘make the UK seem fiscally unstable and a riskier place to invest’. It said that if investment in the sector declined, then production would plummet – creating a ‘disaster’ for UK energy security.

Mike Tholen, Sustainability Director at OEUK, said:

‘The government has a duty to both protect consumers and to ensure national energy security. Labour’s proposals to hit our own producers with further taxes will discourage investment and so risk a rapid decline in UK production.

‘That would mean buying more energy from abroad, increasing the UK’s trade deficit and further risking UK energy security.

‘It comes at the worst possible time for the UK offshore sector, which is still reeling from the introduction of the windfall tax in May.’

Internet link: OEUK website

Economic analysts have warned that the rate of inflation could keep rising in 2023 as a result of rising energy prices.

Think tank the Resolution Foundation stated that inflation could go above 15%, whilst investment bank Citi said that it is ‘entering the stratosphere’ and could reach 18.6%.

Predictions outlined by the Bank of England (BoE) have suggested that inflation could rise to over 13% later this year.

Commenting on the matter, James Smith, Research Director at the Resolution Foundation, said:

‘Inflation has hit double digits earlier than expected off the back of the highest food price inflation in over two decades, and is set to continue climbing as energy bills soar this winter.

‘There is no escaping this cost-of-living crisis, with pay packets shrinking at their fastest pace since 1977 and low-income households facing the prospect of cutting back ‘non-essential’ spending by 25% to cope with energy bills of over £4,000 from January.’

Internet link: Resolution Foundation website

The Treasury Committee has urged the government to provide assurance that it is not ‘flying blind’ into a potential Emergency Budget this September.

In a letter sent to Chancellor Nadhim Zahawi, Mel Stride, Chair of the Treasury Committee, asked whether the Treasury is working with the Office for Budget Responsibility (OBR) on a forecast to be published with any potential Emergency Budget that may be announced.

The Treasury Committee has outlined to the Chancellor that an OBR forecast would need to include all changes to government policy and economic and fiscal data up to when the new Prime Minister takes office.

The government usually gives the OBR ten weeks’ notice of a fiscal event, such as a Budget, to allow officials to provide an independent forecast of the economy and the UK’s fiscal position.

In the letter, Mel Stride said:

‘As a committee, we expect the Treasury to be supporting and enabling the OBR to publish an independent forecast at the time of any significant fiscal event, especially where, unlike other recent fiscal interventions, this might include significant permanent tax cuts.

‘Whether such an event is actually called a Budget or not is immaterial. The reassurance of independent forecasting is vital in these economically turbulent times. To bring in significant tax cuts without a forecast would be ill advised. It is effectively ‘flying blind’.’

Internet link: Parliament website