Britons would struggle to pay bills if interest rates doubled

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Fifty-two percent said they would struggle to pay council tax and energy bills while 44 percent would need to use their savings to make ends meet. Setting interest rates is one of the ways the Bank of England can try to control the economy. 

If interest rates go up, it can make borrowing more expensive, especially for homeowners with mortgages, and can rein in spending in favour of saving. Lower interest rates tend to increase spending.

People appear to understand the impact of higher inflation rates, the poll found. Three-quarters of those quizzed said correctly that repayments would increase for those not on fixed-rate mortgages.

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But Ipsos Mori, who surveyed 2,100 adults, said just three in 10 knew the current interest base rate was 0.1 percent. One in five incorrectly thought it was 0.5 percent.

Flora Vieites, of Ipsos Mori, said: “While only a third of people can accurately say what the current rate is, it’s great to see that most would know what the impact of higher inflation would have on their circumstances.

“Given our newfound freedoms, people are likely to be out spending, which may bring inflation back into line, however should that not be the case and we find inflation continuing to rise, and the furlough scheme shortly coming to an end, the proportions of those who are financially vulnerable are likely to increase.

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“For many the boom and bust years of inflation are a distant memory. While we can hope it stays that way, this research shows that we need to think about who could be affected if the situation changes.”

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