Personal finance is set to take a hit as the financial markets tank. Carter said he was sure it could beset his life in due course, "particularly if there's anything that goes wrong in the financial markets again."
Many British households shared his sentiment. As the new government tried to bolster the economy with big financial giveaways, analysts said people's incomes would sink since the measures could lead to higher inflation and mortgage payments before long, and higher borrowing exacerbates tax and spending trade-offs in the future.
"It is a gamble, and it is far from guaranteed to pay off," said Thomas Pope, deputy chief economist at the think tank Institute for Government.
SOARING INFLATION
Sonia Mauro Ovicovaq runs a street food business in northwest London. Rising prices have been a headache. Britain's consumer price index (CPI) rose by 9.9 percent in August, down from a 40-year high of 10.1 percent in July, but still at an elevated level.
Energy bills have been so high that people throw on jumpers to avoid heating the house, Ovicovaq said. "Everybody's watching the spending, and you can see that," adding that it has gotten more expensive to run the business as the costs of petrol and ingredients rise.
The latest fiscal plans are not helping. Many are concerned the tax cuts will be inflationary. They will give a boost to the economy of roughly 1 percent over the next year compared to under the previous fiscal plans, but also boost inflation by almost as much in the medium term, said economists at advisory firm RSM UK.
Worse yet, the British pound has tumbled to record lows against the U.S. dollar as the government package raised severe concerns over its fiscal health and dented international confidence in its economic future.
A weak pound means it will be more expensive for British businesses to import goods and services denominated in the dollar. According to analyst Myron Jobson at the investment service interactive investor, many will have no choice but to pass on costs to consumers.
Imports make up around a third of households' consumption, and the depreciation of the sterling will push up inflation and reduce living standards by around 1 percent, noted the think tank Resolution Foundation. Most of that impact will be felt over the next year, further exacerbating Britain's cost-of-living squeeze.
The problems for consumers continue to pile up. Oil prices have also rebounded, hitting their highest in months. "With the oil price ratcheting back up there is also going to be more pain at the pumps to come, especially with fresh weakness in sterling," said analyst Susannah Streeter at financial services company Hargreaves Lansdown.
Amid persistently high inflation, Ovicovaq has raised the prices of the food she sells. "People are complaining, but you can't sustain it. That's the problem," she said.
RISING RATES
Amid the uncertainty, however, one thing is clear: interest rates will have to rise further than analysts previously thought to offset the government's loose fiscal policy and any extra inflationary impulse from the lower pound, said economist at Capital Economics consultancy Paul Dales.
The fiscal boost might extend the central bank's battle to tame inflation, said Jason Hollands, managing director at investing platform Bestinvest. "We have a situation where rate setters are tapping on the economic brakes with increasing ferocity, at the same (time) the UK government has decided to put its foot hard on the accelerator."
Sterling volatility, market uncertainty and rate rises have pushed up the cost of mortgages. That has put fresh pressure on 18-year-old Blendi Gerxhalija, who lives with his parents in London. His family has a fixed-rate deal for three years, Gerxhalija told Xinhua. But with rising interest rates, "then what's going to happen?"
To tackle high inflation, Britain's central bank has increased interest rates to 2.25 percent, the highest since 2008. For a homeowner with a 140,000-pound mortgage and residual maturity of 17 years, rates rising to 5 percent would mean an increase in monthly payments by around 190 pounds relative to rates staying at 2.25 percent, said the Resolution Foundation.
Though the government has announced cuts to the Stamp Duty Land Tax, paid when buying a property or land over a certain price, the savings are "likely to pale in significance against the cost-of-borrowing increase," noted Tom Pugh, an economist at the business advisory firm RSM UK.
With interest rates expected to jump significantly over the coming months, "chatter of a mortgage time bomb is getting louder as those on fixed-rate deals expiring soon could now see huge sums added to their monthly repayments when they come to renew," said analyst Alice Haine at Bestinvest.
WIDENING GAP
Lower-income families will likely suffer the most as higher energy prices erode household wealth.
Despite the support package announced by the government, millions of households will remain exposed to unaffordable energy costs, said economist Jonathan Marshall at the Resolution Foundation. "People living in poorly-insulated homes will see bill increases this winter that are more than double that for families in well-insulated homes."
Against this backdrop, the tax-cutting package was widely criticized for favoring high earners. The Resolution Foundation found the wealthiest 5 percent of households stand to gain 3,500 pounds on average next year from the tax cuts, almost 40 times as much as the average 90-pound cash gain for the poorest fifth of households.
While the policy was designed to boost growth for all, Andrew Penny, also a London resident, snubbed it as a bad idea. "The principle behind it is quite wrong," he told Xinhua. "I don't think making rich people richer does make everyone richer."
On top of that, high borrowing caused by tax cuts means the government would spend less on services.
The British government is likely to need to announce fiscal tightening, and therefore spending cuts, for debt to fall, said the Resolution Foundation. The painful policy choices include cutting back public investment and uprating benefits by earnings instead of inflation next year, costing a typical low-income working family with two children over 1,000 pounds a year.
Public anger has escalated following the fiscal plan. According to a YouGov survey, half of Britons say the budget will leave the country worse off, and 37 percent say it will leave themselves and their family worse off.
And 72 percent of Britons blame the government's economic policies for the rising cost of living, up 9 points from March, showed an Ipsos poll in September.
"The way you sort our problems is not by pandering to the rich," Gerxhalija told Xinhua.
As winter approaches, Gerxhalija's family is trying to get double-glazed windows to retain inside the house. "We used to in winter turn on the radiator," he said. "Now we just have to use blankets and jumpers and whatnot."
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