The cost-of-living crisis is sweeping across the country and has the potential to affect local councils and their reserves.

Steven Thomas, Blaenau Gwent’s Council leader, expressed that the cost of living crisis is already biting hard into their finances.

Mr Thomas said: “Like all public sector organisations, higher interest rates on borrowing combined with increased pressures due to inflation will impact and increase overall costs.

“Where those costs exceed the agreed budget, it is likely to reduce the level of the council’s reserves.”

Last week, the Bank of England raised interest rates by half a percentage to tackle inflation and 24 hours later Prime Minister Lizz Truss unveiled plans for the biggest tax cuts in 50 years.

On Monday the pound crashed to a record low against the US dollar.

Anthony Hunt, Torfaen’s Council leader, said: “This council, as with all other parts of the public sector, is experiencing financial pressure from a variety of sources of which high inflation is a particular concern, especially going into 2023/24.

“It is too early to know the full impact upon reserves, but clearly adequate funding from the Uk Government to help address those pressure is key.”

Mary Ann Brocklesby, Monmouthshire’s County Council leader, said: “Market turbulence is never a good thing.

“We do have a forward programme of investment that is reliant on borrowing, notably a new build 3-19 school.

“It is too early to quantify additional unbudgeted cost associated with higher interest rates but there will certainly be a cost that we will need to finance.”