Brits face an even greater squeeze on their budgets after Jeremy Hunt reversed Liz Truss ' tax cut plans.
The new Chancellor ditched a promised 1p cut in the basic rate of income tax as part of his announcement today.
He also scrapped a pledge to freeze yearly household energy bills at £2,500 for two years.
The "Energy Price Guarantee" will only help the poorest after April, Mr Hunt signalled.
It comes after Mr Hunt was parachuted into No11 after Ms Truss sacked his predecessor Kwasi Kwarteng.
He is desperately attempting to stabilise the markets after the Government's disastrous mini-budget crashed the pound.
In one of the biggest U-turns in political history, Mr Hunt junked almost all remaining measures from the mini-Budget.
IR35 tax rules for self-employed people will remain in place.
Plans for a £1bn cut in dividend tax and £2bn VAT-free shopping for visitors to the UK have been scrapped.
A £600m freeze on alcohol duty has also been abandoned.
One of the biggest blows was Mr Hunt's decision to scrap plans to cut Income Tax from 20p to 19p in every pound next April.
Income Tax might not even be cut in 2024 - like the Tories promised.
Instead it will remain at 20% "indefinitely until economic circumstances allow it to be cut", saving £6bn a year.
Only three major announcements from the mini-Budget three weeks ago - a cut to Stamp Duty, a cut to National Insurance from April and a £1m annual investment allowance - will still take effect.
It comes after ministers already junked a £19bn-a-year cut to corporation tax - despite Liz Truss saying this "would damage growth and innovation" - and U-turned on plans to remove the 45p top Income Tax rate for the wealthiest Brits.
But wealthy bankers will still get unlimited bonuses under plans to scrap a cap, the Treasury confirmed.
Here is how the Government's U-turn will affect you:
Q: Will my energy bill jump next April?
A: Yes, for many, but not for all. The Government has watered down its promise to keep a lid on energy prices for two years to just six months instead.
The Treasury will decide who gets help after April, with “support for those in need.”
Just who that applies to, nobody knows yet.
Q: Will mortgage rates keep rising?
A: Bond yields - which influence mortgage rates - dropped a bit yesterday, easing the pressure.
Ray Boulger, senior mortgage technical manager at experts John Charcol, said: “I think mortgage fixed rates are close to a peak and we will start to see rates falling by next week.
“Therefore anyone who can wait should talk to their broker now so they are ready but delay choosing a lender and rate.”
Q: But will the Bank of England still hike interest rates?
A: Very likely, but perhaps not as much as feared.
Money markets are currently pricing in a good chance that the Bank’s base rate - which influences other borrowing costs -
will rise from the current 2.25% to 3% in early November, but could still jump to 3.25%.
Economists now think it will peak at around 4.5%, when it had been expected to reach 4.75% or higher.
Q: Is all the drama in the financial markets over?
A: Far too early to tell. Much could depend on what’s in the Chancellor’s big announcement on October 31 - expected to include spending cuts - and, crucially, the Office for Budget Responsibility’s take on it all.
