August 16, 2022

The Bank of England warned that the British economy is heading into a prolonged recession as it raised interest rates to fight inflation amid fears of 13 or 15 per cent inflation by the end of the year.

The Bank of England raised interest rates to 1.75 percent on Thursday, the highest level since the 2008 financial crisis. The central bank raised interest rates in hopes of easing expected increases in inflation, which is now expected to reach 13.3 percent this year, the highest level in four contracts.

It is now is expected That at the end of the year, the British economy will plunge into a recession lasting at least five quarters, with a recession defined as two consecutive quarters of negative growth.

The bank warned that the recession will not leave the economy smaller than it was before the Chinese Corona virus crisis, as the number of workers will be reduced by 900,000 people by 2025, and the economic crisis is expected to have a significant impact on wages.

According to the forecast, real household income is expected to decline the most since records began in 1963, declining 1.5 percent this year and 2.25 percent in 2023.

Bank of England Governor Andrew Bailey announces rate hike He said: “I understand the huge impact this will have and how difficult the cost of living challenges are for families. Inflation hits the least wealthy the most.

“If we don’t target inflation, it will only get worse.”

However, the central bank said it does not expect inflation to return to its 2 percent target until 2025.

Commenting on the bank’s performance, Brexit leader Nigel Farage said: He said: “The Bank of England has completely let us down. They didn’t expect inflation to go up. Then they told us it was ‘temporary.’ Now they say it’s here to stay for years and it will be 13%.

“They are so bad that they make politicians look good!”

While the Bank of England expected inflation to reach 13.3 per cent, others, including Resolutions, have warned that it will rise even higher, with the think tank claiming it could reach 15 per cent by early next year.

Inflation started in earnest last summer after lockdowns began to pick up, however, persistent inflation is mostly due to the escalating energy crisis. Analysts are now warning Britain’s energy bills could rise to £4,200 in January after another increase to the energy cap, a UK socialist system supposedly aimed at keeping energy prices low for middle- and lower-class families.

Jack Leslie, a senior economist at Resolution, said: “The inflation outlook is highly uncertain, driven largely by unpredictable gas prices, but changes in recent months indicate that the BoE is likely to expect Higher and later inflation – potentially as high as 15 percent in early 2023.”

Follow Kurt Zindulka on Twitter here Tweet embed

Source link

Leave a Reply

Your email address will not be published.