Bank of England raises interest rates to 1.75% as recession predicted later this year
Governor Andrew Bailey urged workers to limit their demands for a pay rise this year warning of the impact of high inflation on those who don’t have “bargaining power”.
“If everybody tries to beat inflation, it doesn’t come down, it gets worse, that’s the problem,” Mr Bailey said.
However, his suggestion was met with strong criticism as unions urged it was “not for hard-pressed workers to cut back even further.”
Kate Bell, head of economics at TUC: “Without wage increases, working people will simply stop spending on anything non-essential – and that will hurt our high streets, damage business and make a recession very likely, putting jobs at risk up and down the country.”
ICYMI: UK faces long recession and deepest plunge in living standards on record
Yesterday the Bank of England announced that interest rates would be increased to 1.75 per cent, in addition to an ominous warning that Britain will plunge into a year-long recession this autumn in which households will be hit by the deepest fall in living standards on record.
In one of its bleakest ever assessments of UK economic prospects, the Bank’s Monetary Policy Committee (MPC) said inflation will now peak at 13.3 per cent in the final three months of this year as average energy bills treble from £1,200 in 2021 to £3,500 by October.
The economy is now forecast to shrink in five consecutive quarters for the first time since the global financial crash of 2008.
More below from our business correspondent, Ben Chapman:
Country to enter recession this year and economy on course to shrink for five straight quarters
Thomas Kingsley5 August 2022 10:42
Good morning and welcome to The Independent’s live blog coverage following yesterday’s interest rate announcement. We’ll be bringing the latest updates as the nation reacts to the Bank’s recession warning.
Thomas Kingsley5 August 2022 10:38