The Bank of England has cautioned the UK will sink into recession as it increased the interest rates by the most almost in 27 years. The economy is predicted to shrink in the ending three months of this year and will keep on shrinking till the end of 2023.
Interest rates increased up to 1.75% as the Bank struggles to stem soaring costs, with inflation now in position to hit over 13%.
Andrew Bailey, the governor said that he was aware the cost of living squeeze was tough but if it didn’t increase interest rates it would become “even worse”. The main reason for increase in inflation and reduction in growth is the result of towering energy bills, caused by Russia’s invasion of Ukraine. A general household will be endowing almost £300 per month for their energy consumption by October, the Bank cautioned.
The anticipated recession would be the prolonged downturn since 2008, when the UK banking system experienced collapse, bringing lending to a stop.
The fall is not positioned to be as huge as 14 years ago but may last just as long.
Andrew Bailey expressed his huge sympathy and huge understanding for all those who are struggling most with the cost of living.