Pundits have warned the UK could slip into recession as inflation continues to soar and the Bank of England is forced to hike interest rates for a fifth time
Interest rates are at their highest in more than a decade and inflation could top 11 percent as experts warn the UK may already be in recession.
On Tuesday (June 15) the Bank of England raised interest rates again – this time by a quarter of a percentage point.
It was the bank’s fifth straight hike since December and means rates are now at 1.25 percent, a 13-year high.
But some experts fear interest rates could rise as high as 3 percent as the government struggles to get the economy back on track amid an ongoing cost-of-living crisis.
And inflation could hit a staggering 11 percent in the fall.
Despite the Bank of England forecasting the UK economy could contract by 0.3% in the second quarter, Chancellor Rishi Sunak said the British public should be “confident” that he can rectify the situation.
“We have the tools we need and the determination to get inflation going again,” he told ITV News.
“I’ll make sure I’m borrowing responsibly so we don’t make things worse and raise mortgage rates more than they are.”
Sunak added that the government will cut inflation and that “strong growth” will return to the economy.
However, an economic adviser to former Chancellor George Osborne issued a dire warning that Britain may already be in recession.
“It is now very, very likely that the second quarter will be negative growth,” he told the BBC.
“We could see a mechanical recovery in Q3, partly for complicated reasons due to the anniversary holiday. But in real terms growth is around zero and could deteriorate in the fall, especially if energy prices rise.”
Cabinet Secretary Michael Gove acknowledged the UK economy was facing a “challenging and difficult time”.
Speaking at the Times CEO Summit, he said: “When you push inflation out of the system, you are bound to be relying on fiscal and monetary policy, which means you can’t do all the things that you would ideally want people in support during a difficult time.”
https://www.mirror.co.uk/news/uk-news/brits-warned-uk-may-already-27257756 Brits warned Britain 'may already be in recession' as inflation could rise to 11%