Russia’s barbaric war in Ukraine could make families suffer and push the UK into recession
Experts say the Bank of England has a ‘high probability’ of raising interest rates. There is also concern that the consequences of the conflict in Ukraine could lead to increased costs for businesses
Image: AFP via Getty Images)
Experts warn Russia’s war with Ukraine could deal another hammer blow to households here, and even push Britain into recession.
As Vladimir Putin’s barbaric assault drags on, the financial impact on UK families and companies grows larger.
Diesel hit a record 170p/litre yesterday and research shows energy bills will grow at least 14 times faster than wages this year.
Experts say the Bank of England has a “high probability” of raising interest rates.
Yesterday’s Office for National Statistics figures showed the economy was recovering from Covid, with gross domestic product growing 0.8 percent in January, after falling 0.2 percent in December. . However, Prime Minister Rishi Sunak warned that any momentum could be lost, saying: “Russia’s invasion of Ukraine is creating significant economic instability.”
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There are also concerns that the conflict could lead to increased costs for businesses, undermine consumer confidence and even send the economy into reverse. Suren Thiru, head of economics at the British Chambers of Commerce, said: “The Russian invasion has increased the risk of a recession in the UK by exacerbating already tight inflation for consumers and businesses, and at the same time skewing the supply of important goods”.
The BCC urged Mr. Sunak to use his Spring Statement to delay the April National Insurance increase. It also warned of a Bank rate hike next week, as experts warn a rise between 0.5% and 0.75% is very likely.
Farmers face rising energy costs, with soaring oil and gas prices leading to huge bills for those heating greenhouses. “It’s a very, very serious situation,” said National Farmers Union President Minette Batters.
Any large drop in output could force more supplies from abroad, potentially pushing up prices.
Wheat prices are at record highs because Ukraine is a major grain producer.
Bread, potatoes and pasta can go from 10% to 50%. “It wasn’t good before the war, it’s worse now,” said Jason Bull, flour supplier Eurostar Commodities. Thomas Pugh, economist at accounting firm RSM, predicts the price of a loaf of bread, currently around £1.20, will rise 24p.
Feed, energy and labor have pushed up the cost of chicken farmers by 50% in a year.
The impact on shoppers depends on what supermarkets infuse but their prices are rising at the fastest rate in more than eight years, with overall inflation at 5.5%, a 30-year high. .
The drivers are feeling pain when pumping. The RAC and AA said the UK average for diesel rose by almost 3p a litre in just 24 hours, to an all-time high of 170p.
Unleaded has increased by 8p a liter in a week, to more than 161p. RAC’s Simon Williams warned prices could continue to stay high, although oil has fallen from a 14-year high of $138 a barrel at the start of the week to $111. “Drivers will wonder if these record spikes will ever stop,” he said.
However, the AA said the drop “gives hope that pump prices may now level off and hopefully fall”.
A wave of record energy price increases is set to begin next month with the TUC predicting bills to grow at least 14 times faster than wages this year. Electricity and gas bills increased by an average of 54% when the price cap was set by regulator Ofgem in April. Experts say the price cap could rise to more than £3,000 by October if wholesale energy costs continue to rise.
TUC Secretary General Frances O’Grady called for “a tax on oil and gas profits, using the proceeds to provide energy needs, not loans.” . The Lib Dems called for a reduction in VAT, from 20% to 17.5% for a year, to save the average family £600 a year.
https://www.mirror.co.uk/money/warning-interest-rates-could-rise-26448351 Russia's barbaric war in Ukraine could make families suffer and push the UK into recession