The Bank of England is warning that the UK is facing the longest recession since records began, as it raised interest rates by the most in 33 years.
The central bank once again raised interest rates to cope with the crippling inflation and as the supposedly Conservative government is preparing to again impose more taxes.
The Bank believes the economy already entered a “challenging” downturn this summer, and predicts thish will continue next year and into the first half of 2024
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Bank chief Andrew Bailey warned of a “tough road ahead” for UK households, but added it had to act forcefully now or things “will be worse later on”
Breitbart reports: In addition to facing the prospect of higher tax bills under Chancellor Jeremy Hunt’s upcoming Autumn budget, Britons were informed by the Bank of England on Thursday that it would be raising interest rates by 0.75 per cent to 3 per cent, the largest single increase since in thirty years and puts the current rate on par with the aftermath of the 2008 global financial crisis.
To put the rate hikes in context, those households with a £200,000 standard variable mortgage may see their payments increase by as much as £1,000 a year if the Bank raises rates to 3 per cent.
The central bankers went on to predict that the UK will enter into the longest recession seen in a century, saying that the recession, which began in the third quarter of 2022 will last until at least midway through 2024. The predicted two-year recession is an increase from previous forecasts which forewarned of a 15-month downturn and would be the longest recession since records began in the 1920s.
Responding to the rate hikes, Finance Minister Jeremy Hunt said: “Inflation is the enemy and is weighing heavily on families, pensioners and businesses across the country. That is why this government’s number one priority is to grip inflation, and today the Bank has taken action in line with their objective to return inflation to target.
“Interest rates are rising across the world as countries manage rising prices largely driven by the Covid-19 pandemic and Putin’s invasion of Ukraine. The most important thing the British government can do right now is to restore stability, sort out our public finances, and get debt falling so that interest rate rises are kept as low as possible.”
The announcement comes as Rishi Sunak and finance chief Jeremy Hunt are reportedly planning on extending the windfall tax on oil and gas companies, despite warnings that this could drive away investment from Britain and thereby prolonging the UK’s reliance on foreign energy sources.