UK to enter recession as Bank of England raises interest rates

Economy 17:30 04.08.2022
The UK is set to enter an economic recession this winter, the Bank of England has said, as it announced its decision to raise interest rates to their highest level since 2009.
 
It predicted that inflation - a measure of changes to everyday living costs - will peak at 13.3 percent in October this year. This will be the highest inflation rate since September 1980.
 
It says that a a further rise in interest rates is needed to respond to this inflation - but some economists believe that the decision will only make the crisis worse.
 
"Against the backdrop of another jump in energy prices, there had been indications that inflationary pressures were becoming more persistent and broadening to more domestically driven sectors," the Bank said on Thursday.
 
“Overall, a faster pace of policy tightening at this meeting would help to bring inflation back to the 2 percent target sustainably in the medium term, and to reduce the risks of a more extended and costly tightening cycle later.” 
 
The Bank Rate of interest is a big factor in determining the cost of borrowing money in the UK - a rise to this rate will affect the amount people will have to pay back on loans, on their mortgages, or on credit card debt.
 
Even a small shift in this rate can have a significant impact on bills.
 
Today, the BoE announced that its rate would be hiked from 1.25 percent to 1.75 - the biggest single increase seen in the UK since the mid-nineties.
 
Economist Grace Blakeley believes that the hike will exacerbate the cost of living crisis.
 
"Raising interest rates is not going to help anything," she told ITV's Good Morning Britain this morning.
 
"It's going to make the problem worse, because you're adding on a big chunk, in terms of interest repayments, to household monthly bills.
 
"We know that raising interest rates to choke off demand in the economy isn't going to solve the fact that we're not producing enough fuel - we need to invest in renewables.
 
"We need to protect households from inflation - that means standing behind workers who are demanding wage increases in line with inflation.
 
"I think the removal of the energy price cap was a very, very bad idea from the government - we've seen that this inflation is largely being driven by rising energy bills, households need to be protected from that.
 
"Over the long run, we need to invest in sutainable energy."
 
The Bank of England has forecast that the price cap on energy bills will rise from £1,971 to £3,450 per year for the average household this October.
 
Experts from Cornwall Insight, an energy consultancy, have also predicted further hikes, to £3,616 in January and £3,729 in April. Other energy experts believe it could go higher still.
 
Earlier today, energy regulator Ofgem confirmed that the energy price cap is to be updated quarterly, rather than every six months, as it warned customers face a “very challenging winter ahead”. 

 

IEPF issued a statement regarding Azerbaijani children at the UN Human Rights Council

News line

Russia accuses Ukrainian military chief of ordering downing of war prisoner plane
22:10 05.07.2025
Türkiye supports firefighting operations in Syria’s Latakia
22:00 05.07.2025
UNRWA calls for immediate fuel delivery to Israel-blockaded Gaza before shutdown of basic services
21:45 05.07.2025
Pashinyan: Armenia needs new constitution
21:20 05.07.2025
UN chief condemns Russia's recent 'series of large-scale' attacks on Ukraine
21:00 05.07.2025
Kazakh servicemen arrive in Azerbaijan to participate in Tarlan - 2025 exercise
20:45 05.07.2025
Erdogan: US has crucial role in achieving ceasefire in Gaza
20:20 05.07.2025
Building collapse in Pakistan kills 15
19:45 05.07.2025
Turkish FM Fidan to attend 17th BRICS Leaders Summit in Rio de Janeiro
19:30 05.07.2025
Australia pledges $283M for green energy project by explosives maker
19:10 05.07.2025
OPEC+ speeds up oil output hikes, adds 548,000 bpd in August
18:45 05.07.2025
Inter completes signing of Ange-Yoan Bonny from Parma
18:20 05.07.2025
Turkish president sees Zangazur corridor 'as part of the geoeconomic revolution'
18:00 05.07.2025
Turkish president urges Azerbaijan, Russia to show restrain amid tension
17:45 05.07.2025
China says war 'not a solution' to Iranian nuclear issue
17:15 05.07.2025
At least 18 people injured after fire alert on Ryanair plane in Majorca as passengers abandon jet & leap from wing
17:00 05.07.2025
Azerbaijani PM meets with UNESCAP executive secretary
16:45 05.07.2025
Lebanese president affirms coordination with Syria, warns against sectarian tensions
16:15 05.07.2025
21 killed in Israeli strikes on tents, school-turned-shelters in Gaza Strip
16:00 05.07.2025
Turkish construction sector takes on international projects worth $6.2B in first half of 2025
15:45 05.07.2025
Azerbaijani woman wrestler becomes European champion
15:30 05.07.2025
Mayor: Death toll in Russian attacks on Kyiv reached two
15:15 05.07.2025
Texas floods kill 24 people and leave many missing from girls' summer camp
14:45 05.07.2025
Conor McGregor has interest in White House fight after Trump's UFC idea
14:30 05.07.2025
Netanyahu era sees 40% surge in Israeli settlements in occupied West Bank
14:15 05.07.2025
Equatorial Guinea sues France in UN court to block sale of Paris mansion
14:00 05.07.2025
US president 'disappointed' over phone call with Putin
13:45 05.07.2025
Academy of Azerbaijan`s State Security Service hosts graduation ceremony
13:30 05.07.2025
Azerbaijan and Pakistan ink memo in Khankendi
13:15 05.07.2025
Trump says there could be Gaza deal next week
13:00 05.07.2025
First flight from Türkiye to Syria launched
12:45 05.07.2025
US marks its 249th anniversary of independence
12:30 05.07.2025
Azerbaijan's role in regional integration discussed at London conference
12:00 05.07.2025
Uzbek Minister: Mirziyoyev's visit to Azerbaijan crucial for dev’t of transport links
11:45 05.07.2025
Trump says US will start talks with China on TikTok deal this week
11:30 05.07.2025
Prime Minister of Pakistan Muhammad Shehbaz Sharif concludes visit to Azerbaijan
11:15 05.07.2025
Pakistani premier proposes low-emissions corridor at Economic Cooperation Organization summit
11:00 05.07.2025
Rwanda pledges to deliver on its part of US-brokered peace deal with DR Congo
10:45 05.07.2025
Hezbollah rejects calls to disarm before end of Israeli ‘aggression’ against Lebanon
10:30 05.07.2025
Trump says Gaza ceasefire deal may come next week after ‘positive’ Hamas response
10:15 05.07.2025
Hamısı