BoE warns of recession as it raises interest rates again

05 Aug 2022

The Bank of England (BoE) has warned that the UK will go into recession later this year as it raised interest rates for the sixth consecutive time.

The largest increase in UK interest rates in 27 years saw the base rate rise to 1.75%, up from 1.25%.

The Monetary Policy Committee made the decision as inflation is set to soar over 13% by the end of this year, the Bank warns, and remain elevated in 2023.

Announcing today's interest rate decision, it says the surge in gas prices mean inflation will be even higher than previously feared.

The BoE also said that the UK is projected to enter recession from the fourth quarter of this year. Real household post-tax income is projected to fall sharply in 2022 and 2023, while consumption growth turns negative, it added.

Commenting on the decision, Alpesh Paleja, Lead Economist at the Confederation of British Industry, said: 'Despite early signs of some pipeline price pressures fading, it's clear that we're in for a hard winter. With another hefty rise in Ofgem's energy price cap looming, support for the most vulnerable households and businesses should be kept under review.

'Monetary policy is the first line of defence against inflation yet building resilience to future price shocks requires a concrete plan for economic growth. So, the new Prime Minister must prioritise boosting productivity through greater business investment via incentives and business rate reforms.'

icaew logo acca logo sage logo sageone logo bas xero

Home | Contact us | Accessibility | Disclaimer | Help | Site map | © 2022 Madisons. All rights reserved.

We use cookies on this website, you can find more information about cookies here.

Madisons is a trading name of Madison Business Services Limited Registered office: Bushbury House, 435 Wilmslow Road, Withington, Manchester, M20 4AF. Company Number: 03800186, VAT Registration Number: 741 1182 67 Registered to carry on audit work in the UK and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. Details about our Audit Registration can be viewed at www.auditregister.org.uk.
Telephone: 0161 434 3535 | Fax: 0161 445 0430 | Email: enquiries@madisons.co.uk.

Address
Madisons, Bushbury House, 435 Wilmslow Road, Withington, Manchester, Lancashire M20 4AF