Summary:
- As the Bank of England raised interest rates by the biggest amount in 33 years, it warned that the UK is going through its longest recession since records began.
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It said that the UK economy would go into a “very tough” two-year slump and that unemployment would almost quadruple.
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Many households are struggling due to the fastest rate of living increase in forty years.
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According to the Bank, the UK will not have the most significant recession in its history, but it will be the longest since records have been kept.
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With prices rising by 10.1% in the year to September, the cost of living is growing at its quickest rate in 40 years.
As the Bank of England raised interest rates by the biggest amount in 33 years, it warned that the UK is going through its longest recession since records began.
It said that the UK economy would go into a “very tough” two-year slump and that unemployment would almost quadruple.
It caused the most significant increase in UK interest rates since 1989, from 2.25% to 3%.
Since 2008, when the UK banking sector was in danger of collapsing, borrowing costs have reached their highest level.
Many households are struggling due to the fastest rate of living increase in forty years.
When a nation’s economy contracts for two consecutive quarters of three months, it is said to be in a recession. Companies typically make less money, salaries may decrease, and unemployment may increase.
According to the Bank, the economy experienced a “difficult” decline this summer, which will likely last until the first half of 2024, a year that could see a general election.
According to the Bank, the UK will not have the most significant recession in its history, but it will be the longest since records have been kept.
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The hike in interest rates may force me to leave the United Kingdom.
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Why is the price increase so pronounced?
According to Chancellor Jeremy Hunt, inflation is “heavily burdening families, retirees, and businesses,” and the government’s top objective is to “grip” it.
As nations attempt to control soaring costs, partly brought on by the COVID-19 outbreak and Putin’s invasion of Ukraine, he noted that interest rates were rising globally.
The restoration of stability, the management of our public finances, and the reduction of debt are the three most crucial things the British government can do to keep interest rate increases to a minimum.
With prices rising by 10.1% in the year to September, the cost of living is growing at its quickest rate in 40 years.
The bank thinks that raising interest rates will make it more expensive to borrow money and deter people from making purchases, relieving pressure on prices.
Although savers will applaud its most recent rate increase, people with mortgages, credit card debt, and bank loans will also be impacted.
The bank said customers whose mortgage contracts are ending would have to pay £3,000 more each year if interest rates keep increasing.
Analysis by: Advocacy Unified Network
