Posted: Thursday, November 3, 2022 – 10:39 PM | Last Updated: Thursday, 3 November, 2022 – 10:39 PM
Britain is headed for the longest recession in modern history without a recovery until the summer of 2024, the Bank of England warned on Thursday.
The gloomy view came from bank officials when the Monetary Policy Committee voted 7 to 2 in favor of raising interest rates from 2.25 percent to 3 percent to control inflation.
But in its report accompanying the interest rate decision, the Monetary Policy Committee said the British economy faces a “very difficult outlook”, British newspaper “Evening Standard” reported.
GDP is expected to contract by 0.75 percent in the second half of 2022 and remain stagnant through 2023 and the first half of 2024 before a recovery begins.
Also, inflation is expected to rise to 11 percent and unemployment to 6.5 percent.
Treasury Secretary Jeremy Hunt said: “Inflation is the enemy and significantly affects households, pensioners and businesses across the country. That is why this Government’s first priority is to get inflation under control and today the Bank has taken action to meet its target. Inflation is back on target.”
He added, “Interest rates around the world are rising as countries manage inflation driven largely by the Covid-19 pandemic and the invasion of Ukraine.”
“The most important thing the British government can do now is to restore stability, get our public finances in order and reduce debt so that interest rate rises are as low as possible,” he said.
“A healthy money and stable economy are the best ways to deliver low mortgage rates, more jobs and long-term growth. However, there are no easy choices, and to do that we have to make tough tax and spending decisions.”
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