The Bank of England raise interest rates to 3 per cent

Today (Thursday 3rd Nov) the Bank of England has raised the base rate of interest from 2.25 per cent to 3 per cent, the largest increase in more than three decades stating that the UK is in a recession.

The Bank of England has forecasted eight successive quarters of GDP decline, which would make it the prolonged recession since comparable records began.

The Bank of England’s governor, Andrew Bailey stated that, “From where we stand now, we think inflation will begin to fall back from the middle of next year, probably quite sharply. To make sure that happens, Bank rate may have to go up further in the coming months… but by less than currently priced in financial markets.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown commented: “The Bank of England threw a black cloud over the UK economy today, shrouding it in gloom. It warned that we’re set for a miserable recession throughout next year and the first half of 2024.

“While this will dampen inflation, it will also pour a bucket of cold water on the labour market, so after such a long period of our wages falling behind inflation, we run the risk of losing those wages altogether.

“The pain of inflation isn’t over yet. The Bank now expects it to be 11 per cent in the last three months of this year, before dropping back from early 2023 as previous energy price hikes drop out of the calculations.”

Andrew Goodacre, CEO of BIRA (the British Independant Retailers Association) said: “As expected interest rates have increased and this continues the current trend for negative news for consumers and businesses alike.This latest increase will further dampen consumer confidence and reduce spending at the busiest time of year for retailers.

“When the Chancellor delivers his Autumn statement on the 17th November, we must see some positive news for independent retailers who are increasingly concerned about the future of their business and the communities they serve.

“I do not doubt the challenges faced by the Chancellor and yet we cannot afford to increase the burden on high street retailers. Independent retailers need assurance that business rates will not be increased and energy support will still be in place next year.”

By Mark Adair – Correspondent, Bdaily

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