The UK is already in recession, the Bank of England warns, and it could be a prolonged one too.
The Bank estimates that the UK entered recession in the third quarter of this year, and that this downturn will last until mid-2024.
It warns:
The MPC’s latest projections described a very challenging outlook for the UK economy. It was expected to be in recession for a prolonged period and CPI inflation would remain elevated at over 10% in the near term.
Unemployment is expected to rise too, with the jobless rate seen hitting almost 6.5% by late 2025 – up from just 3.5% at present.
They’ve lost the plot, these inflationary pressures are from external forces beyond the banks control, suppressing spending power and putting up mortgages will not help imo. Talking down the economy will not help either, he wants a recession he’ll get one.
The idea is surely that people have less money to spend since they either have to pay more to lenders and mortgages, or they’d rather hoard it for interest, and so companies have to keep their products cheap if they are to maintain the number of sales, which suppresses inflation.
Everything is connected though, which makes it a very fine balancing/juggling act.
We have the same problem here, on the 1st Nov the Reserve Bank of Australia (RBA) raised the cash rate by 0.25% to 2.85% which is the highest for nine years. House prices in capital cities are falling.
Inflation reached a surprise 32-year high of 7.3 per cent in September, prompting some analysts to tip a half percentage point rise. The RBA now expects inflation to peak “around 8 per cent” by the end of the year. It upwardly revised its inflation forecasts for the next two years, tipping it to still be at 4.75 per cent by Christmas 2023.
The RBAs target range for inflation is between 2 and 3%
