Bank of England warns UK economy to shrink as interest rates rise

06 May 2022

The Bank of England has warned that the UK economy will shrink this year as it raised interest rates to try to stem the pace of rising prices.

Rates rose to 1% from 0.75%, their highest level since 2009 and the fourth consecutive increase since December.

Inflation, at its highest for 30 years, is set to breach 10% by the end of the year, with fuel, energy and food costs soaring.

The UK economy is now expected to contract in the final three months of this year.

Alpesh Paleja, CBI Lead Economist, said: 'Another rise in interest rates is warranted, given the persistence of high inflation. However, the Monetary Policy Committee are walking an increasingly fine line.

'Further action to curb price pressures needs to be weighed against the increasing need to protect growth, particularly in light of a historic cost-of-living crunch. Households are feeling it and so are businesses, with cost pressures across the board.

'While monetary policy is the appropriate first line of defence in tackling inflation, government needs to take further action to shore up the broader resilience of the UK economy. In the near-term, higher inflation will hit poorer households hardest, so support measures for this group will need to be kept under review.'

Copyright

© 2022 Andrew Wright & Co.. All rights reserved.

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

Please call:
01924 379479

Address
Andrew Wright & Co., 10 Cliff Parade, Wakefield, West Yorkshire WF1 2TA


In the UK the term accountant is not protected by law, therefore anyone can call themselves an accountant. Being an ACCA member firm means that you can have confidence that we are qualified to handle your finances, help your business grow and that we are regulated by the leading accountancy body in the world. The ACCA Qualification provides a wide-ranging skill-set, which means we are trained to provide both strategic and operational input and adapt quickly to your changing management accounting needs.

Unqualified persons who have trained for book-keeping or tax only simply aren't able to provide these other services as their skillset is too narrow.

Andrew Wright & Co is a trading style of Andrew Wright & Co Limited. Registered in England and Wales: 10641250. Registered office: 10 Cliff Parade, Wakefield, West Yorkshire, United Kingdom, WF1 2TA.