The Bank of England has warned that the United Kingdom’s economy will enter recession later this year.
The Bank has cut its growth forecasts, and now sees the economy falling into recession from the October-December quarter which is said to be the longest since 2008.
In a grim warning about the economic outlook, the bank said: “GDP growth in the United Kingdom is slowing.”
“The latest rise in gas prices has led to another significant deterioration in the outlook for activity in the United Kingdom and the rest of Europe. The United Kingdom is now projected to enter recession from the fourth quarter of this year.
“Real household post-tax income is projected to fall sharply in 2022 and 2023, while consumption growth turns negative,” the bank said.
Policymakers raised interest rates by 0.5 percentage points on Thursday to 1.75pc to try to keep a lid on inflation, which is now forecast to climb above 13pc this autumn.
The Bank’s sixth rate rise in a row is the biggest in 27 years, and comes as it warned that price rises were likely to remain in double-digits for the best part of 12 months, the telegraph reported.
However, its latest forecasts showed the UK is expected to start contracting at the end of this year and keep shrinking until the end of 2023.
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