The Great Britain facing a recession with inflation to the highest level since 1982 Bank of England warned.

The bank picked up on Thursday interest rates by 0.25% to 1% in an attempt to restrain the spiral cost of livingand warned that the economy is likely to shrink in the last quarter of the year.

Although the central bank Monetary Policy Committee (MPC) has not officially predicted a recession, the move has increased the likelihood of a contraction.

The following three charts explain the emerging UK economy.

Inflation will soar

By the end of 2022, inflation will rise to more than 10 percent – the highest in 40 years – as millions of people face unprecedented increases in electricity bills and the second-largest drop in living standards since the beginning of the record.

(Bank of England)

According to the Bank of England, energy prices are expected to rise further by 40 per cent in October to meet the rise in wholesale energy costs caused by President Vladimir Putin’s war in Ukraine.

In the UK compared to other countries in the UK there will be a peak in inflation, which will trigger warnings from the Bank of England that it may decline more gradually.

Average bills for gas, electricity, food and other necessities are expected to continue to rise, the MPC bank said Thursday.

GDP growth to equals

The economy is expected to shrink in 2023 after declining in the last quarter of this year. The bank projected growth of 1.25 percent next year, but now say production will fall by 0.25 percent.

(Bank of England)

The chart predicts almost stagnant growth over three years – with the Bank forecasting zero growth in 2023, then 0.2% in 2024 and 0.7% in 2025.

Given that the central bank forecasts that inflation will rise by 10 percent and GDP growth will fall by 1 percent in the last quarter of 2022, the forecast seems to correspond to “stagflation.”

These figures will put pressure on Chancellor Rishi Sunak to provide more support to families struggling.

Unemployment surge

Unemployment will rise as inflation decreases, the Bank expects.

(Bank of England)

Although the UK labor market has recovered to pre-pandemic levels in recent months due to the lifting of Covid restrictions and improved economic prospects, unemployment is expected to rise as an economic catastrophe ensues.

The Bank of England warns that by 2025 unemployment could rise by 8 percent – the worst level since the end of the banking crisis.

His baseline forecast is for unemployment to rise from 3.9 percent to 5.5 percent in three years, leaving about 450,000 more unemployed.

https://www.independent.co.uk/news/business/recession-bank-england-economy-uk-b2072615.html

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