The Bank of England (BoE) has stated. The UK may enter a recession later this year, amid growing energy prices and living costs.
The falling pound affect the safety of bonds. After the UK private sector growth index dropped unexpectedly in May to reawaken fears of a recession.
The central bank on Thursday said the economy is set to contract sharply in the last quarter. After the price of energy is high again. Predict the output is collapse close 1% in the 3 months of 2022.
In 2023, Forecast GDP increase 12.5%. The second annual contraction in four years, despite bank analysts previously expecting the economy to grow 1.25 %.
Global inflation pressures have intensified after Russia’s invasion of Ukraine. This has led to a major deterioration in global trends and UK growth.
These developments are exacerbated by the adverse supply effects that the UK and other countries still face. Concerns about growing supply chain disruptions have also increased because of the Russian invasion of Ukraine and the development of COVID-19 in China.
It happened while BoE raise interest rates in the UK as 1%. An effort to curb the inevitable inflation in the medium term.
Rates have to reached their highest point since February 2009. When they were raised to combat the recession brought on by the financial crisis of 2008. The pound fell to lowest level in almost two years since June 2020 while government bond yields fell.
Rising energy, fuel, and food prices drove. Inflation to a 30-year high of 7% in the years leading up to March. This was significantly beyond the bank’s aim of 2%. The goal was to lower worker demand and force employers to pay greater salaries.
The expectation is reach 10% later this year. Accelerating by a 54% jump in energy prices in April and the ongoing war in Ukraine. This will be the highest level since 1982.
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