Stagflation threat rises as Bank of England downgrades growth to spark fears of economic crisis: Live
Stagflation threat rises as Bank of England downgrades growth to spark fears of economic crisis: Live
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Interest rates were cut from 4.75 per cent to 4.5 per cent on Thursday. UK's economic stagnation is forecast to extend into the first part of this year prompting fresh gloom for Rachel Reeves. The Bank of England announced a cut in interest rates on Thursday from 4.75 per cent to 4.5 per cent, but while this has been a boost to mortgage-holders, the economy is forecasted to grow by just 0.75 percent. This is just half the figure that was initially projected in November, while unemployment is expected to rise over the next two years to just below five per cent.
Inflation is also expected to “rise quite sharply” later this year as gas prices rise and while a recession is forecast to be narrowly avoided, the figures are far from positive for the Chancellor. In a statement yesterday, Ms Reeves said the interest rate cut was “welcome news” but stressed she was “still not satisfied with the growth rate”. It also comes as UK house prices increased by 0.7 per cent month-on-month in January to reach a new record average high and sit just shy of £300,000, according to an index.
