Recession set to last till mid-2024, warns Bank of England

capitalism protest outside the bank of england


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On Thursday 3 November, the Bank of England (BoE) announced its sharpest interest rate hike since 1989. This is meant to combat the sky-high inflation that it warned was pushing Britain into a recession – which is set to last until mid-2024. The BoE said it was lifting borrowing costs by 0.75% – up to 3% in total. This is the highest level since the 2008 global financial crisis. BoE governor Andrew Bailey told a press conference:

The sharp increase in energy prices caused by Russia’s invasion of Ukraine has made us poorer as a nation. The level of economic activity is likely to be flat and even fall for some time.

Of course, the invasion of Ukraine isn’t the only reason energy prices have gone up. Oil companies like Shell have been making a massive profit from our collective misery. In fact, the energy giant made a tidy £8.2bn last quarter – and still received a tax rebate.

Prolonged recession

Minutes from a BoE meeting warned of a “challenging outlook for the UK economy” that was “expected to be in recession for a prolonged period”. This should come as yet another blow to Sunak’s already troubled government.

The BoE said the economy had shrunk since the third quarter, entering a technical recession that is forecast to last until the first half of 2024. This means that people will lose their jobs and have less money to spend, and businesses will go bust.

The BoE rate increase is set to worsen a so-called ‘cost-of-living crisis’ for millions of Britons. Hikes by big banks will almost certainly see retail lenders push up interest rates on their own loans.

Class War

Repayments on UK mortgages have also surged in recent weeks after then-PM Liz Truss spooked markets. In a hold-my-beer moment, now-PM Rishi Sunak has attempted to calm the markets by hinting at tax rises in a new budget on 17 November – even if such a move further harms Britain’s economy. Sunak stated:

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I think everyone knows we do face a challenging economic outlook and difficult decisions will need to be made.

The prime minister is believed to be worth an obscene £200m, and his wife literally has more money than the king. Meanwhile, for the rest of us, annual inflation now stands at 10.1%, the highest level in 40 years.

The Resolution Foundation thinktank calculated that 1.3 million more people will be in absolute poverty come 2023. One thing is for certain – those “difficult decisions” are never truly going to affect the likes of Sunak. This is just another dodgy justification for the Tories’ ongoing class war.

Featured image via Jonny White – Flickr, resized to 770×403 pixels under licence CC BY 2.0

Additional reporting by AFP News

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