In anticipation of an economic slowdown, the Bank of England has hiked

London: The Bank of England, the central bank, is predicting Britain’s economy to enter recession by the end of this year. The governor of the Bank of England, Andrew Bailey, said that the economic price of the war must be paid and warned Britain to prepare to face the peak inflation index in the next few months. The Bank of England has announced a 0.5 per cent increase in interest rates to control inflation. This is the first time since 1995 that the Bank of England has increased by half a per cent.

After the start of the Russia-Ukraine conflict, Western countries imposed massive sanctions on Russia and decided to support Ukraine by providing arms and financial assistance. The US and Britain are leading these actions. The restrictions have reduced Europe’s fuel supply which has increased the prices. In Britain alone, the fuel prices have risen by a whopping 60 per cent, along with inflated food prices. The inflation index is severely high in Western countries, including Britain. In June, inflation was recorded at 9.4 per cent. Although the government is taking steps with the help of Central banks to control inflation, it has not yielded any positive results. On the contrary, it has created a Cost-of-Living Crisis with the rising inflation.

The Bank of England confirmed on Thursday that the British economy would likely be pushed into a recession by the end of this year, and the growth rate will decline in 2023. In Britain, the inflation rate may rise to 13 per cent by the last quarter of this year, and this situation will likely continue in 2023. Rising fuel prices due to the Russia-Ukraine conflict is a major reason for this. The British economy will have to fight a recession due to the rise in fuel prices. The Bank of England has predicted that the state of recession will continue for the next five consecutive quarters.

While predicting a recession, the central bank has hiked interest rates by half a per cent. Therefore, the interest rate in Britain has become 1.75 per cent. Analysts have feared that the prices of many products, including cars and houses, will rise again due to this increased interest rate. It is claimed that this will have a big impact on Britain’s ordinary people, and its repercussions can also be felt at the political level.