Biggest interest rate hike in 27 years as Bank of England warns of impending recession

Home / Blog / Biggest interest rate hike in 27 years as Bank of England warns of impending recession

Biggest interest rate hike in 27 years as Bank of England warns of impending recession

Lifetime news

Posted on: 05/08/2022

After making the biggest hike to interest rates in 27 years, the Bank of England (BOE) has warned the UK is heading for a recession.

Interest rates rose, for the sixth time in a row, to 1.75%, with inflation now set to hit over 13%.

It is now being forecast that the UK economy will shrink in the last three months of 2022 – and keep on shrinking until the end of 2023.

The tipped recession is set to be the longest downturn since the financial crash of 2008, when the UK’s banking system was teetering on collapse.

However, the BOE says this new slump is not expected to be as deep as 14 years ago, but could last just as long.

The Bank’s Governor, Andrew Bailey, said that action had to be taken to tackle the threat of rising inflation. He admitted that the cost of living squeeze was proving difficult for UK citizens but if the Bank didn’t raise interest rates then the overall situation would get “even worse”.

Soaring energy bills are already putting millions of people under severe financial pressure, even hardship, and the BOE has warned that a typical UK household will be charged almost £300 per month for their energy by October this year.

And as well as potentially crippling energy bills, the UK population have been hammered by higher fuel and food prices.

Meanwhile, homeowners on a typical tracker mortgage or a standard variable mortgage will see an increase in repayments.

And higher interest rates also mean steeper charges on credit cards, bank loans and car loans.

The people who are fortunate enough to be able to put money away to save may well benefit from the rise in interest rates, as it could well prompt institutions to increase the interest rate given on savings accounts.

  • Perhaps now is the time to know exactly what your money can and can’t do for you, by having a personal financial plan that gives you a full understanding of your current situation, and offers up scenarios for the future you are looking for. If you would like help putting a financial plan in place then please get in touch. Our Lifetime coaches and financial specialists are here to guide you through to the right outcomes: https://www.lifetime-fm.com/contact-us/


By continuing to use the site, you agree to the use of cookies. More information.

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.