Great -Britain is confronted with a new era of intern in the aftermath of the Rachel Reeves budget, Bank of England predictions suggested yesterday.
One hundred days after the budget, the bank has reduced its prediction for British growth by half this year to only 0.75 percent.
And it warned that the pressure of the lifespan is increasing again, with the inflation that has been set to 3.7 percent this year, because energy bills tax more with domestic finances.
That gloomy combination will contribute to the fear of 'stagflation', when the economy stagnates, even when the inflation pressure comes. It is a phenomenon that destroyed Great Britain on a much larger scale in the 1970s, when inflation was 20 percent while the economy is shrinking.
There was some lighting for households yesterday when the tariff setters of the bank voted with a majority of 7-2 to lower the interest rates from 4.75 percent to 4.5 percent, the lowest level since June 2023.
Two officials wanted to go even further and lower the rates by half a percent in an attempt to offer the economy a faster boost in the middle of the darker.
Without criticizing the Chancellor directly, the bank said that growth was weaker than expected … and that the indicators of business and consumer confidence had decreased '.
In the meantime, the pound fell to one and a half cents and a half against the dollar and also fell sharply against the euro.
The autumn budget of Rachel Reeves has classified an era of internships and rising inflation, suggesting bank of England predictions suggest
The bank acknowledged that the growth had been 'weaker than expected … and the indicators of business and consumer confidence had decreased'
Spokesperson for Tory Business Andrew Griffith said: 'Today's predictions of the Bank of England are a wild indictment of the 100 days since the disastrous budget of Labor. Our main streets and companies are bleeding because of Labor's choices, but Rachel does not want to know or not listen. '
Julian Jessop, Economics Fellow at the Institute of Economic Affairs, said: 'It is difficult to see the new predictions of the bank as something other than a destructive assessment of the Fallout of the budget.
'Other major economies in Europe have also stalled, in particular Germany, France and Italy, but the turnaround has been much sharper in the UK.
'The bank is forced to cut [interest rates] Because the British economy crashes. '
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The risks of stagflation are grim. Inflation remains above the target of 2 percent of the bank and the price pressure is accumulating, but the economy is stagnating and the business trust has been beating. '
The GDP prediction -down grade is the newest blow to Mrs. Reeves's waving growth plan – and threatens to add to its difficulties in balancing the books. If the office for budget responsibility also reduces its growth grid next month, the public financing space of the Chancellor will be wiped out, forcing it to look for more money through tax increases or cuts.
After the £ 25 billion from Mrs Reeves about the national insurance of the employers, plus an increase in the minimum wage, sent business trust dropped as he threatened jobs and raised prices.
Last night the former deputy governor of Bank of England Sir Charlie Bean told, LBC said that the NI walking of the government was' problematic 'because of the impact on jobs and' the following year or two are difficult for the government to navigate . '
Bank Governor Andrew Bailey said, “We live in an uncertain world and the road that lies in front of us will have bumps on it.”
He added that business and consumer confidence 'have deteriorated in recent months', with households 'more price -conscious and retained'.
Mr Bailey continued to blame the budget directly for the growth -downgrade of the bank and said he supported the Chancellor's growing plan.
But he said that all the benefits 'would take time to get through'.
Spokesperson Andrew Griffith of Conservative Business said that the bank's predictions were a 'wild indictment' of the days since the Labor budget
Boe -Governor Andrew Bailey (photo) said that we live in an 'uncertain' world and that there would be 'bumps' on the road
Reeves responded to the rate reduction of the bank: 'This is welcome news. However, I am still not satisfied with the growth rate. Our promise is to go further and faster to start economic growth to give more money in the pockets of working people. '
The economy enjoyed the strongest growth in the G7 group of advanced countries in the first half of 2024 before the birth came to power. Mrs. Reeves says that she will stay behind with a terrible economic legacy – a claim that has been discussed on a large scale by experts.
Sir Keir Starmer defended the government's record when the growth exit was cut and told Sky News: “We would never turn the economy into just six or seven months.”
But Andrew Sentance, a former Bank of England officer, said: “The Bank of England prediction is terrible news for the government. Higher inflation and poorer growth. The autumn budget made it worse. '
