UK economy continues to recover

In November last year, economic activity was back to where it was before the pandemic. Since then, the spread of Omicron meant people spent less, but as the number of new cases falls, we expect spending to go up again.

The number of people out of work is going down. The unemployment rate is only slightly higher than it was before the start of the pandemic.

Inflation (the pace of price rises) has risen above our 2% target. Prices rose by 5.4% last year.

Higher energy prices is one of the main reasons for this. Large increases in oil and gas prices have pushed up petrol prices and utility bills.

Higher prices for goods that we buy from abroad have also played a big role. As economies reopened around the world, people started to buy more goods. Some businesses struggled to meet this extra demand, held back by, for example, shortages of materials and workers. That pushed up their costs and led to higher prices for consumers.

These effects are likely to continue pushing inflation up in the coming months. We expect inflation to rise to around 7% in the spring.

We expect inflation to fall back from the middle of this year. We don’t expect that energy prices will continue to rise as fast, and the shortages that are currently making it difficult for businesses to make their products should ease. We expect inflation to be close to our target in around two years’ time.

The Bank of England has raised the Bank Rate to 0.5% to support inflation returning to the 2% target. Rumours state that they may need to raise interest rates somewhat further.

Previous updates...

BoE Governor: Expect 13%+ Inflation and a Recession!

BoE Governor: Expect 13%+ Inflation and a Recession!

The key update of the week is that the Bank of England has increased its interest rate by 0.5%, the largest increase since the Bank’s operational independence in 1997.  The rate rise comes on the back of a dismal economic forecast by the BoE that forecasted inflation rates of 13%

Fears of recession loom as inflation spirals and confidence declines

Fears of recession loom as inflation spirals and confidence declines

This week has been dominated by the fears of a looming recession following the release of key GDP and confidence data. Significant news was released on Thursday when it emerged that the US economy shrank for a second consecutive quarter. This technical recession is due to a 0.9% GDP contraction

Interest rate rises in the Eurozone & Canada

Interest rate rises in the Eurozone & Canada

It has been a big week in the EU with plenty of data and political action. The ECB has increased interest rates by 0.5%, the first rate rise in the Eurozone since 2011. It comes at a time when inflation has hit record highs of 8.6% and the economic gulf

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