UK may already be in a recession

The Bank of England has raised interest rates from 1.75% to 2.25% – the highest level for 14 years – and warned the UK may already be in a recession.

The central bank had previously expected the economy to grow between July and September but it now believes it will shrink by 0.1%.
It is the Bank’s seventh rate rise in a row as it tries to tame soaring prices.

It takes borrowing costs to their highest since 2008 when the global banking system faced collapse.
Inflation – the pace at which prices rise – is currently at its highest rate for nearly 40 years, leaving many people facing hardship.

Prices are also widely predicted to head higher in October, despite a government plan to limit soaring gas and electricity prices for households and businesses.

Raising interest rates makes it more expensive to borrow which should, in theory, encourage people to spend less and cool prices.

But many households with mortgages will see their costs rise. People on a typical tracker mortgage will have to pay about £49 more a month, while those on standard variable rate mortgages will see a £31 increase.

The Bank now expects the UK economy to shrink between July and September. This comes after the economy already shrank slightly between April and June and will push the UK into recession, defined as when an economy shrinks for two consecutive quarters.

Source-BBC