The Bank of England (BoE) has predicted that the UK will enter a recession before the end of the year.
The prediction, backed up by the British Chambers of Commerce (BCC), follows consecutive rises in interest rates, with inflation reaching a 40-year high of 10.1% in July.
Although the BoE expects the economy to contract over 2023, the BCC predicts that it will grow slowly over the next year at 0.2%.
Both agree that inflation, as measured by the consumer price index rate, will hit a peak of around 14% in the last quarter of 2022.
The sharp rise in inflation is due to increasing energy costs and supply chain issues following the Covid-19 pandemic and the war in Ukraine.
Alex Veitch, director of policy at the BCC, said:
“We have revised our projected inflation rate upwards by four percentage points to a new high of 14%.
“Inflation is running rampant, and it is not only impacting the cost of doing business but also the ability of some firms to keep their doors open.
“Time is fast running out. The Government must step up to the plate and do what is needed to protect businesses, livelihoods and jobs.”
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