Economists increasingly expect UK recession as BOE keeps raising rates

A GROWING number of economists fret that the UK economy is heading for an inflationary recession in six to 12 months.

The only argument is over the severity of the recession and the extent to which inflation would fall during the downturn.

The basic problem is the sharp rise in short, medium and long-term interest rates’ impact on an economy with extensive debt. The Bank of England’s (BOE) latest rate rise of 50 basis points, to 5 per cent, represents a starkly different environment compared to a lengthy period of almost zero per cent to 2.5 per cent rates between 2013 and 2021.