UK economy shows signs of slowdown as BoE rate hikes mount

London, Aug. 23 (BNA): Britain’s economy is slowing and might be heading for a recession as it feels the impact of 14 back-to-back interest rate increases by the Bank of England to fight high inflation.

 

Despite being buffeted by Brexit, the COVID-19 pandemic and last year’s surge in energy prices, the British economy has defied forecasts of contraction so far this year, Reuters reported.

 

But signs of a slowdown are mounting, highlighting the BoE’s dilemma as it continues to grapple with inflation.

 

A survey published on Wednesday showed activity among businesses shrank by the most since January 2021, when Britain was still in a coronavirus lockdown.

 

The housing market is weakening and the jobless rate is up.

 

But the BoE looks set to keep on raising rates with inflation still more than three times its 2% target. Core inflation in July held close to its highest in more than 30 years.

 

Most worrying for Governor Andrew Bailey and his colleagues, pay growth is at its fastest since at least 2001, raising the risk of persistently high inflation.

 

WHQ