Britain teeters on the brink of recession after inflation soars to 40-YEAR high

hollydolly

hollydolly

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Rishi Sunak is promising tax cuts today after inflation soared to an eye-watering 40-year high with fears things are set to get even worse - but he will make clear they are being targeted at business.

The Chancellor will give a hint at his plans for the Autumn Budget in a speech to the CBI this evening, hours after it emerged the headline CPI rate rose to 9 per cent in April.

That was up from 7 per cent in March and a peak since 1982, when Margaret Thatcher was PM, the Falklands War was about to start, and unemployment was running at three million.

The Bank of England expects the annual rate will get even worse, peaking at 10.25 per cent during the final quarter of the year amid the biggest squeeze on incomes since records began in the 1950s. That would be more than five times its 2 per cent target.

Experts said 'this is what Stagflation looks like', while ministers were urged to recognise that the 'warning lights are flashing red' with the UK economy teetering towards recession after the pandemic and Ukraine war.

Analysts said another interest rate hike next month is now 'inevitable', potentially to 1.25 per cent, as the Bank of England scrambles to stop prices spiralling out of control. But the Pound still dipped further against the US dollar as investors priced in the increasingly grim situation.

  • Unite chief Sharon Graham threatened strike action against employers who do not give pay rises in line with inflation, saying calls for wage restraint should be directed at FTSE 100 chief executives;
  • The average cost of a litre of petrol at UK forecourts on Tuesday was 167.6p, higher than the previous record of 167.3p set on March 22 - the day before Mr Sunak announced a 5p cut in fuel duty. Diesel prices have risen to 180.9p;
  • Tories have warned the Bank of England not to overreact now by pushing up interest rates too quickly, dooming the country to recession;
  • The average UK house price jumped by £24,000 in the year to March, according to official figures.
https://www.dailymail.co.uk/news/ar...indfall-tax-inflation-soars-40-YEAR-high.html
 

hollydolly said:
Rishi Sunak is promising tax cuts today after inflation soared to an eye-watering 40-year high with fears things are set to get even worse - but he will make clear they are being targeted at business.

The Chancellor will give a hint at his plans for the Autumn Budget in a speech to the CBI this evening, hours after it emerged the headline CPI rate rose to 9 per cent in April.

That was up from 7 per cent in March and a peak since 1982, when Margaret Thatcher was PM, the Falklands War was about to start, and unemployment was running at three million.

The Bank of England expects the annual rate will get even worse, peaking at 10.25 per cent during the final quarter of the year amid the biggest squeeze on incomes since records began in the 1950s. That would be more than five times its 2 per cent target.

Experts said 'this is what Stagflation looks like', while ministers were urged to recognise that the 'warning lights are flashing red' with the UK economy teetering towards recession after the pandemic and Ukraine war.

Analysts said another interest rate hike next month is now 'inevitable', potentially to 1.25 per cent, as the Bank of England scrambles to stop prices spiralling out of control. But the Pound still dipped further against the US dollar as investors priced in the increasingly grim situation.

  • Unite chief Sharon Graham threatened strike action against employers who do not give pay rises in line with inflation, saying calls for wage restraint should be directed at FTSE 100 chief executives;
  • The average cost of a litre of petrol at UK forecourts on Tuesday was 167.6p, higher than the previous record of 167.3p set on March 22 - the day before Mr Sunak announced a 5p cut in fuel duty. Diesel prices have risen to 180.9p;
  • Tories have warned the Bank of England not to overreact now by pushing up interest rates too quickly, dooming the country to recession;
  • The average UK house price jumped by £24,000 in the year to March, according to official figures.
https://www.dailymail.co.uk/news/ar...indfall-tax-inflation-soars-40-YEAR-high.html
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Awful!
 
During the pandemic, when people were not able to get out and spend money...many shops were forced to close down and the high street still hasn't recovered. This really brought it home to many of us just how vital to the economy simple shopping is. With prices rising, people will have less flexible cash to spend and this will have the same effect. The government surely realises this and will take steps to minimise the effects, (hopefully!)
 

Lavinia said:
During the pandemic, when people were not able to get out and spend money...many shops were forced to close down and the high street still hasn't recovered. This really brought it home to many of us just how vital to the economy simple shopping is. With prices rising, people will have less flexible cash to spend and this will have the same effect. The government surely realises this and will take steps to minimise the effects, (hopefully!)
Click to expand...
I won't be holding my breath
 
The USA is not far behind. I paid $4.59 a gallon for gas the other day and for the first time all fifty states have gas prices over $4.00 per gallon some as high as $6.00. Throw in high food prices and astronomical utility bills and we're catching up quick. :rolleyes:
 
In that OP it says the average price of a LITRE of petrol is £1.67.. but in reality there are many places near me where it's actually 1.70 per litre.. making it £7.50 per gallon..... :eek:😖
 

What’s causing these inflation rates?​

Europe and much of the wider world were already being hit with soaring energy prices - which contribute to inflation - before Russia’s invasion of Ukraine in late February.

The conflict has exacerbated the energy crisis by fuelling global worries it may lead to an interruption of oil or natural gas supplies from Russia.


Russia is the EU's top supplier of oil, natural gas, and coal, accounting for around a quarter of the bloc’s total energy.

An EU ban on coal from Russia is due to come into effect in August, and a voluntary effort is underway to reduce demand for Russian natural gas by two-thirds this year.

A proposed oil embargo has hit roadblocks amid reservations from some landlocked countries that are highly dependent on Russian oil, such as Hungary.

But the prices of many commodities - crucially including food - have also been rising ever since COVID-19 pandemic lockdowns were first introduced two years ago, straining global supply chains, leaving crops to rot, and causing panic-buying in supermarkets.

The war in Ukraine again dramatically worsened the outlook, as Russia and Ukraine account for nearly a third of global wheat and barley, and two-thirds of the world's exports of sunflower oil used for cooking. Ukraine is also the world's fourth-biggest exporter of corn.

The United Nations food agency said prices hit an all-time record in February and again in March, and the World Bank forecasts wheat prices could rise more than 40 per cent this year.

Gentiloni also warned things could get even worse than EU statisticians are currently forecasting.

"Our forecast is subject to very high uncertainty and risks," he said. "Other scenarios are possible under which growth may be lower and inflation higher than we are projecting".
 


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