There is a 50% chance of the UK entering recession next year, the Bank of England has warned.
The warning came as interest rates were held at 5.25%, with the bank confirming that they will stay high for an extended period.
Bank governor Andrew Bailey warned that there was “no room for complacency”, and that rates needed to remain at high levels to “squeeze inflation out” of the economy.
The nine-strong monetary policy committee voted by six to three in favour of leaving the base rate at 5.25% yesterday.
But in a downbeat set of fresh forecasts, the bank said inflation would not return to the 2% target until the end of 2025 and that the economy would flatline for most of the next year, meaning Britain would be in a state of “stagflation” heading into the next general election.
That means there is a 50% chance of the UK entering recession by the middle of 2024.
The base rate has risen from a record low of 0.1% in December 2021 to a 15 year-high of 5.25% in August this year.
