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Bank of England says UK households must brace themselves for the biggest annual fall in their standard of living since comparable records began three decades ago, as it:
- Raises interest rates to 0.5%
- Says inflation will surpass 7%
- Slashes GDP forecast
Bank of England says UK households must brace themselves for the biggest annual fall in their standard of living since comparable records began three decades ago, as it:
- Raises interest rates to 0.5%
- Says inflation will surpass 7%
- Slashes GDP forecast
According to the Bank’s calculations, real post-tax labour income - perhaps the best measure of standards of living since it accounts for the rising tax burden as well as inflation and earnings - will fall by 2% in 2022
Biggest fall since comparable records began in 1990
Biggest fall since comparable records began in 1990
The MPC voted 5-4 in favour of raising interest rates from 0.25% to 0.5%. But those four dissenting members wanted a hike to 0.75%.
So households will have to contend with higher borrowing costs as well as higher taxes, energy, goods and services prices.
So households will have to contend with higher borrowing costs as well as higher taxes, energy, goods and services prices.
The Bank of England now reckons inflation will peak at 7.25% this spring. But it might also be worth bearing in mind their previous forecasts, which you can see in this chart… 
More on this news, and the energy price increase, @RishiSunak’s measures and the broader cost of living crisis, on @skynews through the day.
Market reaction to the @bankofengland decision today. Sterling up a bit vs US dollar.
Andrew Bailey, @bankofengland governor, explaining why they’re raising interest rates even as households face a serious squeeze:
“The reason is: if we don't take this action it will be even worse. It’s a hard message. I know it's a hard message.”
“The reason is: if we don't take this action it will be even worse. It’s a hard message. I know it's a hard message.”
What does the worst year for living standards in at least three decades look like in chart form?
Here's that striking (& deeply depressing) @bankofengland forecast.
Worse than post financial crisis
Worse than Black Wednesday 1992.
The biggest fall in disposable incomes on record
Here's that striking (& deeply depressing) @bankofengland forecast.
Worse than post financial crisis
Worse than Black Wednesday 1992.
The biggest fall in disposable incomes on record
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