Bank of England says UK to enter recession lasting more than a year with inflation hitting 13.3%

The Bank of England has warned the UK could fall into its longest recession since the financial crisis and predicts inflations will peak at more than 13 per cent.

It comes after the Bank's base interest rate soared from 1.25 per cent to 1.75 per cent - the biggest rise since 1995 - in a bid to curb the runaway inflation. Furthermore, Consumer Prices Index inflation may hit 13.3 per cent in October - its highest peak in more than 42 years - if Ofgem raises the price cap on energy bills to around £3.450, according to Bank of England forecasters.

Talking about Britain's current economic situation, the Bank said on Thursday: "Growth is very weak by historical standards." It is believed that household incomes will drop for two years in a row by 1.5 per cent this year and 2.25 per cent - the first time such a thing has happened since records began in the 1960s.

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Despite this, the recession will not be as severe as it was following the 2008 crash with GDP dropping by 2.1 per cent from its peak. Bank officials noted that the depth of the drop is more comparable to the recession in the early 1990s.

Projections also predict that unemployment will begin to rise again next year while inflation is expected to come back under control in 2023 - dropping below two per cent towards the end of the year. “The United Kingdom is now projected to enter recession from the fourth quarter of this year,” the Bank’s Monetary Policy Committee, which sets interest rates, (MPC) said.

“Real household post-tax income is projected to fall sharply in 2022 and 2023, while consumption growth turns negative.” According to the Bank, GDP is set to