Bank of England warns it cannot stop UK falling into recession

[dutchman]

The Bank of England has warned that little can be done to stop the UK falling into a recession as the war in Ukraine continues



Governor Andrew Bailey said it would "overwhelmingly be caused by the actions of Russia and the impact on energy prices".

It expects the economy to shrink in the last three months of 2022 and keep shrinking until the end of 2023.

Speaking in front of the Treasury select committee on Wednesday, Mr Bailey said "sadly"a recession remained the most likely outcome in the UK.

When asked by MPs if there was much that the central bank could do to stop it, he said: "Insofar as the war is having this huge effect, the answer to that would be no."

The Bank predicted a UK recession last month as it raised interest rates by the most in 27 years in a bid to keep soaring prices under control.

Defending its recent moves, Mr Bailey added: "The person going to put the UK in recession is Vladimir Putin, not the MPC [Monetary Policy Committee]."

He said the Bank would take the new prime minister's energy plan announcement "into account" when deciding on interest rates next week.

Economists also expect the UK to fall into a recession despite Liz Truss' energy support plan - albeit a shorter and less severe one. Some suggested on Wednesday that plans to cap energy bills could mean that increases in the cost of living will peak earlier and be "significantly lower" than previously forecast.

Some MPs have hit out at the Bank of England, accusing it of being slow to react to rising prices and protect vulnerable households.

But Andrew Bailey told the committee that since the Bank of England gained independence 25 years ago, "inflation has averaged pretty much on target" until the last few months.

Kwasi Kwarteng reiterated in a statement on Wednesday his "full support for the independent Bank of England and their mission to control inflation, which is central to tacking cost of living challenges". It was issued after his first meeting with Andrew Bailey in his new position as chancellor.

[dutchman]

Bailey's previous employment was as head of the FAILED Financial Conduct Authority!

See: "Outrage over £125m bonuses for staff at UK’s ‘failing’ financial watchdog"

[rebbonk]

The little problem in Ukraine is a convenient scapegoat for many things, as was/is COVID. The bottom line here is that we are where we are because of mismanagement on a monumental scale by those elected to run the country.