The UK economy is heading for its longest recession since the Great Depression of the 1930s, the Bank of England (BOE) said after raising interest rates to a new record on Thursday.
Here are five things to note from the central bank's predictions about the future of the economy.
UK Experiences 2 Year Recession
The BOE warned that the country will face a very challenging 2-year recession.
Earlier, the UK central bank expected to fall into recession later this year and it would last through next year.
However, the BOE now says the economy entered a summer recession and predicts it will continue into next year and into the first half of 2024.
The unemployment rate has almost doubled
This happens when a country experiences a recession, companies reduce workers due to lack of money.
BOE forecasts unemployment to rise sharply over the next two years to 6.4%.
The current unemployment rate is 3.5%, but analysts warn that the situation is starting to change as the number of job vacancies has decreased in recent months.
The mortgage goes up by £3,000 a year
The BOE expects many homeowners to face higher mortgage repayments over the next 2 years.
Annual payments can jump as much as £3,000 in some cases.
Inflation decreases in 2023
Inflation, which reached 10.1% in September, is expected to peak at 11% this winter, before falling next year.
The BOE's target is to return inflation to the 2% target.
Interest rates will not rise as expected
Following inflation expectations to fall next year, the BOE does not see interest rates rising as much as predicted.
The latest interest rate hike brought the current rate up to 3%.
Analysts now think interest rates will peak around 4.75% next year.
