Image: John Walton via PA Images HOMEOWNERS IN THE UK are set to face the biggest single shock on their mortgage bills since the 1980s as the Bank of England hiked interest rates for the eighth time in a row.
The Bank also warned that the UK could be on course for the longest recession since reliable records began in the 1920s. However, the Bank cautioned that this forecast is based on interest rates reaching as high as 5.2%, which the Bank said it does not necessarily expect to happen. UK Chancellor Jeremy Hunt said the Government would focus on tackling the UK’s battered public finances to help limit the need for further big rate rises but admitted there are “no easy options”.He said: “The most important thing the British Government can do right now is to restore stability, sort out our public finances, and get debt falling so that interest rate rises are kept as low as possible.
Meanwhile unemployment is expected to peak at around 6.5%, from 3.5% today, slightly lower than in 2008.It had previously forecast inflation to peak at 13% in the third quarter of this year, but with the Government’s support on household energy bills the forecast was slashed to 10.9%. The latest decision pushes interest rates to their highest since early December 2008 and will heap extra pressures on households.
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