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With more than one million mortgage deals set to expire next year and borrowing costs at a 15-year high, experts warn Britain may be \u201con the brink\u201d of entering a recession.<\/p>\n
The Bank of England has kept the Base Rate frozen at 5.25 percent since September, despite a fall in the latest Consumer Price Index (CPI) inflation rate to 4.7 percent in October.<\/p>\n
The economy experienced no growth in Gross Domestic Product (GDP) in Q3 and negative growth of 0.3 percent in the three months to October.<\/p>\n
Combined with figures from UK Finance showing that around 1.6 million mortgage deals are expiring next year, which could catapult a significant number of households onto higher rates, experts at finance comparison site finder.com warn the country could be \u201cteetering\u201d on the brink of a recession.<\/p>\n
A recession is generally identified by a fall in GDP in two successive quarters.<\/p>\n<\/div>\n
George Sweeney, deputy editor at Finder said: \u201cAlthough recent GDP figures nearly threw a spanner in the works, the Bank of England has decided to hold the Base Rate once again.<\/p>\n
\u201cMany economists were expecting zero growth in GDP during October, but the UK loves to disappoint and the economy performed worse than expected, with the ONS reporting a 0.3 percent contraction.<\/p>\n
\u201cA shrinking economy combined with interest rates remaining at current levels leaves us teetering on the brink of a recession.\u201d<\/p>\n
Mr Sweeney added: \u201cWhen speaking to a panel of experts, research from Finder showed that almost half (46 percent) predicted the UK would enter a recession in 2024 if rates didn\u2019t lower by the end of 2023.<\/p>\n
\u201cAnd rates have not come down, still sitting at their highest level in 15 years.<\/p>\n<\/div>\n
\u201cThe possibility of a recession feels even more likely when you take into account the fact that around 1.6 million mortgage deals are expiring next year, according to UK Finance.\u201d<\/p>\n
However, he noted: \u201cA continued reduction in household disposable income due to higher borrowing costs coupled with an already slowing economy isn\u2019t ideal, but it could mean we\u2019re near the bottom of this downward cycle.\u201d<\/p>\n
Julian Jessop, economics fellow at free-market think tank the Institute of Economic Affairs, said: “The Bank of England\u2019s decision to keep interest rates on hold, despite the rising risks of a recession, is not completely bonkers. The Monetary Policy Committee\u2019s job is to worry about inflation, not growth, and inflation is still well above its two percent target.<\/p>\n
“Nonetheless, there is a clear risk that the Bank will keep rates higher for longer than is either necessary or desirable. Almost every leading indicator of inflation is pointing firmly downwards, including money and credit, producer prices, and global energy costs.<\/p>\n<\/div>\n
“The MPC\u2019s fears about a \u2018wage-price spiral\u2019 are also overdone. In reality, wages are only catching up with prices, and there is already evidence that pay pressures are easing.<\/p>\n
“Unfortunately, the Bank currently lacks the confidence or the credibility to cut interest rates until it is certain that inflation is back under control. By then, it may be too late to prevent a prolonged slump. Hopefully the markets will force the Bank’s hand.\u201d<\/p>\n
Mr Jessop added: \u201cIndeed, bond yields and mortgage costs are already falling as investors anticipate rate cuts from other central banks, led by the US Fed.”<\/p>\n<\/div>\n[ad_2]\n","protected":false},"excerpt":{"rendered":"
[ad_1] With more than one million mortgage deals set to expire next year and borrowing costs at a 15-year high, experts warn Britain may be \u201con the brink\u201d of entering a recession. The Bank of England has kept the Base Rate frozen at 5.25 percent since September, despite a fall in the latest Consumer Price …<\/p>\n","protected":false},"author":1,"featured_media":16005,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/posts\/16004"}],"collection":[{"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/comments?post=16004"}],"version-history":[{"count":0,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/posts\/16004\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/media\/16005"}],"wp:attachment":[{"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/media?parent=16004"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/categories?post=16004"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/farratanews.online\/wp-json\/wp\/v2\/tags?post=16004"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}