London Daily

Focus on the big picture.
Thursday, Jul 23, 2026

Bank of England: Soaring inflation will hit Britain harder than most

Bank of England: Soaring inflation will hit Britain harder than most

Soaring inflation will hit Britain harder than any other major economy during the current energy crisis, the governor of the Bank of England (BoE) has warned.
Andrew Bailey said the UK's economy would likely weaken earlier and be more intense than others as a result of the energy price shock that all European economies face, dpa reported.

The situation was further exacerbated in Britain by the "structural legacy" left by Covid in the labor market as companies struggled with a lack of workers.

"Unfortunately, there is going to be a further step-up in UK inflation later this year because that's a product of the way the energy price cap interacts with the energy prices we have observed over the last few months," Bailey told a European Central Bank (ECB) conference in Sintra, Portugal, on Wednesday.

"I think the UK economy is probably weakening rather earlier and somewhat more than others."

The governor said that in the latest inflation data he had seen a shift in the causes of high inflation from high prices of goods that were in short supply after Covid-19, towards goods and services affected by the Russian-Ukrainian war.

To address inflation, the BoE needed the option of half-point interest rate rises.

"There will be circumstances in which we will have to do more.

We're not there yet in terms of the next meeting. We're still a month away, but that's on the table. But you shouldn't assume its the only thing on the table - that's the key point," Bailey added.

"The key thing for us is to bring inflation back down to target and that is what we will do."

The BoE has so far raised rates five times since December.
Newsletter

Related Articles

0:00
0:00
Close
YouGov Poll Shows Tight Competition Among UK Political Parties
Space Technology Investment Expands Through UK-US Cooperation at Farnborough Airshow
UK Opens Final India Young Professionals Scheme Ballot for Three Thousand Applicants
United Kingdom Approved for Ukraine Financial Support Initiative With EU Partners
UK and Ireland Leaders Discuss Security, Energy and Regional Cooperation
British Heart Foundation Identifies Ten UK Areas With Severe Shortages of Defibrillators
Former Southern Water Executives Charged Over Alleged Water Test Manipulation Scheme
IMF Warns UK Economic Growth Will Slow to One Percent in 2026
UK Inflation Falls to Two Point Six Percent in June as Food and Energy Costs Ease
United Kingdom Joins European Union Loan Mechanism to Support Ukraine’s Defense Needs
Prime Minister Andy Burnham Introduces Two-Pound Bus Fare Cap and Energy Tax Relief Measures Across England
Northern Ireland Secures Additional Infrastructure Funding From UK Treasury
Wales Approves Port Investment Plans to Support Green Energy Supply Chains
UK Financial Regulator Simplifies Stock Market Rules to Attract More Listings
UK Reports Decline in Small Boat Crossings Across the English Channel
UK Government Creates Emergency Support Fund for Financially Pressured Universities
Scottish Government Launches Economic Strategy Focused on Innovation and Renewable Industries
UK Expands Sustainable Farming Incentives to Support Environmental Measures
UK Government Introduces New Neighbourhood Policing Standards Across England and Wales
UK Competition Regulator Opens Review of Artificial Intelligence Foundation Models
UK Deepens Indo-Pacific Security Cooperation After Talks With Singapore and Japan
UK Announces Rail Modernisation Plan for Northern England With New Infrastructure Funding
UK Government Updates Housing Planning Rules to Accelerate Residential Construction
UK Approves Major North Sea Offshore Wind Project to Support Clean Power Goals
UK Health Service Begins Major Digital Upgrade to Cut Hospital Waiting Times
Bank of England Holds Interest Rates Steady as UK Inflation Pressures Remain Persistent
UK Universities and Industry Expand Space and Defense Research Partnerships
House of Lords Approves Social Housing Bill Amendments on Shared Ownership Rights
House of Lords Advances Civil Aviation Bill With New Passenger Protection Measures
UK Government Suspends Tariffs on Fertilizer and Food Imports to Reduce Costs
Russell Group Universities Support New UK Business Department Focused on Innovation
UK Parliament Opens Inquiry Into Transport Barriers Facing Young Jobseekers
Home Builders Federation Calls for Lower Costs as New UK Government Sets Housing Priorities
Andy Burnham Meets UK Devolved Leaders to Strengthen Regional Cooperation
Andy Burnham Holds First International Calls With Trump, Macron, and Zelenskyy
Andy Burnham Reshuffles Cabinet With John Healey Appointed Chancellor of the Exchequer
Andy Burnham Government Removes VAT From Electricity Bills to Cut Household Costs
Andy Burnham Becomes United Kingdom Prime Minister After Sir Keir Starmer Resigns
Miliband Sets Climate and International Law at Centre of UK Diplomacy
US Gasoline Returns to $4 as Renewed Iran Fighting Disrupts Oil Flows
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Orders 50% Tariffs on Selected Canadian Imports
Pentagon Discloses Nearly 100 US Troop Injuries During Renewed Iran Fighting
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
US Judge Pauses Paramount Skydance and Warner Bros Discovery Merger Over Antitrust Concerns
NHS England Faces Growing Retention Pressure Among Younger Midwives
UK Data Centre Expansion Faces Water and Grid Capacity Challenges
UK Defence Shares Rise After John Healey Appointment and Continued Spending Commitments
OECD Urges UK Government to Review Pension Triple Lock to Protect Public Finances
Bank of England Keeps Cautious Approach as Energy Costs Threaten Inflation Progress
×