Economic Crisis Looms as Inflation and Interest Rates Soar

Economists predict that the Bank of England may be forced to drive the economy into a recession in order to tame inflation.

The chancellor, Jeremy Hunt, has faced criticism for appearing to be willing to accept the pain caused by the cost of living crisis, even though it has already caused significant hardship for families.

The prime minister's promise to halve inflation this year, one of five central pledges of his premiership, has come into question, and financial markets are betting that the Bank of England will raise its key base rate to as high as 5.5% before the end of the year.

Many lenders have already started to increase mortgage rates, and experts warn that more borrowers can expect 5%-plus fixed-rate deals in the near future.

The former IMF deputy director has warned that the Bank of England will be forced to raise interest rates higher for longer, which could lead to stagflation (insufficient economic growth with high inflation) and potentially a recession.

The Treasury source believes that inflation is the primary cause of economic instability and slow growth across the world, and that it represents the biggest threat to prevent a recession.

They also criticize the government's lack of action to cut inflation, which is causing mortgage rates to rise and making it difficult for people to afford basic necessities like food.

The Liberal Democrat deputy leader, Daisy Cooper, accuses the government of failing to address inflation and blames their inaction for the current economic crisis.

The opposition party argues that the government's policies are out of touch with the struggles of ordinary people who are feeling the impact of high costs of living.