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Let’s start with what we do know.

The economy is now almost certainly in recession. It will not be pleasant. This is a recession which will be felt in most households’ pockets – both through the rise in energy prices and shop prices and the rise in the cost of borrowing.

And when it comes to the cost of borrowing, things are certainly getting tougher. Today the Bank of England raised its official interest rates by 0.75 percentage points, meaning if you’re on a floating rate loan tied to Bank rate the increase will be immediately reflected in your monthly repayments.

In a sense, the Bank is merely doing what most people had expected and what markets had already priced in: in other words, the current fixed rate loans out there on the market already assumed something like this happening.

Remember that point: we’ll come back to it.

So we know the economy is in recession. We know prices are very high and times are looking tough – especially if you have a mortgage which needs to be re-fixed soon. But here’s where the certainty ends and the murkiness begins.

Normally the Bank of England produces one main forecast in its Monetary Policy Report – the quarterly document in which it gives its sense of the state of the economy. But this time around it did something unusual: it produced two, and gave quite a lot of prominence to both of them.

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A money market rollercoaster

Why? Well, it comes back to the fact that money markets have been on a rollercoaster recently. As you’ll recall if you’ve followed the ride, in the wake of the mini-budget, expectations for where the Bank’s interest rate was going next year leapt up to over 6%. Since Liz Truss‘s exit, those expected rates have begun to fall, to the extent that as of this week they were expecting a peak of 4.75%. That’s a big change.

And these numbers matter enormously: the higher the rates, the more households who will struggle to make their repayments and the tougher life will get for businesses, many of which will struggle to operate. So even a change of a few fractions of a percentage point will make a big difference.

Eight successive quarters of contraction

That brings us back to the Bank’s latest forecasts. It has to base those forecasts for the state of the economy off an assumption of what’s happening to those interest rates. So it typically takes a two week “snapshot” of what money markets expect for borrowing rates and then builds a forecast around it. Normally that’s a pretty uncontroversial exercise, but not this time. Because as we all know, those rates were all over the place following the mini-budget and the ensuing gilt market meltdown.

The upshot is that the Bank’s central forecast – the one we usually look at – is particularly bad. It involves eight successive quarters of contraction: that would be the single longest recession since comparable records began in the early 20th century – though it would be much less deep than nearly all of those downturns. It would see the economy shrink by nearly 3% and unemployment get up to 6.5%.

But here’s the thing: that forecast is based on market expectations that Bank rate would get up to 5.25% next year. And the Bank is unusually explicit today that it thinks that is very unlikely. So that recession forecast is a little bit of a chimera: it is based on a scenario which will probably not happen.

So here’s where that other forecast comes in. The Bank produced a separate set of figures which ignore all that market mayhem and just imagine rates stay where they are, as of this afternoon, at 3% in perpetuity. On the basis of that forecast, there is still a recession, but it is barely more than half the depth of its central forecast and doesn’t last half as long. Unemployment doesn’t peak as high. Household income isn’t quite as badly hit. It’s tough, but not awful.

More rate rises

So: is that forecast a more reliable picture of the impending months? Well, not necessarily, for two reasons. First, the Bank said explicitly today that it thinks it will have to raise interest rates again, albeit not as high as markets were expecting a few weeks ago. What that means is anyone’s guess, but the signal is that they might not even have to rise as high as the 4.75% markets are currently pricing in. But that does mean a slightly worse outlook.

Second, the Bank’s forecast doesn’t make any assumptions about what the government’s Autumn Statement is going to do to the economy. And given everyone expects the government to cut spending and/or raise taxes, it’s a fair assumption that that could also bear down on economic activity.

It’s complicated

So, as you can see: it’s complicated. I know that’s not especially helpful if you’re after a quick summary. But it’s a fairer reflection of where we are. The UK is in recession, but it’s worth being a little wary of the more lurid headlines out there about how it’s the “longest in history”. The Bank is saying that’s a possibility if rates went higher (and it doesn’t currently think they will).

But there is another interesting thing going on here, which comes back to that point I made at the start – that when the Bank moves its rates it is, in a sense, reflecting what people out there in the market are expecting it to do. Those expectations matter – and the Bank can often influence them itself.

Today’s Monetary Policy Report contains some pretty heavy hints that the market has overshot its expectations about where Bank rate will go in the future. In other words, the report itself could plausibly persuade investors to notch down their expectations for where interest rates are heading next year.

If that happened, we would be left with an interesting paradox: that even as it raises interest rates even more than it has ever done since it became independent in 1997, the Bank could actually push down what markets expect that eventual peak to be.

In other words, this interest rate increase could be reducing the real-life cost of borrowing in the mortgage markets. Fixed rate loans could get cheaper as a result of today’s events, not more expensive.

Perhaps that sounds topsy-turvy, but then it’s no more weird than many of the other turns of this rollercoaster in recent weeks.

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Streets of Britain have turned into ‘theatres of intimidation’, Kemi Badenoch says

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Streets of Britain have turned into 'theatres of intimidation', Kemi Badenoch says

The streets of Britain have turned into “theatres of intimidation”, Kemi Badenoch has warned in a speech to mark the opening of the Conservative Party Conference in Manchester.

Speaking just days after a terror attack at a synagogue in the city left two people dead, the Tory leader claimed extremism “has gone unchecked” in the UK.

Politics live: Government grants police new powers in crackdown on repeat protests

She said this had manifested in Pro-Palestine protests which are “in fact carnivals of hatred directed at the Jewish homeland”.

She cited the use of “asinine slogans” such as ‘Globalise the Intifada’, saying this “means nothing at all, if it doesn’t mean targeting Jewish people for violence”.

Ms Badenoch added: “So the message from this conference, from this party, from every decent and right-thinking person in this country must be that we will not stand for it any more. We cannot import and tolerate values hostile to our own.

“We must now draw a line and say that in Britain you can think what you like, and within the bounds of the law you can say what you like, but you have no right to turn our streets into the theatres of intimidation and we will not let you do so any more.

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Ms Badenoch has said she supports the government’s efforts to impose restrictions on repeat protests in light of the Manchester terror attack.

Nearly 500 people were arrested over protests supporting the proscribed group Palestine Action in central London on Saturday.

Demonstrators defied calls from political leaders, including Prime Minister Sir Keir Starmer, to reconsider the event out of respect for the grief of the British Jewish community.

The chief of the Metropolitan Police, Sir Mark Rowley, also called for the event to be postponed, saying he was worried resources would be stretched and the ability of the force to protect communities would be compromised.

Supporters at this year's Tory party conference greet their leader Kemi Badenoch. Pic: PA
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Supporters at this year’s Tory party conference greet their leader Kemi Badenoch. Pic: PA

ECHR plan ‘not vague mush’

Elsewhere in her speech, Ms Badenoch spoke about her policy to leave the European Convention on Human Rights (ECHR) and carry out “ICE-style” deportations if she wins the next election.

She said that shadow Northern Ireland Secretary Alex Burghart will lead a review into a union-wide implementation of leaving the ECHR, so voters have “a clear, thorough and robust plan, not the vague mush that we see day in, day out from Labour, nor the vacuous posturing that we see day in, day out from Reform”.

The plan has been condemned by Former Conservative justice secretary and Lord Chancellor Robert Buckland, who lost his seat at the 2024 election.

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Active plot against Kemi Badenoch at this party conference in Manchester

“I have seen first-hand how deeply this issue touches our constitution, our Union, and our international standing. It would be a profound mistake to go down this path,” he wrote in an article for Conservative Home.

The comments reflect how the issue has long divided the party, with “one nation” moderates like Mr Buckland opposed to the idea of leaving the ECHR, and others seeing it as necessary to get a grip on illegal migration and tackle Reform UK.

In a sign she won’t shy away from that fight, Ms Badenoch told GB News earlier that every Conservative candidate must sign up to her plan to leave the ECHR, or they would be barred from standing at the next election.

‘Mountain to climb’

The Tories are languishing in the polls behind Reform and Labour after suffering their worst-ever defeat at the election last year.

Ms Badenoch, who was elected to lead the party last November, ended her speech acknowledging there was a “mountain to climb” but insisting she was up for the fight.

“Britain needs deep change. But I reject the politics that everything must go, that everything must be torn down, that everything is broken,” she said.

“If we leave it to Labour or Reform, Britain will be divided. Only the Conservatives can bring this country back together.

“So, I say to you all as we start our conference, yes, we have a mountain to climb, but we have a song in our hearts, and we are up for the fight.”

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Police to get new powers to impose restrictions on repeat protests

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Police to get new powers to impose restrictions on repeat protests

Police have been granted new powers to impose conditions on repeat protests to “close a gap in the law”, the home secretary has said.

Shabana Mahmood told Sky News’ Sunday Morning with Trevor Phillips that the changes, announced earlier in the day, would allow communities to “go about their daily business without feeling intimidated”.

Politics Live: Conservative party conference gets under way

It follows the arrests of nearly 500 people during demonstrations in support of the proscribed group Palestine Action in central London on Saturday.

Protesters defied calls to rethink the event in the wake of the Manchester synagogue terror attack on Thursday, in which two Jewish worshippers were killed.

The new powers will allow police forces to consider the “cumulative impact” of protests, assessing previous activity, when deciding to impose limits on protesters.

The limits that could be imposed include moving demonstrators to a different place or “restricting the time that those protests can occur”, Ms Mahmood said.

She added: “It’s been clear to me in conversations in the last couple of days that there is a gap in the law and there is an inconsistency of practice.

“So I’ll be taking measures immediately to put that right and I will be reviewing our wider protest legislation as well, to make sure the arrangements we have can meet the scale of the challenge that we face.”

A demonstration supporting Palestine Action on Saturday in central London. Pic: Reuters
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A demonstration supporting Palestine Action on Saturday in central London. Pic: Reuters

Police officers detain a protester during the mass protest. Pic: Reuters
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Police officers detain a protester during the mass protest. Pic: Reuters

The changes will be made through amendments to the Public Order Act, and anyone who breaches the new conditions will risk arrest and prosecution.

‘More flexibility to prevent disruptive protests’

The home secretary has written to chief constables in England and Wales to explain the new powers.

She wrote: “The government will bring forward legislation to increase the powers available to you to tackle the repeated disruptive protests we have seen and continue to provide the reassurance to communities that they need.

“Through upcoming legislation, we will amend sections 12 and 14 of the Public Order Act 1986 to allow senior officers to consider the cumulative impact of protests on local communities when they are imposing conditions on public processions and assemblies.

“This will allow you more flexibility to prevent disruptive protests from attending the same location and instruct organisers to move to a different site.”

The Greens and the Lib Dems said it was an attack on the right to protest.

Green Party leader Zack Polanski told Sky News: “Giving police sweeping powers to shut down protests because of their ‘cumulative impact’ is a cynical assault on the right to dissent. The whole point of protest is persistence; that’s how change happens. Do you think the suffragettes protested once and then gave up?”

Lib Dem home affairs spokesman Max Wilkinson said this will “do nothing” to tackle antisemitism “while undermining the fundamental right to peaceful protest”.

Earlier, Ms Mahmood said the right to protest was a “fundamental freedom” but this must be balanced “with the freedom of their neighbours to live their lives without fear”.

In a statement she said: “Large, repeated protests can leave sections of our country, particularly religious communities, feeling unsafe, intimidated and scared to leave their homes. 

“This has been particularly evident in relation to the considerable fear within the Jewish community, which has been expressed to me on many occasions in these recent difficult days.

“These changes mark an important step in ensuring we protect the right to protest while ensuring all feel safe in this country.”

Tories ‘will support’ measures

Conservative leader Kemi Badenoch said her party will “of course support” the new measures but asked why it took “so long” for them to be introduced.

Speaking to the BBC’s Sunday with Laura Kuenssberg, she claimed that what happened in Manchester was foreseeable and not enough has been done to address fears over safety in the Jewish community.

Ms Mahmood addressed the Jewish communities’ concerns after being shown a clip of deputy prime minister David Lammy being heckled at a vigil on Friday.

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Home secretary reacts to moment Lammy was heckled

She told Sky News’ Trevor Phillips the government “of course” hears their strength of feeling and is “committed to dealing with antisemitism in all of its forms”, pointing to the “strengthening” of police powers announced today.

Asked if the reaction to Mr Lammy reflected anger at the government’s decision to recognise a Palestine state, she said it was important not to “elide” Thursday’s attack with the situation in the Middle East.

“People are entitled to their views and of course we were there to hear those views. What I would say is that the attack that took place, the person that’s responsible for that attack is the attacker himself,” she said.

“And, of course, four other people are in custody and the police investigation does need to take its course. It’s important that we don’t elide that into the wider questions of what’s going on in the Middle East.”

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Man who helped barricade Manchester synagogue says attacker was ‘monster’ who ‘tried every door’

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Man who helped barricade Manchester synagogue says attacker was 'monster' who 'tried every door'

A man who helped barricade the Manchester synagogue has described how the terror attack unfolded.

Alan Levy said he was in the car park in the grounds of Heaton Park Hebrew Congregation Synagogue in Crumpsall when the incident started and he saw the attacker, who he called a “jihadist monster”.

“I was there when he crashed his car into the synagogue gates and ran down the security guard that was there and attacked a volunteer security guard and tried to gain access into the synagogue,” Mr Levy said in an interview with Sky News’ people and politics correspondent Nick Martin.

It was then that Mr Levy ran into the synagogue and sought to lock it down.

He and other congregants helped barricade the doors to stop the attacker from getting inside, as “he was shoulder-charging the doors trying to get in”.

“He was throwing plant pots at the glass. He was using a knife to try and get in. These brave men basically saved the community from further harm,” Mr Levy said.

“All I was thinking was ‘we’ve got to keep these doors closed’.

“He was trying each door in turn. When we realised which door he was going to, we moved doors so there was more pressure on the doors to keep them closed.”

Alan Levy, helped barricade the synagogue
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Alan Levy, helped barricade the synagogue

Two people were killed in the attack on Thursday, including one who died from a police bullet fired as officers shot dead the perpetrator, Jihad al Shamie.

The victims were named as Adrian Daulby, 53, a member of the congregation, and Melvin Cravitz, 66, a worshipper at the synagogue.

What we know about the synagogue attack in Manchester

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Who was the Manchester synagogue attacker?

Mr Levy’s son, Marc, described the moment he first received news of the attack and said “it’s impossible to articulate the worry and concern” as he didn’t know whether his family was safe or not.

“I first knew that there was an incident when my phone started lighting up repeatedly and I realised that there was an attack on my synagogue,” he said.

“It’s a place where all my childhood memories of worshipping… pretty much going there throughout my whole life.

“I knew at that time that my father would have been on security at that time, as he is every morning, given that him and his friends are some of the first people who arrive.”

He said it was only when he saw his father on Sky News’ live feed that he realised he wasn’t one of the victims.

Six people were arrested over the attack but two have been released without charge.

Police revealed the attacker had been on bail over a suspected rape, but wasn’t on the radar of counter-terror police.

The Independent Office for Police Conduct (IOPC) is investigating the shooting – this is standard practice when a member of the public is killed – and will examine “whether police may have caused or contributed to the death” of Mr Daulby.

Al Shamie, 35, was named as the attacker on Thursday and is believed to be of Syrian descent.

He is understood to have been granted British citizenship when he was around 16, having entered the UK as a young child.

Police shot him dead seven minutes after the first emergency call as they feared he was wearing an explosive device – later identified as a fake.

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