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The Bank of England has raised UK interest rates by a further half percentage point to 4%, but gave its clearest signal yet that borrowing costs may now be nearing their peak.

This was the Bank’s tenth successive interest rate increase, but in the accompanying documentation, it hinted that there is a chance it might be the last for the time being, saying that it would only raise rates further “if there were to be evidence of more persistent [inflationary] pressures” than in its forecasts.

Those forecasts suggest that inflation has now peaked, and that it will come down gradually this year and next, eventually dropping beneath the Bank’s 2% target.

“I do see the signs that we’re turning a corner, and that obviously is encouraging but there’s a long way to go,” Andrew Bailey, governor of the Bank of England, told Sky News in an interview. “There’s still some very big risks out there.”

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BoE governor explains interest rate rise

“We’re going to take it each game as it comes and look at the evidence very closely,” he added.

In raising interest rates again, the Bank pointed to wages in the private sector rising faster than anticipated.

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Chancellor agrees on rate hike

There are widespread strikes this week in the public sector as workers fight for higher wages. Mr Bailey said the Bank would be keeping a close eye on developments in this area, as they could contribute further to inflation.

“What happens going forwards on wage setting will be very important and we’ll be watching it very closely because that will be an important indicator of whether the very sharp downward path of inflation will happen,” he said.

The Bank also upgraded its general forecast for the economy on Thursday.

While it still projects a technical recession this year, it would be a very shallow recession, with overall growth falling by 0.5% in 2023, compared with its November forecast of a 1.5% fall.

“If it emerges now, it’ll be the shallowest recession in a long long time,” Mr Bailey said.

Ed Conway analysis: It’s clear the Bank thinks we are – or near to – a peak in interest rates

Seven members of the nine-person Monetary Policy Committee supported the half percentage point increase, but two members – Swati Dhingra and Silvana Tenreyro – voted to leave borrowing costs on hold.

All were told that while the increase today is significant, the hints included in the Bank’s minutes represent a marked change in tone.

Previously it had said that it was ready to respond “forcefully” to higher inflation; this time, that language was removed.

Previously it had said further rate increases might be required if the economy behaved in line with their forecasts; this time it indicated that rate increases were dependent on higher inflation than in its forecasts.

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Chancellor Jeremy Hunt has said the Treasury supports the Bank of England’s decision to increase the interest rate to 4%.

The shifts in language leave the door open for some small further increases in borrowing costs but provide the firmest signal yet that UK interest rates are now at, or close to, their peak.

Outlook still weaker than in recent years

Still, while the outlook for the UK economy is better than in the Bank’s previous forecasts, it is nonetheless far weaker than in recent years.

While the average UK growth rate pre-financial crisis was around 2.5% and around 1.5% post-pandemic, the Bank expects underlying growth of just 0.7% in the coming years.

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Is Brexit to blame? The war in Ukraine? Ed Conway takes a look at why the IMF predicts the UK economy is behind any advanced nation this year

Moreover, because of the fall in national income projected this year, it now expects that the size of the economy will still be at 2019 levels in 2026 – a full seven years of lost growth.

Many other countries around the world have already exceeded their post-pandemic level; the UK, according to the Bank’s figures, is set to languish below it until the second half of this decade.

A spokesperson for the prime minister commenting on the figures said: “Inflation is the biggest threat to living standards in a generation, we support the bank’s action today. We will continue to take the decisions needed to reduce inflation.”

“This is a difficult time for mortgage holders in the UK. Inflation falling is not a given, it requires government to stick to the difficult decisions it has taken.”

On the subject of mortgage rates, Mr Bailey told Sky News that he was “hoping that we’ll see much more stability in the interest rate curve off of which mortgages are priced off.”

“That evidence is helpful, but there are a lot of people who don’t immediately benefit from that,” he added.

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Labour MP Dan Norris arrested on suspicion of rape and child sex offences

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Labour MP Dan Norris arrested on suspicion of rape and child sex offences

Labour MP Dan Norris has been arrested on suspicion of rape and child sex offences.

A Labour Party spokesperson said: “Dan Norris MP was immediately suspended by the Labour Party upon being informed of his arrest.

“We cannot comment further while the police investigation is ongoing.”

Police said a man in his 60s had been arrested on Friday on suspicion of sexual offences against a girl, rape, child abduction and misconduct in a public office.

Sky News has contacted Mr Norris for comment.

Mr Norris, 65, defeated Jacob Rees-Mogg to win the new seat of North East Somerset and Hanham in last year’s general election.

He has also lost the party whip in the House of Commons and has stepped down from his role as chair of the League Against Cruel Sports.

Avon and Somerset Police said in a statement: “In December 2024, we received a referral from another police force relating to alleged non-recent child sex offences having been committed against a girl.

“Most of the offences are alleged to have occurred in the 2000s, but we’re also investigating an alleged offence of rape from the 2020s.

“An investigation, led by officers within Operation Bluestone, our dedicated rape and serious sexual assault investigation team, remains ongoing and at an early stage.

“The victim is being supported and given access to any specialist help or support she needs.

“A man, aged in his 60s, was arrested on Friday (April 4) on suspicion of sexual offences against a girl (under the Sexual Offences Act 1956), rape (under the Sexual Offences Act 2003), child abduction and misconduct in a public office. He’s been released on conditional bail for enquiries to continue.

“This is an active and sensitive investigation, so we’d respectfully ask people not to speculate on the circumstances so our enquiries can continue unhindered.”

Mr Norris first entered Parliament when Tony Blair came to power in 1997 and served as the Wansdyke MP until 2010.

He was an assistant whip under Mr Blair and served as a junior minister under Gordon Brown.

Mr Norris has also been West of England mayor since 2021 but is due to step down ahead of May’s local elections.

A spokesman for the League Against Cruel Sports, a UK-based animal welfare charity which campaigns to end sports such as fox hunting and game bird shooting, confirmed he had stepped down from his role.

“The charity cannot comment further while an investigation is ongoing,” a statement said.

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Jaguar Land Rover to ‘pause’ US shipments over Donald Trump tariffs

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Jaguar Land Rover to 'pause' US shipments over Donald Trump tariffs

Jaguar Land Rover (JLR) has said it will “pause” shipments to the US as the British car firm works to “address the new trading terms” of Donald Trump’s tariffs.

The US president has introduced a 25% levy on all foreign cars imported into the country, which came into force on Thursday.

JLR, one of the country’s biggest carmakers, exported about 38,000 cars to the US in the third quarter of 2024 – almost equal to the amount sold to the UK and the EU combined.

Follow live updates: Trump’s baseline 10% tariff kicks in

In a statement on Saturday, a spokesperson for the company behind the Jaguar, Land Rover and Range Rover brands said: “The USA is an important market for JLR’s luxury brands.

“As we work to address the new trading terms with our business partners, we are taking some short-term actions including a shipment pause in April, as we develop our mid- to longer-term plans.”

The company released a statement last week before Mr Trump announced a “baseline” 10% tariff on goods from around the world, which kicked in on Saturday morning, on what he called “liberation day”.

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JLR reassured customers its business was “resilient” and “accustomed to changing market conditions”.

“Our priorities now are delivering for our clients around the world and addressing these new US trading terms,” the firm said.

Trading across the world has been hit by Mr Trump’s tariff announcement at the White House on Wednesday.

All but one stock on the FTSE 100 fell on Friday – with Rolls-Royce, banks and miners among those to suffer the sharpest losses.

Read more: A red wall on Wall Street – but Trump seems to believe it will work out

Cars are the top product exported from the UK to the US, with exports worth £8.3bn in the year to the end of September 2024, according to data from the Office for National Statistics.

For UK carmakers, the US is the second largest export market behind the European Union.

Industry groups have previously warned the tariffs will force firms to rethink where they trade, while a report by thinktank the Institute for Public Policy Research said more than 25,000 car manufacturing jobs in the UK could be at risk.

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Two people die after caravan fire at holiday park in Lincolnshire

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Two people die after caravan fire at holiday park in Lincolnshire

Two people have died following a fire at a caravan site near Skegness, Lincolnshire Police have said.

In a statement, officers said they were called at 3.53am on Saturday to a report of a blaze at Golden Beach Holiday Park in the village of Ingoldmells.

Fire and rescue crews attended the scene, and two people were found to have died.

They were reported to be a 10-year-old girl and a 48-year-old man.

The force said the victims’ next of kin have been informed and will be supported by specially trained officers.

Officers are trying to establish the exact cause of the blaze.

“We are at the very early stages of our investigation and as such we are keeping an open mind,” the force said.

Two fire crews remain at the scene.

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