Interest rates hiked by Bank of England by 0.5 percentage points in tenth consecutive rise

Published

2 years ago

February 3, 2023

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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.”

“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.

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.

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.

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.

UK

Four charged after £7m of damage caused to aircraft at RAF Brize Norton

Published

10 hours ago

July 2, 2025

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Four charged after £7m of damage caused to aircraft at RAF Brize Norton

Four people have been charged after £7m of damage was caused to two Voyager aircraft at RAF Brize Norton.

The investigation into the incident early on Friday 20 June was led by counter-terror police.

They have been charged with conspiracy to enter a prohibited place knowingly for a purpose prejudicial to the safety or interests of the UK – and conspiracy to commit criminal damage.

The four charged have been identified as:

• Amy Gardiner-Gibson, 29, of no fixed abode

• Daniel Jeronymides-Norie, 35, from London

• Jony Cink, 24, of no fixed abode

• Lewie Chiaramello, 22, from London

They will appear at Westminster Magistrates’ Court later today.

A 41-year-old woman arrested last week on suspicion of assisting an offender has been released on bail until 19 September.

Meanwhile, a 23-year-old man detained on Saturday was released without charge.

Last month’s incident at RAF Brize Norton in Oxfordshire was claimed by the activist group Palestine Action.

Yesterday, MPs voted to proscribe the group as a terrorist organisation.

The legislation passed with 385 MPs voting in favour, while 26 were against.

UK

No 10 backs Chancellor Rachel Reeves and says she ‘is going nowhere’ after tearful appearance in Commons

Published

18 hours ago

July 2, 2025

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No 10 backs Chancellor Rachel Reeves and says she 'is going nowhere' after tearful appearance in Commons

Rachel Reeves has not offered her resignation and is “going nowhere”, Downing Street has said, following her tearful appearance in the House of Commons.

A Number 10 spokesperson said the chancellor had the “full backing” of Sir Keir Starmer, despite Ms Reeves looking visibly upset during Prime Minister’s Questions.

Politics latest: ‘A moment of intense peril’ for PM

A spokesperson for the chancellor later clarified that Ms Reeves had been affected by a “personal matter” and would be working out of Downing Street this afternoon.

Politics latest: Reeves looks visibly upset in Commons

UK government bond prices fell by the most since October 2022, and the pound tumbled after Ms Reeves’s Commons appearance, while the yield on the 10-year government bond, or gilt, rose as much as 22 basis points at one point to around 4.68%.

Downing Street’s insistence came despite Sir Keir refusing to guarantee that Ms Reeves would stay as chancellor until the next election following the fallout from the government’s recent welfare U-turn.

Tory leader Kemi Badenoch branded the chancellor the “human shield” for the prime minister’s “incompetence” just hours after he was forced to perform a humiliating U-turn over his controversial welfare bill.

Emotional Reeves a painful watch – and reminder of tough decisions ahead

It is hard to think of a PMQs like it – it was a painful watch.

The prime minister battled on, his tone assured, even if his actual words were not always convincing.

But it was the chancellor next to him that attracted the most attention.

Rachel Reeves looked visibly upset.

It is hard to know for sure right now what was going on behind the scenes, the reasons – predictable or otherwise – why she appeared to be emotional, but it was noticeable and it was difficult to watch.

Speaking at Prime Minister’s Questions, Ms Badenoch said: “This man has forgotten that his welfare bill was there to plug a black hole created by the chancellor. Instead they’re creating new ones.”

Turning to the chancellor, the Tory leader added: “[She] is pointing at me – she looks absolutely miserable.

“Labour MPs are going on the record saying that the chancellor is toast, and the reality is that she is a human shield for his incompetence. In January, he said that she would be in post until the next election. Will she really?”

Not fully answering the question, the prime minister replied: “[Ms Badenoch] certainly won’t.

“I have to say, I’m always cheered up when she asks me questions or responds to a statement because she always makes a complete mess of it and shows just how unserious and irrelevant they are.”

Mrs Badenoch interjected: “How awful for the chancellor that he couldn’t confirm that she would stay in place.”

The prime minister’s watered-down Universal Credit and Personal Independent Payment Bill, aimed at saving £5bn, was backed by a majority of 75 in a tense vote on Tuesday evening.

A total of 49 Labour MPs voted against the bill – the largest rebellion in a prime minister’s first year in office since 47 MPs voted against Tony Blair’s Lone Parent benefit in 1997, according to Professor Phil Cowley from Queen Mary University.

After multiple concessions made due to threats of a Labour rebellion, many MPs questioned what they were voting for as the bill had been severely stripped down.

They ended up voting for only one part of the plan: a cut to Universal Credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.

Ms Badenoch said the climbdown was proof that Sir Keir was “too weak to get anything done”.

Ms Reeves has also borne a lot of the criticism over the handling of the vote, with some MPs believing that her strict approach to fiscal rules has meant she has approached the ballooning welfare bill from the standpoint of trying to make savings, rather than getting people into work.

Experts have now warned that the welfare U-turn, on top of reversing the cut to winter fuel, means that tax rises in the autumn are more likely – with Ms Reeves now needing to find £5bn to make up for the policy U-turns.

Asked by Ms Badenoch whether he could rule out further tax rises – something Labour promised it would not do on working people in its manifesto – Sir Keir said: “She knows that no prime minister or chancellor ever stands at the despatch box and writes budgets in the future.

“But she talks about growth, for 14 years we had stagnation, and that is what caused the problem.”

UK

Prosecutors consider more charges against Lucy Letby

Published

21 hours ago

July 2, 2025

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Prosecutors consider more charges against Lucy Letby

Prosecutors are considering whether to bring further criminal charges against Lucy Letby over the deaths of babies at two hospitals where she worked

The Crown Prosecution Service said it had received “a full file of evidence from Cheshire Constabulary asking us to consider further allegations in relation to deaths and non-fatal collapses of babies at the Countess of Chester Hospital and Liverpool Women’s Hospital”.

“We will now carefully consider the evidence to determine whether any further criminal charges should be brought,” it added.

“As always, we will make that decision independently, based on the evidence and in line with our legal test.”

Letby, 35, was found guilty of murdering seven children and attempting to murder seven more between June 2015 and June 2016 while working in the neonatal unit of the Countess of Chester Hospital and is currently serving 15 whole-life orders.

She is understood to have carried out two work placements at Liverpool Women’s Hospital, where she trained as a student, between October and December 2012, and January and February 2015.

Police said in December that Letby was interviewed in prison as part of an investigation into more baby deaths and non-fatal collapses.

A Cheshire Constabulary spokesperson said: “We can confirm that Cheshire Constabulary has submitted a full file of evidence to the CPS for charging advice regarding the ongoing investigation into deaths and non-fatal collapses of babies at the neo-natal units of both the Countess of Chester Hospital and the Liverpool Women’s Hospital as part of Operation Hummingbird.”

Detectives previously said the investigation was looking into the full period of time that Letby worked as a nurse, covering the period from 2012 to 2016 and including a review of 4,000 admissions of babies.

Letby’s lawyer Mark McDonald said: “The evidence of the innocence of Lucy Letby is overwhelming,” adding: “We will cross every bridge when we get to it but if Lucy is charged I know we have a whole army of internationally renowned medical experts who will totally undermine the prosecution’s unfounded allegations.”

On Tuesday, it was confirmed that three managers at the Countess of Chester hospital had been arrested on suspicion of gross negligence manslaughter in a separate investigation.

Police said the suspects, who occupied senior positions at the hospital between 2015 and 2016, have all been bailed pending further inquiries.

There is also an investigation into corporate manslaughter at the hospital, which began in October 2023.

A public inquiry has also been examining the hospital’s response to concerns raised about Letby before her arrest.

In May, it was announced the inquiry’s final report into how the former nurse was able to commit her crimes will now be published early next year.

Earlier this year, Letby’s lawyers called for the suspension of the inquiry, claiming there was “overwhelming and compelling evidence” that her convictions were unsafe.

In February, an international panel of neonatologists and paediatric specialists told reporters that poor medical care and natural causes were the reasons for the collapses and deaths.

Their evidence has been passed to the Criminal Cases Review Commission (CCRC), which investigates potential miscarriages of justice, and Letby’s legal team hopes her case will be referred back to the Court of Appeal.