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

Published

3 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

Three people in a life-threatening condition after ‘arson attack’ at restaurant

Published

2 hours ago

August 23, 2025

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Three people in a life-threatening condition after 'arson attack' at restaurant

Three people are in a life-threatening condition after a suspected arson attack at a restaurant in Ilford, say police.

Five people – three women and two men – were injured in the fire, which broke out shortly after 9pm on Friday at Indian Aroma on Woodford Avenue, Gants Hill.

No arrests have been made.

Hospital porter Edward Thawe, 43, went to help with his son after hearing screams from his nearby home.

He described the scene as “horrible” and “more than scary and the sort of thing that you don’t want to look at twice”.

He said: “I heard screaming and people saying they had called the police.”

He said he saw a woman and a severely burned man who may have been customers.

He said the man’s “whole body was burnt”, including his shirt, but he was still wearing his trousers.

After being treated at the scene by paramedics from the London Ambulance Service, the victims were taken to hospital.

Nine others were able to get out beforehand, London Fire Brigade (LFB) said in a statement.

“The brigade’s control officers received seven calls about the fire and mobilised crews from Ilford, Hainault, Leytonstone and Woodford fire stations to the scene. The fire was extinguished by 10.32pm,” said an LFB spokesperson.

“We understand this incident will cause concern within the community. My team of specialist detectives are working at speed to piece the incident together,” said Detective Chief Inspector Mark Rogers, of the Met’s Central Specialist Crime North unit.

“Locals can expect to see a large police presence in the area. If you have any concerns, please speak to those officers on the ground.”

The London Ambulance Service told Sky News: “We sent resources to the scene, including ambulance crews, an advanced paramedic, an incident response officer and paramedics from our hazardous area response team.

“We treated five people for burns and smoke inhalation. We took two patients to a major trauma centre and three others to local hospitals.”

Health secretary Wes Streeting, who is the MP for Ilford North, posted on X to thank the emergency services for their response to the fire.

He also asked his constituents to “please avoid the area for now”.

Anyone with information is urged to contact the Met via 101, quoting 7559/22AUG. If you wish to remain anonymous, please speak with Crimestoppers on 0800 555 111.

UK

Asylum hotel protests expected to swell this weekend – as Farage unveils ‘mass deportation’ plan

Published

6 hours ago

August 23, 2025

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Asylum hotel protests expected to swell this weekend - as Farage unveils 'mass deportation' plan

A weekend of protests and counter-protests outside hotels housing asylum seekers began last night, with dozens expected today. It comes as Reform UK leader Nigel Farage has vowed “mass deportations” of illegal immigrants if his party wins the next general election.

Saturday is set to see more demonstrations across major towns and cities in England, organised under the Abolish Asylum System slogan, with at least 33 planned over the bank holiday weekend.

The protests are expected in Bristol, Exeter, Tamworth, Cannock, Nuneaton, Liverpool, Wakefield, Newcastle, Horley, Canary Wharf, Aberdeen and Perth in Scotland, and Mold in Wales.

Counter-protests – organised by Stand Up To Racism – are also set to be held in Bristol, Cannock, Leicester, Liverpool, Newcastle, Wakefield, Horley and Long Eaton in Derbyshire.

It comes after Friday night saw the first demonstrations of the weekend, including one outside the TLK hotel in Orpington, south London.

Dozens of protesters could be heard shouting “get them out” and “save our children” next to the site, while counter protesters marched to the hotel carrying banners and placards which read: “Refugees welcome, stop the far right.”

The Metropolitan Police said a large cordon was formed between the two groups and the hotel, and later confirmed that no arrests were made.

Abolish Asylum System protests were also held in Altrincham, Bournemouth, Cheshunt, Chichester, Dudley, Leeds, Canary Wharf, Portsmouth, Rhoose, Rugby, Southampton and Wolverhampton.

Tensions around the use of the hotels for asylum seekers are at a high after statistics showed there were more than 32,000 asylum seekers currently staying in hotels, marking a rise of 8% during Labour’s first year in office.

Regular protests had been held outside the Bell Hotel in Epping, Essex, which started after an asylum seeker housed there was charged with sexually assaulting a 14-year-old girl on 10 July.

In the wake of those protests, Epping Forest District Council sought and won an interim High Court injunction to stop migrants from being accommodated there – a decision which the government is seeking permission to appeal.

Farage vows ‘mass deportations’ if elected

Meanwhile, Nigel Farage has told The Times there would be “mass deportations” of illegal immigrants if Reform UK wins the next general election, vowing to remove the UK from the European Convention on Human Rights and other international agreements to facilitate five deportation flights a day.

When asked by the newspaper whether that would include Afghan nationals at risk of torture or death, he said: “I’m really sorry, but we can’t be responsible for everything that happens in the whole of the world.

“Who is our priority? Is it the safety and security of this country and its people? Or are we worrying about everybody else and foreign courts?”

Minister of State for Border Security and Asylum Angela Eagle said in response that the Reform UK leader is “simply plucking numbers out of the air, another pie in the sky policy from a party that will say anything for a headline”.

She added: “This Labour government has substantially increased returns with 35,000 people removed from the country in the last year alone, a huge increase on the last government.

“We are getting a grip of the broken asylum system. Making sure those with no right to be here are removed or deported.”

Labour has pledged to end the use of hotels to house asylum seekers by the end of this parliament in 2029.

Conservative MP and shadow home secretary Chris Philp also accused Reform UK of recycling Tory ideas on immigration.

“Nigel Farage previously claimed mass deportations were impossible, and now he says it’s his policy,” he added. “Who knows what he’ll say next.”

Home Office stops Norfolk hotel

It comes after South Norfolk Council said it had been told that the Home Office intends to stop housing asylum seekers at the Park Hotel in the town of Diss – which has also seen demonstrations over the last month.

Protests broke out there after officials said they would send single men to the hotel rather than women and children. The hotel’s operator had warned it would close if the change was implemented.

A Home Office spokesperson said on Friday that “we are not planning to use this site beyond the end of the current contract”.

In response, Conservative council leader Daniel Elmer said: “The Home Office thought it could just impose this change and that we would accept it.

“But there is a right way of doing things and a wrong way, and the decision by the Home Office was just plain wrong.”

He added that while “I welcome the decision, in reality it does mean that the women and children who we fought so hard to protect will now be moved elsewhere, and that is a shame”.

UK

Labour may have walked into political trap over housing asylum seekers in hotels

Published

6 hours ago

August 23, 2025

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Labour may have walked into political trap over housing asylum seekers in hotels

Has the government just walked into a giant political elephant trap by attempting to reverse the Epping hotel ruling?

Already on the back foot after a judge ordered the Bell Hotel to be emptied of asylum seekers, the Home Office is now being attacked for trying to appeal that decision.

“The government isn’t listening to the public or to the courts,” said Tory shadow home secretary Chris Philp.

The politics is certainly difficult.

Government sources are alive to that fact, even accusing the Tory-led Epping Council of “playing politics” by launching the legal challenge in the first place.

The fact Labour councils are now also considering claims undermines that somewhat.

After all, the party did promise to shut every asylum hotel by the next election.

Figures out this week showed an increase in the number of migrants in hotels since the Tories left office.

And now, an attempt to keep people in a hotel that’s become a flashpoint for anger.

That’s why ministers are trying to emphasise that closing the Bell Hotel is a matter of when, not if.

“We’ve made a commitment that we will close all of the asylum hotels by the end of this parliament, but we need to do that in a managed and ordered way”, said the security minister Dan Jarvis.

The immediate problem for the Home Office is the same one that caused hotels to be used in the first place.

There are vanishingly few accommodation options.

Labour has moved away from using old military sites.

That’s despite one RAF base in Essex – which Sir Keir Starmer had promised to close – seeing an increase in the number of migrants being housed.

Back in June, the immigration minister told MPs that medium-sized sites like disused tower blocks, old teacher training colleges or redundant student accommodation could all be used.

Until 2023, regular residential accommodation was relied on.

But getting hold of more flats and houses could be practically and politically difficult, given shortages of homes and long council waiting lists.

All of this is why previous legal challenges made by councils have ultimately failed.

The government has a legal duty to house asylum seekers at risk of destitution, so judges have tended to decide that blocking off the hotel option runs the risk of causing ministers to act unlawfully.

So to return to the previous question.

Yes, the government may well have walked into a political trap here.

But it probably had no choice.