INTEREST rates hit their highest level for 13 years yesterday — amid a warning that inflation is heading for 11 per cent.
As homeowners were left reeling by a double whammy, experts also warned the UK may already be in recession.
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But Chancellor Rishi Sunak said he was confident he could get the economy “back on track”.
The Bank of England yesterday hiked interest rates for the fifth time in a row, by a quarter of a percentage point.
They now stand at 1.25 per cent, with some experts claiming they could reach three per cent.
The Bank said inflation, now nine per cent, could soar to 11 per cent in October — sparked by more hikes in energy bills and rising food prices.
But Mr Sunak said people should “feel confident” he can deal with the crisis.
He told ITV News: “We have the tools we need and the determination to get inflation back on track.
“I will make sure that I’m borrowing responsibly so that we don’t make the situation worse and increase mortgage rates more than they are.”
He promised: “We will get inflation down and strong growth will return.”
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But an economic adviser to former Chancellor George Osborne warned the UK may already be in recession. Rupert Harrison, of financial services firm BlackRock, told the BBC: “It’s very, very likely now that the second quarter is going to see negative growth.
“We may get some mechanical bounce-back in the third quarter, partly for complicated reasons due to the Jubilee holiday.
“But effectively growth is around zero and may get worse as we head into the autumn, particularly with energy prices going up.”
Cabinet minister Michael Gove also warned yesterday of “a challenging and difficult time” ahead.
He told The Times CEO Summit: “It is inevitably the case when you’re squeezing inflation out of the system that you will rely on a fiscal and monetary policy that will mean you cannot do all things you would in ideal circumstances like to support people through a difficult period.”
RED WALL: CUT TAX, PM
RED Wall Tories will today tell the PM to cut taxes or risk a bloodbath at the next election.
The northern MPs have drawn up a “mini-manifesto” at their own conference in Doncaster.
Putting Boris Johnson on notice, Red Wall Tory MP leader Jake Berry will declare: “It’s time to stop talking about being the party of low tax, it’s time to be the Government of low tax.”
BoJo, pressured to cut tax, and Chancellor Rishi Sunak, who is resisting, will both give speeches at the conference.
