Closing post
Time for a recap…
Jeremy Hunt said he would back further interest rate rises by the Bank of England, even if they risk plunging the UK into recession, in order to combat soaring inflation.
When asked whether he was comfortable with the central bank doing whatever was needed to bring down inflation, even if that could cause a recession, the chancellor told Sky News:
“Yes, because in the end, inflation is a source of instability. And if we want to have prosperity, to grow the economy, to reduce the risk of recession, we have to support the Bank of England in the difficult decisions that they take.”
Exclusive: the Chancellor tells @EdConwaySky he’s comfortable with Britain being plunged into recession if that’s what it takes to bring inflation down
— Tom Boadle (@TomBoadle) May 26, 2023
Hunt backs the Bank to raise rates after higher than expected inflation figures this week
Watch: pic.twitter.com/TheVfGhDjE
Hunt’s comments came as City investors braced for several more increases in UK interest rates.
The Bank of England is now expected to raise Base Rate to 5.5% by the end of this year, from 4.5% today, after inflation fell less than expected in April.
Nationwide, Britain’s biggest building society, increased some of its mortgage rates for new borrowing today, saying this will ensure its rates “remain sustainable” in the current economic environment.
The rate increases, of up to 0.45 percentage points, only affect customers taking out a new mortgage deal.
Economists fear the UK could fall into recession by the end of 2023, or early in 2024, as high interest rates hit economic activity.
Luke Hickmore, investment director at asset manager Abrdn, told Radio 4’s Today Programme:
I don’t think it’ll be a really hard recession, but we will feel it, and I think people’s incomes are going to come under a lot of pressure from those higher mortgage rates.
Despite rising inflation, consumers spent more in the shops last month.
Retail sales across Britain rebounded in April, after bad weather hit spending in March, with consumers bying 0.5% more during the month.
Commenting on today’s retail sales figures for April, ONS Chief Economist @GrantFitzner said: (1/2)
— Office for National Statistics (ONS) (@ONS) May 26, 2023
⬇️ pic.twitter.com/LRZRDPXgUG
@GrantFitzner continued: (2/2)
— Office for National Statistics (ONS) (@ONS) May 26, 2023
⬇️ pic.twitter.com/LUnV3vWkEz
In other news…
The start of the May half-term holiday for many schools will result in “hectic” roads and the most flights departing the UK since before the pandemic, according to industry estimates.
Asos is raising £80m from shareholders and borrowing £275m from Bantry Bay Capital, the specialist lender which recently bailed out troubled retailers Superdry and Matalan, as it struggles to secure a turnaround after falling nearly £300m into the red.
The Boots boss, Seb James, more than doubled his pay to £3.8m last year after the chemist chain tripled profits as pandemic restrictions eased.
And UK ice-cream sellers are complaining that the quality of the “Cadbury 99 flake” – has deteriorated since production was moved to Egypt.
Ice-cream sellers say they are being asked to pay through the nose for a box of shards. “You can’t give someone a 99 with a broken flake,” John Taylor, the owner of C&M Creamery Ices, told the BBC.
“It’s embarrassing for an ice-cream man.”
Hopefully you can do your own research on this! Have a lovely Bank Holiday weekend. GW
Could Jeremy Hunt’s comments today be one for the history books?
Reading and seeing the comments by Jeremy Hunt about being "comfortable" with a recession, it struck me that this could be the 2020s version Callaghan's "crisis? What crisis?" (Which he might not even have said IIRC).https://t.co/IXdRgCD8CR
— Francis Tusa (@FTusa284) May 26, 2023
