Rishi Sunak warned recession could still happen as Brits face further interest rates pinch

26 May 2023, 23:27 | Updated: 27 May 2023, 08:34

Rishi Sunak and Andrew Bailey could still make decisions that could tip the UK into recession despite better than expected economic growth in the last quarter
Rishi Sunak and Andrew Bailey could still make decisions that could tip the UK into recession despite better than expected economic growth in the last quarter. Picture: Getty

By Chay Quinn

Rishi Sunak is being warned that Britain still could face a recession next year - as he celebrates better than expected economic growth.

Jagjit Chadha, the director of the National Institute of Economic and Social Research, said that the UK was "in danger of engineering a recession" if interest rates continue to rise to take inflation.

Brits are being slapped with a double whammy of 5% interest rates and limited spending power due to sky-high inflation.

Chancellor Jeremy Hunt has been roundly criticised for asserting that he wants interest rates to rise regardless of whether it tips the UK into recession or not.

The Office for National Statistics (ONS) said the decrease was mainly driven by gas and electricity costs remaining stable in April. It is the first time the CPI has been below 10 per cent in eight months.

Read More: Rocketing food prices see UK inflation fall less than hoped

Read More: UK retail sales rebound in April despite inflation pressure

Bank of England execs will likely raise interest rates to 5% or above - heaping more misery on Brits and 'risking a 2024 recession'
Bank of England execs will likely raise interest rates to 5% or above - heaping more misery on Brits and 'risking a 2024 recession'. Picture: Getty

However, food prices are still surging at 19.1%, according to today’s data.

Chancellor of the Exchequer Jeremy Hunt said: “The IMF said yesterday we've acted decisively to tackle inflation but although it is positive that it is now in single digits, food prices are still rising too fast.

"So as well as helping families with around £3,000 of cost of living support this year and last, we must stick resolutely to the plan to get inflation down.”

“The economy has performed better than expected so far in 2023, but if this means that inflation is going to be sticky and the Bank still has to go further to combat inflation, the economic pain is going to be badly timed for the government.”

Rachel Reeves has slammed the Tories fiscal strategy and said the public does not feel better than they did before the Conservatives took power in 2010.
Rachel Reeves has slammed the Tories fiscal strategy and said the public does not feel better than they did before the Conservatives took power in 2010. Picture: Getty

Shadow chancellor Rachel Reeves said: "As bills keep surging, families will be worried food prices and the cost of other essentials are still increasing.

Financial markets now fear when the Bank of England evaluate interest rates that they could heap misery onto borrowers and provide no relief from rising prices.

More Latest News

See more More Latest News

The Israeli Iron Dome air defence system launches to intercept missiles fired from Iran

Israel hails ‘success’ in blocking Iran’s unprecedented attack

Rishi Sunak confirmed a number of Iranian drones attacking Israel were shot down by RAF jets.

RAF jets shot down ‘a number’ of Iranian drones attacking Israel, Rishi Sunak says

A demonstrator waves Iranian and Palestinian flags during an anti-Israeli gathering at the Felestin (Palestine) Square in Tehran, Iran

What is the fallout from Iran’s attack on Israel?

Disability advocate Charlotte Anderson advises people on how to apply for PIP.

YouTuber who fills out PIP applications for £650 each says she has ‘only ever lost one claim in six years’

Planning documents show the owners of the pub want to rebuild it in a new location.

Owners of Crooked House agree to rebuild ‘Britain’s wonkiest pub’ - providing it's in a new location

Joe Biden has reaffirmed the US's commitment to defending Israel's security.

Biden reaffirms ‘ironclad support' of Israel as he plans G7 meeting to coordinate ‘diplomatic response to Iran attack’

The IDF said over 300 weapons were fired by Iran.

‘Together we will win’: Netanyahu vows to fight off attacks from Iran after over 300 drones and missiles fired at Israel

Israeli's military have fought off a massive Iranian drone and missile attack - downing more than 200 weapons launched by the hostile state with the help of ace RAF pilots.

Israel fights off massive Iran attack - downing over 200 missiles and drones with help of RAF

Plans have been drawn up for an evacuation of Brits from the Middle East. Defence Secretary Grant Shapps (l) and protesters outside the British Embassy in Tehran (r)

Brits living in the Middle East could be rescued by the Royal Marines in 'Dunkirk-style' evacuation

The knifeman who killed six people in a rampage at a Sydney shopping centre has been named as 40-year-old Joel Cauchi (left)

Pictured: Sydney knifeman, 40, who killed six people before being shot dead by brave policewoman

Iranian drones and missiles have arrived in Israel with explosions in the skies - as officials warn of a "significant response" to the massive attack.

Explosions in skies and sirens across Jerusalem amid Iranian attack - as Israel warns of 'significant response'

USS Bataan which is heading to the Eastern Mediterranean (main) and Joe Biden (r)

US sends amphibious warship and 2,500 Marines into the Eastern Mediterranean after Iran attacks Israel

US and UK forces are helping defend Israel from Iranian drones and missiles after a massive attack was launched.

British and American jets 'shoot down Iranian drones' as Rishi Sunak slams Iran for 'reckless' attack against Israel

President Biden is holding an emergency national security meeting as the US prepares its response to Iran's drone and missile attack on Israel.

President Biden holds high-stakes emergency meeting as Iran launches full-scale attack on Israel

Iron Dome Rocket Interceptions of Hamas Rockets- Southern Israel- Night Attack On Ashdod City

Israel closes airspace as it braces for Iranian drone attack

Iranian attack drones are 'en route to Israel', according to an Israeli Defence Force spokesperson.

Iran launches massive drone and missile attack on Israel as war in Middle East escalates