Interest rates are too high and starting to bite on the economy, says IPPR

Reacting to today’s interest rate announcement from the Bank of England Dr George Dibb, head of IPPR’s Centre for Economic Justice, said:

“The pause in interest rate rises is welcome but rates are already likely too high and starting to bite. The UK economy shrank in July, the Bank has downgraded its growth forecast for this quarter, and the labour market has clearly started to turn downward.

“The Bank is worried about rising pay which is being driven by the financial sector. Yet it’s another group of people who are likely to pay the price of a recession - those in insecure employment or struggling with housing costs.

“Meanwhile, sharply rising rents and the risk of another energy price spike this winter highlight the need for the government to do more to keep inflation in check, and not just rely on the Bank of England.”