UK’s interest rates at 3% for first time since 2008

The Bank of England has warned the UK is in its longest recession since records began, as it raised interest rates by the most in 33 years, the BBC reports.

In its outlook for the UK economy, it said the country would face a “very challenging” two-year slump.

It also warned the unemployment rate will nearly double.

The Bank lifted the UK interest rate to 3% from 2.25%, the biggest increase since 1989.

It takes borrowing costs to their highest since 2008, when the UK banking system faced collapse.

Interest rates have been rising since last December as the cost of living has accelerated. Prices are increasing at the fastest pace in 40 years.

The Bank believes by raising rates it will make it more expensive to borrow and encourage people not to spend money so easing pressure on prices.

The Bank had previously expected the UK to fall into recession at the end of this year and it would last for the entirety of next year.

It now believes that the UK economy already entered a downturn in the summer, which will continue for next year and into the first half of 2024 – a possible general election year.

While it will not be the UK’s deepest downturn, it will be the longest since records began in the 1920s.

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