The Bank of England has predicted another recession, double-digit inflation and half a million job losses as stagflation forces stalk the UK economy. In a dismal set of forecasts, Threadneedle Street warned Britain faces anaemic growth in the coming years as households and businesses tighten their belts to cope with rocketing energy bills and living costs. Growth will slow markedly this year to 3.75% before GDP contracts 0.25% in 2023 and barely rebounds in 2024, the Bank predicted. It marked a large downgrade on its previous prediction of 1.25% growth in 2023 as the war in Ukraine dims global growth prospects. Its rate-setters predicted a 1pc slump in output in the final quarter of this year as households face their second biggest plunge in disposable incomes on record. Governor Andrew Bailey admitted the forecasts are “a very weak projection” and point to a “very sharp slowdown” as the Monetary Policy Committee (MPC) predicted a second downturn for Britain in just four years. The darkening in the economic outlook is being driven by the cost-of-living crisis with the Chancellor refusing to dole out more help for families feeling the pinch. Putin’s invasion in Ukraine has exacerbated the living standards crunch, stoking inflationary pressures as it pushes up energy bills, food costs and prices at the pump. The MPC warned inflation will breach the 9% mark in the coming months and hit double digits by the end of the year, the highest level since 1982. The rate of inflation in 2022 will be almost double the Bank’s previous expectations and remain well above its 2% target by next spring, at almost 7%. Britain’s economy will also be hampered by the Bank raising borrowing costs and Chancellor Rishi Sunak cutting back on fiscal support following the pandemic, the rate-setters conceded. The highest inflation since the Bank’s independence will eat into household incomes and cut business profits, a squeeze its rate-setters admit they are “unable to prevent”.

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