Thursday evening UK news briefing: Bank of England warns of year-long recession

Your evening briefing from The Telegraph
Your evening briefing from The Telegraph

Evening briefing: Today's essential headlines

Ukraine war | A female Russian commander who "boasted of how she enjoyed killing Ukrainians" has become the country's first senior woman officer to die. Lieutenant Colonel Olga 'Kursa' Kachura was killed when a Ukrainian missile struck her car as she drove in the city of Horlivka, in the Donetsk region of Ukraine. More on the war in our live blog.

The big story: UK to enter year-long recession

British families face the longest recession since the financial crisis and soaring prices, the Bank of England has warned, as a surge in energy bills will leave households poorer and the economy smaller.

Policymakers raised interest rates by 0.5 percentage points today to 1.75pc to try to keep a lid on inflation, which is now forecast to climb above 13pc this autumn.

The Bank's sixth rate rise in a row is the biggest in 27 years, and comes as it warned that price rises were likely to remain in double-digits for the best part of 12 months.

Its latest forecasts showed the UK is expected to start contracting at the end of this year and keep shrinking until the end of 2023.

These graphs show how the size of the economy is expected to fall and the direction of inflation.

The pound wiped out earlier gains and dropped 0.6pc against the dollar following the bleak forecasts. This chart in our live blog illustrates the sharp decline.

Bank of England governor Andrew Bailey - Frank Augstein/Pool
Bank of England governor Andrew Bailey - Frank Augstein/Pool

Recovery from Covid was always going to lead to economic disruption and the Ukraine war has added an energy price spike.

Yet could the Bank of England have handled the shocks better?

Tory leadership frontrunner Liz Truss has pledged to "look again" at the Bank's mandate "to make sure it is tough enough on inflation".

There was evidence of the impact of soaring prices on the wider economy today as it emerged Britain's builders are the most downbeat since the start of the pandemic as recession fears dragged the sector into its first slowdown for 18 months.

Andrew Lilico suggests it is time to revoke the Bank's independence.

Tax cuts warning

Ms Truss has promised during the campaign that she would reverse the 1.25 percentage point rise in National Insurance which came into force at the start of this tax year in a bid to help families immediately with the rising cost of living.

The chances of that happening look increasingly likely given the poll results in the Foreign Secretary's favour and today the Telegraph has been told that figures in her leadership campaign are privately attempting to convince MPs who have endorsed her rival Rishi Sunak to switch sides.

Yet the Foreign Secretary's strategy of cutting taxes has received opposition from the boss of high street retailer Next.

Lord Wolfson has warned tax cuts will not solve the challenges facing the British economy.

Read what each candidate's cuts will save you as they prepare to do battle in a televised leadership debate on Sky later.

How to get a pay rise

Retirees are on track to receive consecutive 10pc state pension increases as high inflation is now forecast to remain in double-digits for most of next year.

With a 15 month recession predicted by the Bank of England, is there anything workers can do to protect their wealth?

Switching to the best savings rates, investing in companies that can prosper as the cost of borrowing rises, and locking in cheap mortgage rates while they last could have a big impact.

Read the ways to make money as interest rates rise.

Despite soaring energy bills and sky-high rents, wage growth has failed to keep pace.

Yet with vast levels of job vacancies, we are living in a red-hot recruitment market. Read how to secure a 100pc pay rise.

Comment and analysis

Around the world: Missiles fired into Taiwan's waters

The Chinese army launched multiple ballistic missiles into waters around Taiwan today as China's largest ever military drills encircling the island began. The Taiwanese defence ministry confirmed that 11 missiles had been fired, nearly double the number that were fired in July 1995 during the Third Taiwan Strait Crisis. In response, Taiwan activated "relevant defence systems", a senior military official said at a briefing. Japan said that five ballistic missiles fired by China also appeared to have landed in its exclusive economic zone, in the first such incident. Watch videos of the rockets being fired and a map showing where they landed.

Thursday big-read

Premier League new kits 2022-23: every shirt ranked

Six of the best from this season (NB - may not actually represent best of anything)
Six of the best from this season (NB - may not actually represent best of anything)

Be warned about our traditional round-up of the best and worst new designs for the new season. Thom Gibbs reveals some total shockers

Read the full guide

Sport briefing: England star from political royalty

Many sportspeople are eager to shrug off the burden of a famous family name, but not Flora Peel. It helps that the England hockey star's lineage belongs in the dim and distant past, but there are certainly few monikers as renowned as hers: Peel's great-grandfather (to the power of five) was Sir Robert: the two-time Prime Minster, creator of the Metropolitan Police service and one of the founders of the modern Conservative Party. Read more on the Commonwealth Games star from political royalty. As we approach a new Premier League season, players are at risk of having their careers curtailed due to the physical and mental demands being placed on them. Read why the boss of the Professional Footballers' Association has issued the warning for the uniquely challenging season.

Editor's choice

  1. Not just a nip and tuck | Jane Fonda and the 'too far' facelift

  2. One-filling sarnies | Sandwiches have become too complicated – one ingredient is all you need

  3. Strict protocols | 'We were treated like toxic freight on our Covid-stricken cruise'

Business briefing: The fake Caribbean resort scheme

The Serious Fraud Office has convicted a fraudster of encouraging thousands of people to invest in properties in the Caribbean that were never built. David Ames has been found guilty on two counts of fraud by abuse of position for his role in the seven-year scheme as head of Harlequin Group. Mr Ames convinced 8,000 investors to pay a 30pc deposit on an unbuilt villa or hotel room and took half of the money as fees for the company and salesmen. The company then only put 15pc of the deposits towards construction and never secured additional funding for the scheme. Read how the scam even secured political endorsements.

Tonight starts now

Great British Bake Off – The Musical, review | "We like to think of this musical as 'the lost series of Bake Off' that's not yet been aired". So cheekily avouch Pippa Cleary and Jake Brunger in the programme for their all-singing, occasionally dancing Bake Off spin-off. That assertion, and the title alone, makes a mouth-watering invitation to fans of the series. And there are plenty of them. Surviving the jump to Channel 4 in 2017, BO remains a ratings KO – if just a sliver of the viewing millions bite at this, the pair will be in a jammy situation. Dominic Cavendish reveals how this tongue-in-cheek homage at the Cheltenham Everyman has a few terrific showstoppers, even if it lacks the tears and tension of baking.

Three things for you

And finally... for this evening's downtime

The most beautiful islands in Greece | Now synonymous with "overtourism", Santorini and Mykonos could not have been more different in the Fifties. See what they looked like in their glorious heyday before the Instagram crowd came and ruined them.

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