The chances of the UK slipping into recession over the next couple of years have risen amid inflation that could have triggered the country’s external shocks, JPMorgan economists said on Friday, a day after the Bank of England raised the cost of its debt.
The British central bank raised its benchmark interest rate to 1.25% on Thursday – the highest level since January 2009. Although its action is more gradual than other central banks, the central bank said it was ready to operate “along the river” if necessary. Risks of inflation.
“If (the Federal Reserve) causes a sharp recession in growth or recession, it will spread to the UK and create a recession in the UK, coupled with tight domestic financial conditions,” the JPM said.
On Thursday, the central bank accepted the largest rate hike since 1994 and identified a sluggish economy.
“… Given the nature of the UK economy, we are seeing more exposure to external shocks over the short term and a greater chance of a recession in the next one to two years,” the JPM added.
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