JPMorgan’s economists said on Friday that the chances of the UK slipping into recession over the next couple of years have increased amid inflation that could have hit the country’s external shocks.
The British central bank raised its benchmark interest rate to 1.25% on Thursday – the highest since January 2009. Although its action was more gradual than other central banks, the central bank said it was prepared to face it. Risks of “river” 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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