31: Bank of England - November MPC Minutes


The Bank of England (BoE) Monetary Policy Committee met earlier this week and voted by a majority of 7-2 to increase the Bank Rate by 0.75 percentage points. The increase marks the biggest since 1989 and the eighth time in a row the bank has hiked interest rates. Looking back to November 2021, the base rate was just 0.1%...

Since the MPC’s previous forecast in August, there have been significant developments in fiscal policy. The Bank's overall forecast for the economy looks grim, output has already begun to contract and will go on falling for the next two years, creating the longest recession of modern times. 

The unemployment rate is expected to rise to just under 6.5% by the end of the forecast period (2025) - up from 3.5% in the three months to August, its lowest level since 1974. This would be a considerable rise in unemployment and will affect consumer spending which has multiple adverse impacts on the economy. 

Of course, soaring borrowing costs heap more pressure on indebted UK firms. For companies in need of finance to expand, or to just survive, rising interest rates and inflation make a scary combination (especially as recession looms).

For British businesses which have loans at a variable rate, or need to refinance, rising interest rates will have a marked effect on costs and profits. At Company Watch we have long warned about “zombie firms” being kept alive by debt while paying low-interest rates... well, these firms could soon face a reckoning.

CPI inflation was 10.1% in September and is projected to pick up to around 11% in 2022 Q4.

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