Editorial: Most vulnerable need help as economic gloom deepens
The latest forecast from the Bank of England paints an exceptionally bleak picture for the months ahead, offering scant hope that we could soon put the economic gloom behind us.
We already had dire warnings in May, predicting inflation at more than 10 per cent by October. In the space of three months, the outlook has worsened with the bank now saying inflation could peak at 13.3 per cent inflation in October, the highest for more than 42 years.
It also sounded alarm bells over the state of the UK economy, which is set to plunge into the longest recession since the financial crisis.
On Thursday, interest rates were raised yet again, from 1.25 per cent to 1.75 per cent, the biggest increase for 27 years.
The bank's aim is to bring rampant inflation under control but it will mean further pain for householders with tracker mortgages and those with fixed rates due to come to an end. Those with mortgages and other loans will be worried about yet another sharp increase in their monthly bills as food and fuel costs soar.
The bank forecasts that household incomes are set to fall, despite the measures currently in place from the British government and also predicts that unemployment will start to rise again next year.
Bank of England governor Andrew Bailey accepted that 'inflation hits the least well-off hardest', but added that if action is not taken now there will be worse consequences in the future and higher interest rates.
This is all devastating news for households that are already struggling to make ends meet.
Meanwhile, with Boris Johnson and his new chancellor on holiday and the two contenders vying for the Tory leadership and the keys of 10 Downing Street focusing on the votes of a tiny electorate, there is no sense the government has a plan to tackle this economic crisis.
Families are genuinely fearful of what the next few months will bring and need urgent, effective support, not an administration in limbo.
That said, there will be little confidence that either Liz Truss or Rishi Sunak will come up with the appropriate level of help for those most vulnerable to runaway prices.
An uplift to Universal Credit is just one step that will target the least well-off in our society but much more will be needed to ensure households can get through the winter and beyond.