The Bank of England has warned the UK will fall into recession as it raised interest rates by the most in 27 years.

The economy is forecast to shrink in the last three months of this year and keep shrinking until the end of 2023.

Interest rates rose to 1.75% as the Bank battles to stem soaring prices, with inflation now set to hit over 13%.

Governor Andrew Bailey said he knew the cost of living squeeze was difficult but if it didn't raise interest rates it would get "even worse".

Photo Credit:- Business Live

The main reason for high inflation and low growth is soaring energy bills, driven by Russia's invasion of Ukraine.

A typical household will be paying almost £300 a month for their energy by October, the Bank warned.

What has the Bank of England announced?

Prices: Inflation expected To peak at  13.3%

What has the Bank of England announced?

Borrowing: Interest rates raised to   1.75%

What has the Bank of England announced?

Energy: Average annual bills expected to hit   1.75%

What has the Bank of England announced?

Recession: UK economy expected to shrink for 1.75%

More than a Year

Chancellor Nadhim Zahawi said he was confident the action the government was taking meant it could overcome the economic challenges.

But both Mr Zahawi and Boris Johnson were criticised by Labour for being on holiday when the Bank detailed its gloomy outlook.

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