The Bank of England has warned the UK is facing its longest recession since records began, as it raised interest rates by the most in 33 years.
It warned the UK would face a “very challenging” two-year slump with unemployment nearly doubling by 2025.
Bank boss Andrew Bailey warned of a “tough road ahead” for UK households, but said it had to act forcefully now or things “will be worse later on”.
It lifted interest rates to 3% from 2.25%, the biggest jump since 1989.
By raising rates, the Bank is trying to bring down soaring prices as the cost of living rises at its fastest rate in 40 years.
Food and energy prices have jumped, in part because of the Ukraine war, which has left many households facing hardship and started to drag on the economy.
A recession is defined as when a country’s economy shrinks for two three-month periods – or quarters – in a row.