Spectre of recession is a threat to recovery

MAKE no mistake, the latest grim forecasts from the Bank of England make for gruesome reading.

With the economy set to slam into reverse, the spectre of recession looms.

Inflation is predicted to soar above 10 per cent, heaping more agony on families and pensioners grappling with rocketing prices for everything from energy bills, to petrol and the weekly shop.

Britain faces stagflation – a poisonous combination of soaring costs and stagnant growth. To slay this dragon, the Bank has raised interest rates to 1 per cent – a 13-year high.

Of course, this remains historically very low. But it will still strike fear into the hearts of those with mortgages and businesses who face higher borrowing charges – increasing the risk of job losses.

(And how predictable that the grasping high street banks shamelessly refuse to pass on rate rises to savers).

The squeeze is a global problem caused by post-pandemic supply chain chaos and surging gas prices and exacerbated by the Ukraine war.

While this has dealt a juddering blow to our recovery, the truth is that had Chancellor Rishi Sunak not devised emergency Covid measures to protect firms and jobs, the pain would have been infinitely worse.

Even so, the Treasury and Bank of England blundered badly by turning off the moneyprinting presses, increasing interest rates and hiking taxes all at the same time, delivering a triple whammy to incomes and prosperity.

Radical thinking is now required. Relaxing MOT rules for new cars is an imaginative start. What about spiking the hated national insurance hike entirely?

The key battleground over the next two years will be which party is best placed to pilot Britain through the economic turbulence. It is imperative that the Tories capitalise on their reputation for competence with the nation’s purse strings.

If life remains hard for ordinary families, they will call for the tumbrils.