Britain faces price rises far higher and more drawn out than in rest of the West

BRITAIN faces the biggest and most prolonged wave of inflation in the West as it is uniquely vulnerable to global gas and food prices, economists have warned.

Prices in the UK will rise by 4pc next year, according to analysts at Barclays, far outstripping the 2.5pc expected in the eurozone and 3.6pc in the US.

Fabrice Montagne, economist at Barclays, said the UK is in a tight spot when it comes to gas in particular. “We are surprisingly exposed to whatever happens on a random pipeline in eastern Europe, and that is because we only have a little bit of inventories,” he said.

Mr Montagne said Brexit has added more complexity into supply chains already bogged down by shortages of ships, lorry drivers and materials, which risks pushing up food prices.

At the same time Covid has discouraged foreign workers from coming to Britain, adding to shortages and pushing up wages and therefore prices.

Barclays expects inflation in Britain to peak at 4.9pc in the second quarter of 2022, before dipping to 2.6pc by the end of the year – still well above the Bank of England’s 2pc target. It says inflation will have fallen below 2pc in other big Western economies, indicating a more long-lasting squeeze in Britain.

Higher inflation is putting pressure on the Bank of England to raise interest rates. Barclays expects the Bank to hike its base rate from 0.1pc now to 0.25pc in December, then on to 0.5pc and 0.75pc by the middle of 2022.

However, Huw Pill, the Bank’s chief economist, has called for “patience” on inflation. Mr Pill, who refused to say whether he would vote to raise interest rates in December, said: “There’s no quick fix, and that lack of a quick fix means some patience will be required.”