Interest rate rise 'will add to pain' felt by ordinary families

Unite today (May 5) warned that yet another interest rate rise – the fourth consecutive rise in a row since December – will add to the financial pressure facing millions of ordinary families amid an unprecedented cost of living crisis.

The Bank of England (BoE) today raised interest rates from .075 per cent to 1 per cent – the highest interest rate level in over a decade, as it warned that the UK economy is set to contract toward the end of the year.

The newest estimates show that the UK economy will shrink by 0.25 per cent in the last three months of 2022, down from previous estimates which forecast 1.25 per cent growth.

Raising interest rates is thought to be a mechanism for bringing inflation down. The idea is if the cost of borrowing goes up for both businesses and consumers, people will spend less. With less demand, prices will drop.

But some economists have highlighted that raising interest rates may do little to cool inflation at time when rising prices are largely tied to the skyrocketing prices of oil and gas.

Instead, the latest news will come as yet another blow for ordinary families, who are already facing a perfect storm of rising energy bills, skyrocketing food costs and increases in rent and mortgage payments.

Commenting, Unite general secretary Sharon Graham said, “Workers are getting hammered from all sides and this rise will add to the pain.  Four out of ten UK families are already struggling to pay energy bills and are spending less on food.

“This will pile more financial pressure on ordinary families – mortgages, rents and price rises – all part of the big business drive to make workers pay for the pandemic. Unite continues to resist that as our wins on pay deals in the last six months shows.”

By Hajera Blagg