Britain’s economic recovery, after the Covid-19 pandemic and long lockdowns, is being obstructed by several problems like hindrances in the supply chain, a rise in inflation and the risk of increase in unemployment. The policymakers are struggling to steer United Kingdom out of these complicated problems.
Andy Haldane, chief economist of the former Bank of England, says that United Kingdom is in a VILE era, volatile inflation and low expansion.
Financial markets think that Bank of England is certain to raise interest rates by February, but some economists who are worried about the flagging recovery are not sure of raising the interest rates.
United Kingdom hit an inflation rate of 3.2 percent in August. It is the highest inflation rate in almost a decade.
The momentum of growth of the economy has largely dissipated in the latest readings. Britain’s economy had grown rapidly in the beginning of this year, when it was reopened after the third wave of Covid-19 pandemic.
Britain’s supply chain faces a large staffing problem. The manufacturers deal with heavy delays for supplies and obstructions in distribution of products.
Households are also facing tax increases and other financial problems for working people. Consumers have started leaning towards saving more and spending less.
In the last seven monthly reports of unemployment rates, six of them have recorded a fall in unemployment, which was the result of the government’s job-protecting furlough programs. The scheme has ended in September and Bank of England is keeping an eye on the unemployment rate for the coming months.