IMF forecasts UK inflation to hit 30-year high in 2022
14 December 2021 - 20:10City workers exit an office building in the City of London, UK, on December 14 2021. UK companies added to payrolls in November at a record pace and unemployment fell, figures that are almost certain to fuel concerns at the Bank of England that unsustainable inflation pressures are building in the labour market. Picture: BLOOMBERG/CHRIS J. RATCLIFFE
But the central bank held off from a widely expected rate rise in November due to concern about the impact of the end of the government’s job furlough programme, and is expected to do so again on Thursday due to the spread of the Omicron coronavirus variant. A global inflation surge due to higher energy prices and supply-chain bottlenecks created by the Covid-19 pandemic has been exacerbated in Britain by Brexit barriers to trade and migration.
Georgieva said Omicron could exacerbate inflation pressures in supply chains but a return to the severe lockdowns seen last year looked unlikely. The IMF believes Britain’s economy will expand by 6.8% in 2021 and 5% in 2022, after shrinking by a historic 9.8% in 2020 when it felt the full force of the pandemic.Brexit dealt significant damage to trade with the European Union and there would be further difficulties when Britain implements customs checks on EU imports on January 1, Georgieva said.
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