The Impact of Brexit on the UK Economy

The Bank of England has expressed concern that wages and prices are rising in tandem, making inflation harder to eradicate. The latest annual regular wage growth of 7.2% was far above the level that the BOE believes is consistent with meeting its 2% inflation target. With productivity growing at best at 1% a year, wage growth would need to drop to around 3% before the Bank of England feels comfortable with persistent inflationary pressures. An interest rate hike in the UK quickly takes money out of people's pockets, meaning that they have less to spend on other goods,. slowing the economy and slowing inflation.