Interest rate rise - reactions

Chancellor responds to Bank of England interest rates decision

The Chancellor's response to the Bank of England's interest rates decision is below

Chancellor of the Exchequer Jeremy Hunt said:

“High inflation is a destabilising force eating into pay cheques and slowing growth. Core inflation is higher in 14 EU countries and interest rates are rising around the world, but the lesson from other countries is that if you stick to your guns, you bring inflation down.

“Our resolve to do this is watertight because it is the only long-term way to relieve pressure on families with mortgages. If we don’t act now, it will be worse later”.

Rachel Reeves MP, Labour’s Shadow Chancellor, responding to the rise in interest rates, said:

“Families across Britain will be desperately worried about what today’s interest rate rise might mean for them.

“They want to know that support will be there if they need it.

“Instead the Chancellor and Prime Minister are burying their heads in the sand and failing to clean up the mess this Tory government has made.

“Labour’s five-point plan to help ease the Tory mortgage penalty and our Renters’ Charter would provide practical help right now.

“Longer-term, Labour will build a stronger, more secure economy and get it growing again.”

Mortgages: Sunak treating homeowners as “collateral damage” 

Responding to Rishi Sunak ruling out support for mortgage borrowers as the Bank of England increases interest rates yet again, Liberal Democrat Ed Davey said:

“Homeowners are being treated as collateral damage by Rishi Sunak. This latest rate rise will scar family finances for years to come, all because this Conservative government crashed the economy and sent mortgages spiralling.

“It is heartbreaking that this could lead to people losing their family home through no fault of their own. Rishi Sunak needs to provide targeted support to those hardest hit, instead of cruelly standing by as people worry about keeping a roof over their head.”

ENDS 

Notes to Editor

Mortgage Protection Fund 

• The Liberal Democrats are calling for an emergency ‘Mortgage Protection Fund’ to protect families falling into arrears or facing repossession as a result of soaring interest rates, paid for by reversing Conservative tax cuts for the banks.

• The fund would be targeted towards homeowners on the lowest incomes and those seeing the sharpest rises in mortgage rates. Those whose mortgage payments rise by more than 10% of their household income would be eligible for grants to help cover the cost of that rise, paid monthly. These payments would be capped at £300 a month.

• The Conservatives have cut taxes for the big banks by more than £3 billion a year since 2016, through cuts to both the Bank Levy and Bank Surcharge. The Liberal Democrats would reverse those cuts to ask the big banks to pay their fair share.

• This would be a temporary scheme to tackle the current problem of soaring mortgage rates. It would initially be introduced for a year, and the Government would need to review the need for it next year depending on what happens to mortgage rates.

• Similar emergency support to help homeowners at risk of losing their homes was introduced by the government in 2009 in the wake of the financial crisis, including the Mortgage Rescue Scheme, Homeowners Mortgage Support scheme and changes to the existing Support for Mortgage Interest scheme.

• The Liberal Democrats are also calling for protections for renters including an immediate ban of no fault evictions, a national register of landlords and the temporary reintroduction of pandemic-era measures protecting renters from evictions over rent-arrears and extending the mandatory notice period given by landlords.

Unite: Bank of England inflicts pain on households

Hiking up interest rates is the wrong choice

Unite general secretary Sharon Graham said: “Yet again the Bank of England is making the wrong choice - inflicting pain on ordinary households across the UK by hiking up interest rates.

“This latest rise is nothing more than a hand-out to the banks who have already made bumper profits from 12 other interest-rate hikes. The 13th could put hundreds of thousands of mortgage holders in peril of not being able to pay their mortgage.

“Instead of blaming inflation on workers’ wage rises it’s high time the Governor of the Bank of England tackled the profiteers of corporate Britain. They are to blame for the current crisis.”

Interest rate rise risks doing more harm than good, says IPPR 

The UK’s leading progressive thinktank, IPPR, has responded to the announcement that the Bank of England has increased its interest rates to 5 per cent. 

Dr George Dibb, head of the centre for economic justice at IPPR, said: 

“This interest rate rise risks doing more harm than good. The Bank of England has been forced to take action because of government inaction. This will put enormous pressure on mortgage holders, and we are now on the precipice of intentionally pushing the economy into recession.  

“Instead of further rate rises, we need a more balanced set of policies, including more fiscal policy action, to address the persistence of inflation. This should involve further price support measures to lower energy prices, excess profits taxes to disincentivize excessive price increases, and income support to help smooth out wage adjustments.” 

Commenting on the interest rate decision, Andrew Bailey, Governor of the Bank of England said:

“We've raised rates to 5% following recent data which showed that further action was needed to get inflation back down. The economy is doing better than expected, but inflation is still too high and we’ve got to deal with it. We know this is hard - many people with mortgages or loans will be understandably worried about what this means for them. But if we don't raise rates now, it could be worse later. We are committed to returning inflation to the 2% target and will make the decisions necessary to achieve that.”

We have made available a short video of Andrew Bailey explaining today’s announcement. This will be available here and on Twitter shortly.

Andrew Bailey will also give a pooled interview. This will be broadcast this afternoon.

Interest rate rise: Dangerous groupthink will cost people their jobs and homes, warns TUC

Commenting on today’s decision by the Bank of England to raise the base rate by 0.5 percentage points, TUC General Secretary Paul Nowak said:

“This interest rate hike is the result of dangerous groupthink in the Bank of England and Downing Street. Pushing interest rates so high that the economy is driven into recession will only make the current crisis worse, costing people their jobs and their homes.

“Inflation was caused by global energy shocks and government should be doing more to ensure households and businesses benefit as prices fall.

"Instead of scapegoating workers who are desperate for their pay to keep up with prices, ministers should focus on a credible plan for sustainable economic growth and rising living standards."