The country’s economic outlook has “deteriorated materially” alongside the rest of the world but is faring better than the 2008 crisis, experts said yesterday.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the Bank’s verdict seems to be that “the situation isn’t as quite as bad as previous crises”.
She added: “Consumers might be coping with the biggest hikes in prices in four decades but compared to the months before the 2008 financial crisis hit, households aren’t as likely to dig themselves deeper into more debt.”
“The escalating cost-of-living crisis is so stark that the Government has already moved to pledge more support to those on lower incomes.”
Households have come under increasing pressure in recent months because of soaring energy, food and fuel prices.
In April, domestic energy bills rocketed when the price cap increased by 54 per cent to £1,971 for the average household.
Experts believe this could rise to around £2,800 in October, which could help to push inflation above 11 percent later this year.
The Bank said: “Commodity price volatility following the Russian invasion of Ukraine has further exacerbated price pressures facing households and businesses and has had implications for the financial system.”
“Tighter financial conditions and reduced real incomes will weigh on debt affordability for households, businesses and governments in many countries, increasing the risks from global debt vulnerabilities.”
In its Financial Stability Report, the Bank said financial institutions were resilient to debt vulnerabilities among households and businesses. Governor Andrew Bailey said: “The UK banking system remains strong.”
But the Bank said the outlook for the UK economy is “very uncertain.”
It added: “The Russian invasion of Ukraine could cause more disruption to global energy and food markets. Given this, we expect households to become more stretched in the coming months.”