The Chancellor’s decisions has led to a surge with inflation which has hit 4% in September and the S&P Global prediction marks soaring increase from August’s 3.8% which is double the Bank of England’s target of 2%.
The official figures are due out on Wednesday which will place further pressure on the Chancellor prior to her Autumn Budget on 26 November.
Analysts blaming Rachel Reeve’s tax hikes in April affecting borrowers and household spending have been ruined.
Omer Mehmet, managing director at Welling-based Trinity Finance, said: “Borrowers are the big losers here. If inflation creeps back up to 4%, this will show exactly how fragile the recovery really is.
Mehmet warned: “For mortgage holders, it’s another reminder that fiscal policy and monetary policy are now pulling in opposite directions, and ordinary families are caught in the middle.
Riz Malik, director at Southend-on-Sea-based R3 Wealth, sounded a dire alarm, likening the outlook to the economic malaise of half a century ago.
He said: “Welcome to 1970s style stagflation. Even with rising unemployment, high inflation will be the issue that stops deep rate cuts from the Bank of England’s Monetary Policy Committee. It seems regardless of who inhabits Downing Street, this country’s economic woes continue and prospects look as bleak as a mid-winter.”
Samuel Mather-Holgate, an independent financial adviser at Swindon-based Mather and Murray Financial said, “If Rachel Reeves’ goal was to kill off the UK economy she would have passed with flying colours.
At a time when British business needs an injection of capital through tax cuts to stimulate the stagnation in the veins of UK companies, she’s likely to fill the needle with a poison. More tax cuts will kill off the slight prospect of any growth and this is what we should expect from an incompetent chancellor.
Eamonn Prendergast, a chartered financial adviser at Bromley-based Palantir Financial Planning Ltd
Said, “If inflation does rise to 4%, it reinforces the sense that UK plc is stuck in a high-tax, low-growth loop. The government’s fiscal tightening and frozen thresholds have squeezed disposable income, while wage growth is losing momentum.
“That’s not a recipe for sustainable confidence. Until inflation starts easing decisively, the Bank of England will struggle to justify cutting rates meaning higher borrowing costs will linger longer for households and businesses.
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