Interest rates hit a 13-year high yesterday – amid a warning that inflation was heading towards 11 per cent.
As homeowners were facing a double whammy, experts also warned that Britain could already be in recession.
But Chancellor Rishi Sunak said he was confident he could “get the economy back on track”.
The Bank of England yesterday raised interest rates by a quarter percentage point for the fifth time in a row.
They are now at 1.25 per cent, with some experts claiming they can reach as high as three per cent.
The bank said inflation, which is now at nine per cent, could rise to 11 per cent in October – on account of higher rise in energy bills and rising food prices.
But Mr Sunak said people should “feel confident” that he can deal with the crisis.
He told ITV News: “We have the necessary equipment and are determined to get inflation back on track.
“I’ll make sure I’m borrowing responsibly so that we don’t make the situation worse and don’t raise mortgage rates higher than they should.”
He promised: “We will bring down inflation and strong growth will return.”
But an economic adviser to former chancellor George Osborne warned that Britain could already be in recession. Rupert Harrison of financial services firm BlackRock told the BBC: “It is now very likely that the second quarter will see negative growth.
“We may get some mechanical bounce-back in the third quarter, partly due to complicating reasons due to the Jubilee holiday.
“But effectively growth is around zero and could worsen as we move into autumn, especially with the rise in energy prices.”
Cabinet Minister Michael Gove also warned of “a challenging and difficult time” yesterday.
He told The Times CEO Summit: “It’s essentially the case when you’re squeezing inflation out of the system that you would rely on a fiscal and monetary policy, which would mean that you can’t do everything that You want to support people in ideal circumstances. Through difficult times.”
Red Wall: Tax Cut, PM
RED Wall Tories will ask the Prime Minister today to cut taxes or risk bloodshed in the next election.
Northern lawmakers have drawn up a “mini-manifesto” at their own convention in Doncaster.
Putting Boris Johnson on notice, Red Wall Tory MP leader Jake Berry will declare: “It’s time to stop talking about being a low-tax party, it’s time to be a low-tax government.”
BoJo, pushing for tax cuts, and Chancellor Rishi Sunak, who is protesting, will both deliver speeches at the convention.