Bank of England warns of recession risk in run-up to expected election next year

Interest rates left unchanged at 5.25% as Bank signals 50-50 chance of recession by summer

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The Bank of England has warned the economy will be on the brink of recession in an election year after signalling interest rates will need to remain high for an extended period to tackle stubborn inflationary pressures.

After holding rates unchanged at 5.25% for a second consecutive time – the highest level since the 2008 financial crisis – Threadneedle Street said the risks from war in the Middle East and domestic inflationary pressures would force it to keep borrowing costs high despite a worsening growth outlook.