During every trip, in every speech, in the header of every official email, Rishi Sunak reminds us: In January, the British Prime Minister made five big promises to his fellow citizens. The first of them was “Cut inflation in half” by the end of 2023 (his other promises were economic growth, reducing public debt, reducing hospital waiting lists, and stopping illegal immigration). When he spoke, inflation was 10.5%. Seven months later, it has fallen, but somewhat less than in the other large economies. Thus, in June it remained at 7.9% in twelve months, which made it the strongest of the G7 countries.

Like Europe and the United States, the United Kingdom is struggling with a violent increase in prices. But even more than elsewhere, the phenomenon seems persistent. In an attempt to stop it, the Bank of England (BoE) is stepping up interest rate hikes. It started before the others, making its first hike in December 2021, where the American Fed expected March 2022 and the European Central Bank expected July 2022.

However, she is not finished. On Thursday, August 3, for the fourteenth consecutive time, it raised its reference rate, this time from 5% to 5.25%, a level it had not reached since 2008. Never, since its creation in 1694, has British monetary policy institution had made so many successive increases. As a symbol of the country’s economic fragility, homewares brand Wilko, which owns 400 stores, announced on Thursday that it would file for bankruptcy. About 12,000 jobs are threatened.

The tone adopted by the BoE is however a little more optimistic than in previous months. “Inflation fell in June, which is good news, and it will continue to do so in the coming months”says Andrew Bailey, its governor. According to him, it will fall to around 5% in October, which should allow Mr. Sunak to fulfill his promise. Within a year, it should drop to 3%.

The impact comes in particular from gas.

Mr Bailey also points out that the worst-case scenario, which the Bank of England predicted in the autumn of 2022, has not materialised. “The economy has been stronger than expected. (…) In November [2022], we expected a long and shallow recession. It didn’t happen. » By contrast, the UK posted weak growth, around 0.2% per quarter for the first half as a whole. Because of this quasi-stagnation, the country is experiencing better dynamics than Germany, but less good than France, and clearly less good than the United States.

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