Opposition Blames Johnson for 'Record' Interest Rate of One Per Cent

The Bank of England's Monetary Policy Committee (MPC) announced the decision at lunchtime on Thursday, following forecasts that inflation could soar from seven per cent now to over 10 per cent by the end of the year, while economic growth is set to fall to a fraction of a per cent.

British opposition figures have accused the Tory government of economic mismanagement after interest rates hit a '13-year high' of one per cent.

Labour shadow chancellor Rachel Reeves blamed Prime Minister Boris Johnson for the Bank of England's decision to raise its base rate by 0.25 per cent on Thursday, as voters headed to the polls in local government elections in parts of the UK.

"This underlines how the Tories are making the cost of living crisis worse — and how poorly they're managing our economy," Reeves tweeted.

The central bank's Monetary Policy Committee (MPC) announced the decision at lunchtime on Thursday, following forecasts that inflation could soar from seven per cent now to over 10 per cent by the end of the year, while economic growth is set to fall to a fraction of a per cent.

The latest rate hike is small beer compared to those imposed by late prime minister Margaret Thatcher's chancellor Nigel Lawson between 1988 and 1989. The economic boom credited to Lawson's 1986 budget tax cuts also saw inflation jump from three to eight per cent. By the time of his resignation in 1989, interest rates had hit a staggering 15 per cent.

Labour chancellor — and later PM — Gordon Brown off-loaded responsibility for lending rates onto the Old Lady of Threadneedle Street a week after Labour won the 1997 general election, regaining power after 18 years in opposition. The rate peaked at 7.5 per cent the next year amid rampant inflation of around seven per cent.