Bank of England blames surge in early retirement for Britain’s economic woes

THE Bank of England yesterday blamed a surge in early retirement for our economic woes – and warned more interest rate rises might be needed.

The Bank has raised interest rates to 3 per cent so far, up from 0.1 per cent a year ago, as it seeks to bring inflation back down from more than 10 per cent towards its target of 2 per cent.

Chief economist Huw Pill said there are around 600,000 fewer people in Britain’s labour force than they had anticipated.

This is putting pressure on employers to pay staff more despite a looming recession.

Mr Pill said: “That is a real shock to the economy, that is not something that monetary policy can prevent”.

The Institute for Fiscal Studies points to early retirement as a key factor depressing the number of workers, which has left businesses struggling to find the staff they need to fill vacancies.

Mr Pill said an economic slump is the way to bring down inflation in a crisis caused by shortages of energy, global food prices and a drop in the number of people in the UK who want to work.

He added: ‘We are entering a recession.’

The Bank has faced heavy flak for being too slow to raise interest rates last year, allowing inflation to take hold.