Britain still headed for recession but inflation could slow, says Bank of England

Bank of England Governor Andrew Bailey has avoided questioning whether Liz Truss' planned energy program could drive up the cost of living .

Governor Andrew Bailey of the Bank of England speaking to the Treasury Select Committee (

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Britain is still headed for recession, but the skyrocketing cost of living may slow, Bank of England economists say.

Inflation is expected to climb to over 13% and average energy bills are expected to jump 80% in October, from £1,971 to £3,549.

Interest rates have been raised from 1.25% to 1.75% - the biggest increase in 27 years, and the economy is expected to contract every three months from October to 2014, until 2.1% according to the Bank of England forecast.

BoE Governor Andrew Bailey avoided questioning whether Liz Truss' planned energy program could drive up the cost of living, but he didn't deny that a recession could lead to growth lower.

Asked by the Commons Treasury Select Committee whether economists hoped that a recession would lower inflation and later increase economic growth, Mr Bailey replied: "The recession - I hope it doesn't happen not - but we obviously planned it because we unfortunately think that's the most likely outcome due to Russia's actions and the impact on energy prices."

Liz Truss is set to announce a package of measures tomorrow to ease the burden of rising energy bills (

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If Ms. Truss were to freeze the energy cap at current levels, it could mean that inflation has already peaked.

The Bank's Chief Economist, Huw Pill, told MPs: "If we go into recession...I think it's important to stress that it's a consequence of the impact of the higher energy prices on the real incomes of UK residents, as we are a net importer of energy.

“What we are buying from the rest of the world has increased very, very significantly compared to what we are selling to the res...