Britain faces a protracted recession and the worst squeeze on living standards in more than 60 years, the Bank of England warned on Thursday, as it raised interest rates to their highest level since the onset of the global financial crisis.

Eight of the Monetary Policy Committee’s nine members voted to raise interest rates by 0.5 percentage points to 1.75 per cent, following aggressive steps from the European Central Bank and US Federal Reserve in the face of soaring inflation. Silvana Tenreyro, an external member, voted against the majority for a smaller 0.25 percentage point rise.

The BoE said that because of the latest surge in gas prices, it now expected inflation to rise above 13 per cent at the end of the year — much higher than its May forecast — and to remain at “very elevated levels” throughout 2023 before falling back to the 2 per cent target in two years’ time.