CEREDIGION MP Ben Lake has called the Bank of England’s announcement to increase interest rates ‘sobering’.

Responding to the announcement from the Bank of England that it has raised the base rate of interest by 0.75 per cent to 3 percent – the single biggest increase in more than three decades, Ben Lake MP warned the UK government against another round of austerity.

The UK is already in recession, the Bank of England has warned, which could last for a “prolonged period”.

The unemployment rate is currently at its lowest for 50 years, but the Bank warned it is expected to rise to nearly 6.5 per cent.

Mr Lake, who is Plaid Cymru’s Treasury spokesperson, called the announcement ‘sobering’ but warned against implementing another round of austerity and instead to use the upcoming budget to “set out a sustainable package of support to help every household cope this winter.”

He said: “Sobering news that the Bank of England has raised interest rates by 0.75 percentage points today – the single biggest increase since 1989.

“This will place further strain on households, and see mortgage rates rise yet again.

“The Chancellor should avoid the temptation of implementing another round of cuts to hard-pressed public services in response to this serious development.

“He should instead heed the Bank’s warning that the UK is already in recession, and use the upcoming budget to set out a sustainable package of support to help every household cope this winter.”

Chancellor of the Exchequer, Jeremy Hunt, MP, said: “Inflation is the enemy and is weighing heavily on families, pensioners and businesses across the country.

“That is why this government’s number one priority is to grip inflation, and today the Bank has taken action in line with their objective to return inflation to target.

“Interest rates are rising across the world as countries manage rising prices largely driven by the Covid-19 pandemic and Putin’s invasion of Ukraine.

“The most important thing the British government can do right now is to restore stability, sort out our public finances, and get debt falling so that interest rate rises are kept as low as possible.

“Sound money and a stable economy are the best ways to deliver lower mortgage rates, more jobs and long-term growth. However, there are no easy options and we will need to take difficult decisions on tax and spending to get there.”