Bank of England expects UK to fall into longest ever recession

The Bank of England has warned the UK will see its longest recession since records began, as it raised interest rates by the most in 33 years.

In its outlook for the UK economy, it said the country would face a "very challenging" two-year slump.

It also warned the unemployment rate will nearly double.

The Bank lifted the UK interest rate to 3% from 2.25%, the biggest increase since 1989.

It takes borrowing costs to their highest since 2008, when the UK banking system faced collapse.

Interest rates have been rising since last December as the cost of living has accelerated.

Prices are increasing at the fastest pace in 40 years.

The Bank believes by raising rates it will make it more expensive to borrow and encourage people not to spend money so easing pressure on prices.

The news will be welcomed by savers, but the rise will have a knock-on effect on for those with mortgages, credit card debt and bank loans.