High inflation has an adverse effect on the UK productivity

Rising inflation in the UK could threaten businesses in making long-term decisions that are necessary for increased productivity, Bank of England representative Katherine Mann said in a podcast. 

Earlier, there were repeated calls to raise the interest rate by half a point. A majority of BoE’s members voted for this decision last month, as inflation hit a record over the past 40 years, reaching 10.1%. 

Labor productivity in the UK lags behind the targets for the U.S, German and French markets. According to Katherine Mann, current inflation rise will force businesses to focus on short-term pricing decisions. 

"High inflation has a lot of negative consequences for the country’s economy," — she said.

“With inflation rising, businesses are trying to find the best pricing strategy. In order to improve productivity, companies should take into account the following factors: producing quality products, making the right investment decisions, and seizing all market opportunities,” noted Katherine Mann.

The BoE will announce a possible rate hike on September 15. It is expected to reach the level of 2.25%.