andy verity, bbc news.t this with our political correspondent damian grammaticas. it's all about the economy, but the two possible next prime ministers differ on all of this.— differ on all of this. yes, that's riaht, differ on all of this. yes, that's right. and _ differ on all of this. yes, that's right, and their _ differ on all of this. yes, that's right, and their differences - differ on all of this. yes, that's . right, and their differences thrown into stark relief by those projections from the bank, the forecast from the bank of england. so liz truss today doubling down, saying that she thinks this shows it even more important to keep taxes low, she said, because she says tackling the threat of recession is the thing that is really important. 0n the other hand, what we've seen of rishi sunak last night, saying that will be throwing fuel on the fire, today, james cartlidge mp, a sunak supporter who worked alongside mr sunak and the treasury tackling the covert pandemic, he said that would amount to a

andy verity, bbc news.oarded a bus in birmingham and asked people how they're coping with rising prices. hello... 0n the number 11 bus around birmingham, the rising cost of living is making it hard for passengers to keep a grip on theirfinances. i never thought in my lifetime i would see a time like this. i work part—time. i mean, i'm actually working extra hours, obviously, to live. but particularly with the bills going up, it's tough. i work at asda so i notice the prices have gone up quite a lot. i mean sometimes they say, why has this gone up? i say, i don't know, i only work here. it's not my fault. it's not my fault, you know. do you ever see people at the checkout who are really desperate? yes. . have. — yes, and they can't survive now. so in six months' time, they've got no chance. there should be help. you know, a lot of people need help. there should be some i assistance going around. but a lot of people . have nowhere to turn. people expect that inflation will go up even further as well. it defin

andy verity, bbc news. let's get more from our business editor, simonjack, in chester. from politicians on that key issue of energy bills? t that key issue of energy bills? i really am. i am here that key issue of energy bills? i really am. lam here in that key issue of energy bills? i really am. i am here in chester and this morning i was talking to the chancellor of exchequer nadim zahawi at the airbus factory in north wales and a couple of things struck me. you will remember he is a big member of the team liz truss who so far have prioritised tax cuts over what she has previously called hand—outs in terms of direct support. today hand—outs was replaced with help and he said we will look into the winter to provide more support in october and then injanuary. growing realisation that more help will be needed for consumers who are really terrified about what is coming this winter. 0n the economic picture, as andy was saying, the economy hasn't fallen off a cliff, it has shrunk by 0.1% but the fact remains businesses are seeing their costs soar, they are seeing their cost

andy verity, bbc news.s on bbc news 0nline — that's bbc.co.uk/news — and by using the bbc news app. both conservative candidates have said they will not allow a second referendum on scottish independence. liz truss and rishi sunak have promised greater scrutiny of the scottish government in the latest hustings in perth. here's our scotland editorjames cook. anger, outside about conservative policies. with passion aboutjobs, immigration, the climate and of course independence. inside perth concert hall the issues were broadly the same, although the atmosphere was rather more relaxed. it is the same, although the atmosphere was rather more relaxed.— was rather more relaxed. it is quite frankly barbie _ was rather more relaxed. it is quite frankly barbie for— was rather more relaxed. it is quite frankly barbie for politicians - was rather more relaxed. it is quite frankly barbie for politicians to - was rather more relaxed. it is quite frankly barbie for politicians to be l frankly barbie for politicians to be

andy verity, bbc news. under pressure to support their citizens with huge sums of money being spent to shield the most vulnerable. 0ur europe correspondent, jessica parker, reports from belgium? veronique often wears a smile. though her money, she says, doesn't go far. she gets a discount on energy bills through a social tariff, along with a million belgian households. but still, she's taking fewer showers and won't heat her flat above 16 degrees this winter. higher energy costs will have consequences. translation: if they're increasing, l then i'll have even less to live on. | i don't know what i'll do then. eventually i'll have to go for food parcels to help me eat. and that's happening to more and more people i know. europe is awash with warnings about hard times ahead, and information campaigns on how to cut energy use. it's hitting the news as governments use tax breaks, price caps and lump sum payments to help people with rising prices. how long can this go on for in terms of providing this level of g

andy verity reports.a rely rarely has the bank of england given that an economic morning the sun settling. not only forecast in the worst inflation in a0 years, hitting 13%, but a full—blown recession starting this autumn. it means it expects buying and selling activity to start shrinking and carry on for the whole of next year. the to start shrinking and carry on for the whole of next year.— to start shrinking and carry on for the whole of next year. the risks of the full costs _ the whole of next year. the risks of the full costs of _ the whole of next year. the risks of the full costs of exceptionally - the full costs of exceptionally large at present. the source of the risks and the driver of most of the revisions to the full costs since the may report is overwhelmingly energy prices and the consequences of the actions of russia. the rise in energy prices has exacerbated the fall in real incomes and led to another significant deterioration in the outlook for activity in the uk, and in the rest of euro

andy verity, bbc news. are we like to see in the next few months. what are we like to see in the next few months-— what are we like to see in the next few months. . , , , ., few months. that is the big question because of course _ few months. that is the big question because of course we _ few months. that is the big question because of course we had _ few months. that is the big question because of course we had that i because of course we had that warning from the bank of england last week saying that we are heading into recession. a recession being defined as a situation where the economy shrinks for two consecutive three month periods. but that was expected to start later this year, because although we now know that the economy did shrink in the second quarter, we had that figure out today, until now the consensus was that we would then see a small rebound in economic growth in the third quarter of this year, between july and september. but what is interesting is that after this 0ns data today, the offi

our economics correspondent andy verity there.d i'm afraid that its course is passing through, passing directly into inflation, but it will have an effect on the economy, i'm afraid, as you say, yes, we are forecasting as you say, yes, we are forecasting a recession. 50 as you say, yes, we are forecasting a recession-— a recession. so you're blaming russia for— a recession. so you're blaming russia for that. _ a recession. so you're blaming russia for that. but _ a recession. so you're blaming russia for that. but you - a recession. so you're blaming russia for that. but you know, j russia for that. but you know, economic policies set here. some would argue that of the biggest interest rate rise in over a quarter of the century, at the very same moment is predicting a significant recession. itrufhat the very same moment is predicting a significant recession.— significant recession. what i would sa to that significant recession. what i would say to that is _ significant recession. what i would say to that is that _ significant rece

andy verity, bbc news. let's talk about the storm, as andy calls it.ector of the institute of chartered accountants in england and wales. very good evening to you, thanks for your time. very good evening to you, thanks for yourtime. it very good evening to you, thanks for your time. it all feels so unremittingly bleak, doesn't it? i suppose i should start by asking you whether you recognise these forecasts, you think that things are going on the trajectory we are all discussing today?— going on the trajectory we are all discussing today? well, certainly, the bank of _ discussing today? well, certainly, the bank of england _ discussing today? well, certainly, the bank of england in _ discussing today? well, certainly, the bank of england in their - the bank of england in their forecast to paint a pretty bleak picture of the uk economy over the next year or so and i think most economists would agree with that. i think we are going through a period, particularly as costs start to ramp up particularly as costs start to ramp u p after particularly as costs

andy verity, bbc news.t hannah miller boarded a bus in birmingham, and asked people how they're coping with rising prices. hello... 0n the number 11 bus around birmingham, the rising cost of living is making it hard for passengers to keep a grip on theirfinances. i never thought in my lifetime i would see a time like this. i work part—time. i mean, i'm actually working extra hours, obviously, to live. but particularly with the bills going up, it's tough. i work at asda so i notice the prices have gone up quite a lot. i mean, sometimes they say, "why has this gone up?" i say, "i don't know, i only work here." it's not my fault. "it's not my fault," you know. do you ever see people at the checkout who are really desperate? yes. . have. — yes, and they can't survive now. so in six months' time, they've got no chance. there should be help. you know, a lot of people need help. there should be some i assistance going around. but a lot of people . have nowhere to turn. people expect that inflation will go up even

andy verity, bbc news.ahnbulleh, ceo of the new economics foundation, a left—of—centre think tank. so, as we were just having there, the biggest drop in living standards for decades?— for decades? yes, so this is going to feel really _ for decades? yes, so this is going to feel really painful— for decades? yes, so this is going to feel really painful for— for decades? yes, so this is going to feel really painful for people i to feel really painful for people because we are seeing real wages plummet and why it feels so tough is because it's off the back of near on a decade in which wages have been stagnant so for me this long term trend has got to be addressed and, yes, there are absolutely short term things we must do to alleviate the cost of living but we also going to have to do things to boost peoples incomes so for example increasing... pay at the bottom end, making sure national living wage actually reflects the true cost of living, strengthening the powers of workers to negotiate better pay deal and a

andy verity, bbc news.he changes that you've seen in your costs. we know as consumers we are all feeling this. we are seeing our energy bills go this. we are seeing our energy bills 9° up this. we are seeing our energy bills go up to crazy levels. what are you seeing from a business point of view, because we should remember you don't get an energy price cap as far as businesses are concerned? brute as businesses are concerned? we don't. i as businesses are concerned? we don't- twill— as businesses are concerned? - don't. i will talk about that any minute if i can. we've had a massive increase in the cost of gas. there's another increase in september next month and are basic costs will have doubled. 0n month and are basic costs will have doubled. on top of that we've had an increase in pvc of 50 or 60%. our prices have had to increase. a knock—on effect. we are despairing and the whole industry. since mr johnson resigned, they really haven't, you know, they are not addressing this critical issue of rising en

here's our economics correspondent, andy verity. from the outside, a.7% is the best average pay rise for years. but the inside story is the average worker is dealing with astronomical price rises that more than cancel that out. aiming to attract the instagram generation, this extravagantly decorated restaurant in heath, 0xfordshire reopened, post—pandemic, to a strange new world, where even when you offer training and bump up the pay, you can't get the staff. we can't open up, which is a massive shame, apart from friday and saturday evening because of lack of people. try as he might, the restaurant's boss can't recruit enough experienced servers to offer a fine dining service in this room for more than two days a week. we believe it's costing about 30% more for anybody that has a hotel, pub or restaurant to employ people, than it used to pre—march 2020, so what we're trying to do at the moment is to find other ways to incentivise our people to come, and we, you know, as an industry, we need to be looking at, are we open for maybe fo

andy verity, bbc news.g more about inflation and the cost of living over the next hour and just over half past i will be talking to labour about all of that as well. right now we will take a look at the other story dominating here today. a grim story from west london. the case of the elderly man who was stabbed to death while he was out riding on his mobility scooter yesterday afternoon. an elderly man who was stabbed to death while riding a mobility scooter in west london yesterday has been named as thomas 0'halloran. he was 87. police have described the attack on mr 0'halloran as a shocking and unprovoked crime. this afternoon, the metropolitan police released this image of a man they say was seen running away from the scene with a knife and are asking anyone with information to come forward. let's go to our correspondent, katharine da costa in greenford. that is where the attack happened yesterday afternoon. a desperate story. bring us up—to—date with the police, the investigation, what they are saying r

here's our economics correspondent, andy verity.he outside, 4.7% is the best average pay rise for years. at the inside story is the average worker is dealing with astronomical price rises that more than cancel that out. aiming to attract the instagram generation, this extravagantly decorated restaurant in oxfordshire reopened, post—pandemic, to a strange new world, where even when you offer training and bump up the pay, y°u you offer training and bump up the pay, you can't get the staff. we can't open _ pay, you can't get the staff. we can't open up. _ pay, you can't get the staff. - can't open up, which is a massive shame, apart from friday and saturday. shame, apart from friday and saturda . , . , shame, apart from friday and saturday-— shame, apart from friday and saturda . , . , shame, apart from friday and saturda . , ., , saturday. try as he might, the boss can't recruit — saturday. try as he might, the boss can't recruit enough _ saturday. try as he might, the boss can't recruit enough experienced . can't recruit enough exper

it means the �*real value�* of pay fell by 3% our economics correspondent andy verity has this reportis looking through toys for her baby after getting a pay rise of £1 an hour in herjob as a packer at a warehouse, which came as a pleasant surprise. with prices rising much faster even that higher wage couldn't buy what it but a year ago. that that higher wage couldn't buy what it but a year ago.— it but a year ago. that is a big raise, honestly. _ it but a year ago. that is a big raise, honestly. but— it but a year ago. that is a big raise, honestly. but after - it but a year ago. that is a big | raise, honestly. but after that, raise, honestly. but afterthat, when we raise, honestly. but after that, when we went raise, honestly. but afterthat, when we went in raise, honestly. but after that, when we went in the shop and left £100 for three orfour when we went in the shop and left £100 for three or four days of food, and everything necessary, it was quite a shock. from the outside, 4.7% is the best average pay rise for years. but the inside story is the average worker is dealing with

andy verity, bbc news.the conservative mayor of the tees valley, ben houchen. thank you forjoining us. what do you think the future has in store for you people in your part of the country because back when we see this unusual and very difficult combination that is known as stagflation?— combination that is known as staaflation? ~ , ., ., , stagflation? well, it is going to be a hue stagflation? well, it is going to be a huge problem — stagflation? well, it is going to be a huge problem and _ stagflation? well, it is going to be a huge problem and i _ stagflation? well, it is going to be a huge problem and i think- stagflation? well, it is going to be. a huge problem and i think whoever is elected as the next conservative leader and therefore as the prime minister is going to face a challenge we haven't seen in this country for many decades. we have heard in that video about the impact on individuals. just this morning i was contacted by the local business that isn't impacted by the price cap on energy, albe

andy verity, bbc news.ecutive of the national energy action, adam scorer. what are your fears about tomorrow's announcement and what you think needs to be done to help from noble families? the needs to be done to help from noble families? ., , ., . , ., families? the fears of which you have let out _ families? the fears of which you have let out pretty _ families? the fears of which you have let out pretty confused - families? the fears of which you - have let out pretty confused fencing what we are facing a cataclysmic rise in energy prices. we are looking forward to winter, once we are into winter when people are having to, there is no choice to be made most people will not be able to keep their homes. they will add up to a huge amount of debt. what we need, it's not that we have to wait to the conservative election. that must be the first decision that they make. to put the money in the pockets in their pockets and have a plan that is proportionate to the crisis that we face. [30 plan that is proportiona

here's our economics correspondent, andy verity.ey, andrea is looking through toys for her baby after getting a pay rise of £1 an hour in herjob as a packer at a warehouse, which came as a pleasant surprise. with prices rising much faster even that higher wage couldn't buy what it but a year ago. that is a big raise, honestly. but after that, when we went in the shop and left £100 for three or four days of food, and everything necessary, it was quite a shock. from the outside, 4.7% is the best average pay rise for years. but the inside story is the average worker is dealing with astronomical price rises that more than cancel that out. aiming to attract the instagram generation, this extravagantly decorated restaurant in heath, oxfordshire reopened, post—pandemic, to a strange new world, where even when you offer training and bump up the pay, you can't get the staff. we can't open up, which is a massive shame, apart from friday and saturday evening because of lack of people. try as he might, the restaurant's boss can't recruit enough

but it means mortgages and loans will be more expensive for millions of people as andy verity reports. rarely has the bank of england given out an economic warning this unsettling. it's not only forecasting the worst inflation in a0 years, hitting 13% in the next few months, but a full—blown recession starting this autumn. that means it expects buying and selling activity to start shrinking and carry on for the whole of next year. the risks around the mpc�*s forecasts are exceptionally large at present. the source of these risks and the driver of most of the revisions to our forecasts since the may report is overwhelmingly energy prices and the consequences of the actions of russia. this rise in energy prices has exacerbated the fall in real incomes and so led to another significant deterioration in the outlook for activity in the uk, and in the rest of europe. gdp growth in the uk has slowed and the economy is now forecast to enter recession later this year. these were what prices looked like the last time the official interest rate rose by as much half a percentage point, 28 years a

things are even more difficult if you are in the public sector, here's our business correspondent andy verity very interesting difference between the pay rises in the private sector and the public sector. the public sector, less than 2% on average. and that's going to cause problems for public sectors employers who want to recruit people to do importantjobs, teaching, nursing etc. when you compare it to the private sector, for example, financial services you've had double digit pay rises. there's an increasing disparity in the recruitment crisis that we are talking about, where people can't do the business on offer because they can't get the staff to do it, it's looking like it's getting progressively worse partly because of the tight labour market. you're seeing people like the british chambers of commerce saying, what we need to do is actually open ourselves up to more labourfrom europe because brexit is playing a role here. and if you want to have enough people to do the work is on hand to do then you do need to have enough people to do it. ryan—collins is head of finance and macroeconomic

andy verity is with me...ed rises inflation, meaning sustained rises in prices is a mismatch between supply and demand. demand is where people want to buy things, if there is lots of people wanting to buy things, and not as many people selling them, there are not many gifts for sale in our supply, then we have a mismatch. the people selling will tend to bump up their prices to take advantage of all the demands coming at them for their goods. that is why prices rise when you have high demand and weak supply. you have high demand and weak supply, and that is exactly what we have had in recent times. as the global economy reopens after the pandemic, a lot of the supply capacity, for example the capacity to refine oil, the capacity for airport flights to foreign countries, all of that capacity has been reduced when everything was shut down in the pandemic. therefore, it is taking a long time before it cranks back up and can meet the demand, and that's why soaring prices all over. this is, of course, aggravated by