Written by William Schomberg, David Milliken

LONDON, (Reuters) – Businesses and individuals in Britain must realize that they will not be able to recover income from high inflation anytime soon. This was the Bank of England’s latest warning to the public.

Huw Pill claimed that the BoE predicted an inflation rate of 10% in the next year. He said this would lead to a steep economic slowdown, and perhaps a recession.

Pill stated that “what we’re buying is getting more expensive than what we’re selling.” He spoke at an online briefing hosted by BoE for business owners.

This does indicate a pinch… on real domestic purchasing power within the UK. It is not clear how this distribution occurs across companies, among wage-earners, and across pensioners.

The BoE hiked its benchmark interest rate from 1.00% to 1.0% Thursday. It said that this was the highest point since 2009 and Britain would see a flat economy in 2023 or 2024, as it had suffered greatly from last year’s high inflation.

Pill stated that the BoE forecasts of Britain’s future economic growth were now weaker than they had been in the past.

It might not be a good benchmark to have wage growth return to inflation at a rapid pace. Some parts of society need to face the fact that there’s a real income squeeze.

Pill suggested that companies might absorb some of this loss through smaller profits margins.

Just to clarify, this squeeze in real income will be very significant over the next 18 month, due to the shock to the economy.

Andrew Bailey, BoE Governor and angered trade unions by requesting restraint on pay agreements to stop inflation from rising earlier in the year.

Bailey claimed that those who can maintain their income are likely to do this at the expense or people with less bargaining power.

A combination of low inflation and slow growth makes it difficult for the BoE to decide how many additional rate hikes are necessary after its four since December. It is currently at the fastest pace in 25 years of monetary tightening.

Pill was one of six Monetary Policy Committee members who voted on Thursday for the quarter-percentage-point hike while three others voted for an increase twice that size.

Pill stated that we should focus on the long-term in all of our efforts and not react to immediate developments. ”