Bank of England raises rates of interest to 1.75% as recession predicted later this 12 months
The Bank of England governor has been criticised for saying pay rises will gasoline inflation.
The Bank yesterday elevated rates of interest to 1.75 per cent – the very best in 27 years – whereas warning that Britain will plunge right into a year-long recession this autumn.
Governor Andrew Bailey urged staff to restrict their calls for for a pay rise this 12 months warning of the impression of excessive inflation on those that don’t have “bargaining power”.
“If everybody tries to beat inflation, it doesn’t come down, it gets worse, that’s the problem,” Mr Bailey mentioned.
However, his suggestion was met with sturdy criticism as unions urged it was “not for hard-pressed workers to cut back even further.”
Kate Bell, head of economics at TUC: “Without wage increases, working people will simply stop spending on anything non-essential – and that will hurt our high streets, damage business and make a recession very likely, putting jobs at risk up and down the country.”
Not time for ‘hard-pressed’ staff to make cuts, TUC official says
Commenting on the Governor of the Bank of England’s suggestion that staff’ pay mustn’t sustain with the price of dwelling and that staff with bargaining energy specifically ought to present restraint, TUC Head of Economics Kate Bell mentioned:
“It’s time for companies to rein in their profits – not for hard pressed workers to cut back even further.
“After the longest and harshest wage squeeze in 200 years, working people in every part of the country are suffering a huge fall in living standards as prices soar.
“With incomes set to fall even further and the economy teetering on the brink of recession, it’s now more than ever that workers need a pay rise.
“Without wage increases, working people will simply stop spending on anything non-essential – and that will hurt our high streets, damage business and make a recession very likely, putting jobs at risk up and down the country.
“Making sure people can put food on the table for their family is not going to push up inflation.
“’If the Governor is worried that some workers might miss out on negotiated pay rises, he should encourage all workers to join a union.”
Thomas Kingsley5 August 2022 11:00
Andrew Bailey denies Bank was too gradual to behave over hovering inflation
Governor Andrew Bailey has additionally immediately denied criticism that the Bank was too gradual to behave over hovering inflation.
It got here after claims from politicians, together with Attorney General Suella Braverman, that the Bank was asleep on the wheel and allowed inflation to get uncontrolled.
Mr Bailey advised BBC Radio 4’s Today programme mentioned he doesn’t imagine the Bank acted too slowly and that earlier motion may have introduced ahead a recession.
“We don’t make policy with the benefit of hindsight,” he added.
“I’d challenge anyone sitting here a year, two years ago, to say there will be war on Ukraine and it will have this effect on inflation.”
Thomas Kingsley5 August 2022 10:48
Bank of England governor urges staff to restrict pay rise calls for to curb inflation
With the Bank of England’s rate of interest will increase got here governor Andrew Bailey’s suggestion that staff ought to restrict their calls for for a pay rise this 12 months warning of the impression of excessive inflation on those that don’t have ‘bargaining power’.
Andrew Bailey mentioned the issue was one “we all have to be very conscious of” hours after he warned households will suffer the deepest fall in living standards on record as the UK plunges into a yearlong recession this autumn.
Calling for wage restraint, Mr Bailey said: “If everybody tries to beat inflation, it doesn’t come down, it gets worse, that’s the problem.”
He added: “There’s a second problem. I put this in terms of high pay rises and high price increases, because in that world it’s the people who are least well off who are worst affected, because they don’t have the bargaining power. I think that is something that broadly we all have to be very conscious of.”
Thomas Kingsley5 August 2022 10:46
ICYMI: UK faces long recession and deepest plunge in living standards on record
Yesterday the Bank of England announced that interest rates would be increased to 1.75 per cent, in addition to an ominous warning that Britain will plunge into a year-long recession this autumn in which households will be hit by the deepest fall in living standards on record.
In one of its bleakest ever assessments of UK economic prospects, the Bank’s Monetary Policy Committee (MPC) said inflation will now peak at 13.3 per cent in the final three months of this year as average energy bills treble from £1,200 in 2021 to £3,500 by October.
The economy is now forecast to shrink in five consecutive quarters for the first time since the global financial crash of 2008.
More below from our business correspondent, Ben Chapman:
UK faces deepest plunge in living standards on record, Bank of England warns
Country to enter recession this year and economy on course to shrink for five straight quarters
Thomas Kingsley5 August 2022 10:42
Good morning and welcome to The Independent’s live blog coverage following yesterday’s interest rate announcement. We’ll be bringing the latest updates as the nation reacts to the Bank’s recession warning.
Thomas Kingsley5 August 2022 10:38