“Some people in the UK need to accept that they are in a worse economic position,” Bank of England chief economist Hugh Peel said.
London, Thanasis Gavos
Accept that they are now poorer because of conditions that have led to persistently high inflation, Bank of England chief economist Hugh Peel has called on British citizens.
Speaking on a podcast, the central bank official criticized the fact that in response to higher energy and food bills in recent years, citizens are demanding bigger wage increases and businesses are raising their prices.
He said, echoing a warning from Bank of England governor Andrew Bailey, that these moves hurt efforts to rein in inflation.
According to the latest official figures, the inflation rate in the UK is at 10.1%, despite successive increases in the Bank of England’s key lending rate, which now stands at 4.25%.
The central officials’ argument is rejected by the labor unions in various sectors of the economy, which since November have been carrying out frequent strike actions. As they say, the proposed increases represent a reduction in real income due to high inflation.
In the Columbia University Law School podcast, Mr. Peel said that the United Kingdom, which imports natural gas, is paying an increased price, while the prices of its own exports, namely mainly services, are much lower.
“So somehow in the UK some people need to accept that they are worse off financially and stop trying to maintain their real spending power by raising prices, either through higher wages or passing on energy costs to their customers etc.
What we are facing now is a reluctance to accept that yes, we are all worse off financially and we all have to shoulder our share.”
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