Britain’s new prime minister will have to find “billions more” to help struggling households, economists warned Friday, as rising inflation threatens to plunge the country into its worst economic crisis in decades. is given
Paul Johnson, director of the prestigious Institute of Financial Studies think tank, issued the warning a day after the Bank of England predicted Britain could be headed for a 15-month recession later this year with inflation rising to 13 percent. There is also unemployment. Set to rise.
But as the two Tory leadership contenders waged a war of words over the crisis, Mr Johnson suggested rising energy bills – which analysts say could reach around £3,400 a year in October – Can push candidates to do more. To address the cost of living crisis.
The head of the IFS told BBC Radio 4’s Today program that he wondered why the contest between front-runner Liz Truss and former chancellor Rishi Singh had so far focused on tax cuts.
What I find remarkable about the Conservative leadership debate is that they are not talking about things that will really require public finance. They will have to find billions more to support their families. I mean, this is a much bigger increase in energy bills than what was expected a few months ago when the support packages were announced, and the tax cuts that are being talked about won’t help. is being done.
“Secondly, of course, public services will need more money. Because the inflation rate is 13 percent, and salaries are going up there in the five to six percent range, that means the level of increases that this year Placed and announced a year ago, she is rarely seen.
Ahead of the latest hustings event with Conservative Party members in Eastbourne tonight, allies of Mr Sink and Ms Truss clashed over how best to survive the deepening economic crisis.
Business Secretary Kwasi Kwarting, who is backing Ms Truss and is widely tipped to become chancellor if she wins, said she would include “immediate financial support” for households in the emergency budget. “, which is reportedly slated for September 21.
But they renewed attacks on Mr Sink’s position that the tax cuts could only be implemented when inflation was back under control. He told Sky News: “In very simple terms, you have a world where prices are going up. So people’s shops, people’s energy bills are all going up. So that means real incomes are going up. Being squeezed. Now to tell people that your real income is being squeezed and I’m going to raise your taxes. I think that’s just adding insult to injury. I never understood. If we’re going to help people, how are we going to help people by taxing them? Just continuing our economic policy at this point. It’s not going to cut it, it’s not going to help us get out of this predicament. will
But Liam Fox, the former international trade secretary who is backing Mr Sink, suggested Ms Truss was offering a “magical solution”.
He said: “The question in the leadership contest is do we maintain the traditional conservative response to this? Or do we try something completely different and take risks with the economy? It’s not going to be easy, and I I think that’s a key difference between the candidates in this election because it… do you really say it’s going to be difficult and be honest with the British people? Or do you pretend there are magical solutions?”
Ms Truss has vowed to boost economic growth by reversing April’s National Insurance rise and scrapping plans to raise corporation tax from 19 per cent to 25 per cent – a move which experts said That would cost around £30 billion.
After Bank of England governor Andrew Bailey criticized the worsening economic situation, Mr Quarteng stepped up criticism from the Truss camp that he should have done more to tackle inflation last year.
“So there’s an argument, and I think it’s a strong one, to say that inflation was a problem that was identified at the beginning of last year,” Mr Kwarting told Ms Truss of the central bank’s mandate to review. said while supporting the calls of
And the bank’s job was to deal with inflation. They’ve got a two percent inflation target, that’s actually their mandate. And now inflation is in double digits. So clearly something has gone wrong. And I think there’s an argument to suggest that maybe the rate should have gone up.
But while Mr Bailey said he would welcome discussions with the next government on how to carry out its role, he rejected claims by Ms Truss’s allies that she should raise interest rates sooner. was
He insisted that last year’s interest rate hike could have threatened to damage the jobs market as Britain’s economy emerged from the pandemic and blamed global shocks, including the war in Ukraine, for the sharp rise in inflation. was He told the Today programme: “If you go back two years… the idea at the time was that we would have tightened monetary policy… I don’t remember many people saying that.” Asked if he would see out his eight-year term as the new prime minister, he said: “I made a commitment. It’s an eight-year term. And it’s the independence of the Bank of England. is part of the fabric of
Mr Sink is trailing in polls of 160,000 Tory members who will decide the race for No 10 by September 5, with pollster Lord Hayward saying the crisis was in his favor during last night’s televised leadership debate on Sky News. . “I think the feeling is that it was the first time he actually got the better of him,” Lord Hayward said.
“There was a sense that he got the message across better. There was a sense, conveyed in the audience and their reaction, that he had the sense to be almost steady as he went, rather than a threat at that moment. Don’t take it for granted.