The U.K. Needs to Realize It’s Gotten Poorer, a Central Banker Says
In the podcast, Pill was asked to figure out how temporary or persistent the current inflationary pressures are. Britain was hit by a series of shocks. Pandemic, rising energy pressure caused by war in Ukraine, food supply disruptions. Each of these was temporary, but they were so close that inflation never abated.
He added that another factor is involved. The UK, a large net importer of natural gas, has faced significant price increases for what it used to buy from the world compared to what it used to sell, mainly services. It changes the economic health of the country.
Here’s what he said:
“You don’t have to be an economist to understand that if what you’re buying goes up significantly compared to what you’re selling, you’re going to be worse off.
So somehow in the UK someone will accept that their situation is getting worse and raise prices to maintain real consumption power, whether by raising wages or passing energy costs onto customers. It is necessary to stop
And what we are facing now is a reluctance to accept it. Yes, we are all in worse situations and we all have to do our part. It’s okay, but they have to take our part too. The “pass the parcel” game being played here, that game is the game that is causing inflation, and that part of the inflation is likely to persist. ”
This is not the first time Bank of England officials have been criticized for making thoughtless suggestions on how to curb inflation. Earlier last year, Bank Governor Andrew Bailey said: “Suppression of wage negotiations” is necessary So inflation didn’t get out of control.
Some European Central Bank policymakers have expressed similar concerns, albeit in softer terms and more focused on corporate behavior. experienced a so-called terms of trade shock in which the price of This has hurt the economy, and European policymakers have urged businesses to accept some loss, just as workers had to accept lost real income.
European Central Bank President Christine Lagarde said it was “important to have a fair share of the burden” between businesses and workers. said last month.