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Dark prediction of looming UK recession accuses BoE governor of ‘promoting panic’

https://sputniknews.com/20220806/boe-governor-accused-of-adding-to-a-sense-of-panic-with-bleak-forecast-of-looming-uk-recession-1098292319.html

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The Bank of England’s Monetary Policy Committee (MPC) released pessimistic economic forecasts on August 4, with inflation reaching 13.3% in October and interest rates rising from 1.25% to 1.75%, pushing the UK into It hinted at a 15-month long recession.

Bank of England Governor Andrew Bailey has been accused of ‘facilitating panic’ by dismissing UK outlook after the Monetary Policy Committee (MPC) announcement. dire economic forecasts The Daily Mail reported on the country issued on Thursday.

MPC’s Bailey and his colleagues face backlash from business leaders and economists after predicting inflation will reach 13.3% in the last three months of 2022, pushing the UK into a recession that will last for more than a year. Did.

Real household income was set to fall by about 5% over two years, according to the Bank of England’s latest projections. Cost of living The squeeze is expected to start easing by 2024.
Bank of England Building, London - Sputnik International, 1920, May 8, 2022

UK headed for year-long recession, worst drop in living standards on record, BoE warns
To stem inflation, banks’ monetary policy committees Raising Borrowing Costs by 0.5 percentage points from 1.25% to 1.75% on Thursday. The sixth consecutive MPC hike since December is the largest increase in borrowing costs in 27 years.
Bailey Warning stagflation It would result in the UK’s most severe decline in living standards on record, but it has not fared well in some areas. also claimed to be “pessimistic”.

Given the catastrophic financial forecasts, some accused banks of being “sleep behind the wheel” and raising interest rates too late to curb soaring inflation.

with Minister of Foreign Affairs Tory Party Nominee Liz Truss argued that a harsh outcome was “inevitable” despite “very worrying” forecasts from the BoE. “We can change the outcome and make the economy more likely to grow,” Truss said, suggesting that a plan for deep tax cuts could avoid a year-long recession.

Former prime minister Rishi Sunak, an opponent of the truss, said tax cuts without funds would result in “unhappiness for millions”, as he told a Sky News debate on Friday.

Two Candidates for Conservative Party Leadership, Ex-Treasurer Lisisnak and Foreign Minister Liz Truss - Sputnik International, 5 August 1920

Conservative leadership favorite Truss Woos still backs snacks

Former Tory leader Sir Yin Duncan Smith, who has supported the Truss, is quoted as saying:

“Andrew Bailey is in damage limit mode. Banks have made big mistakes this past year and they don’t want to admit it… there is no reason they should be in recession. You don’t have to follow your gender, Liz is right, we can cut taxes and boost growth.” ‘ added.

“British people have this idea that a recession is inevitable. Nothing is inevitable,” argued Sir Yin Duncan Smith.

Douglas McWilliams, deputy chairman of the Center for Economics and Business Studies think tank, echoes these sentiments, predicting that it “looks worse than most other companies and, if anything, fuels a sense of panic.” He blamed the Bank of England for making the offer.

Gerald Lyons, an economic adviser to online wealth management service NetWealth and former adviser to Boris Johnson during his tenure as mayor of London, said Bailey’s “very pessimistic” forecast and the U.S. Federal Reserve’s He noted similarities with the predictions of his colleagues at the Society. .

“The Fed was basically conveying the same message, but much more reassuring. There was a little more optimism Bailey didn’t have,” Lyons said.

In response to the criticism, Andrew Bailey told BBC Radio 4’s Today program that the bank’s previous actions may have contributed to the recession.

“We do not make policy with the benefit of hindsight,” he said.

When asked if he could resign in response to reforms from the new prime minister in the fall, the governor said:

“I have promised my tenure will end. This is an eight-year term.”

British Pound - Sputnik International, 1920, August 3, 2022

Scholars: UK faces stagflation for first time in almost 50 years
of runaway inflation In line with global trends, higher oil and gas prices after 2021 are the main culprits. The energy situation worsened after Russia launched a special military operation in Ukraine on her February 24th and the US, EU and Western allies slapped Moscow with several sanctions packages.

After regulator Ofgem revised its price cap, Investec now predicts that the £1,971 annual energy bill price cap could reach £4,210 in January, so UK energy prices are on the rise again. expected to rise sharply.



https://sputniknews.com/20220806/boe-governor-accused-of-adding-to-a-sense-of-panic-with-bleak-forecast-of-looming-uk-recession-1098292319.html Dark prediction of looming UK recession accuses BoE governor of ‘promoting panic’

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