The Prime Minister said today there is a “big chance” to fix unnecessary cost pressures for people and businesses across the UK as Boris Johnson denied that his Government is being “complacent” about spiralling inflation.
Speaking at a press conference at the close of the Nato summit in Madrid, Johnson said the “very, very tight labour market” and difficult “balance of our energy mix” add to inflationary pressures.
“We’ve got to help people with the cost, with the £1200 pounds and all the other help that we’re giving helping people with trying to get through the price spike.
“But you’ve also got to try to look at the root causes”.
He named issues in the housing, transport and energy markets, as well as “the way government spends money”, which he said are “driving unnecessary cost pressures”.
“Those are the things that we need to fix as part of our plan for a stronger economy,” Johnson told reporters.
“I in no way minimise the importance of this… This is a big chance for us now to do things differently.”Boris Johnson
It comes amid mounting fears that the cost-of-living crisis could tip the UK into recession, as defined by two quarters in a row of falling output, as rocketing inflation sees households and businesses rein in spending.
Inflation has already reached a 40-year-high of 9.1 per cent and is set to rise past 11 per cent in the autumn.
Bank of England Governor Andrew Bailey yesterday that soaring inflation will hit Britain harder than any other major economy during the current energy crisis and that output is likely to weaken earlier and be more intense than others.
Costs of Ukraine war
Asked about people in the UK concerned about soaring costs being driven up by the conflict in Ukraine, Johnson said the “price of freedom” is “always worth paying”.
“Unless we get the right result in Ukraine, (Russian President Vladimir) Putin will be in a position to commit further acts of aggression against other parts of the former Soviet Union, more or less with impunity, that will drive further global uncertainty, further oil shocks, further panics and more economic distress for the whole world.”
The Prime Minister was also asked about his repeated promise to bring down tax rates, after new HM Revenue and Customs figures showed that some 6.1 million taxpayers are projected to be paying income tax rates at the higher rate of 40 per cent or the additional rate of 45% in 2022/23.
Johnson said: “Next month, we’ve got a tax cut worth £330 on average … for all payers of national insurance contributions coming in, a very substantial tax cut in addition to what we’ve done on fuel duty and on council tax.
“Of course, we always want to try to reduce burdens, but we have to do it in a sensible and a responsible way.”