Rishi Sunak sought to reassure people following a 40-year high in UK inflation to 9.1 per cent, insisting the Bank of England will “act forcefully” to counter the rise.
The BoE, which is independent of government, has been criticised for not being quick and decisive enough about rising costs of living, with members of the rate-setting committee having voted for a steeper rise.
Sunak told BBC News this morning the government will also “be responsible with borrowing and debt so we don’t make the situation worse and drive up people’s mortgage rates”, while offering a support package of around £37bn to the country.
He also committed to improve “the productivity of our economy” including “the supplies of energy we have”, as well as “moving people off welfare and into work”. A key factor in rising inflation has been the price of fuel, petrol and gas, owing in part to the war in Ukraine.
Britain has been looking to shore up its energy security by turning to renewables, nuclear power, as well as new sources for coal, oil and gas.
Pressed on wether the UK is heading for a recession, he said ”forecasters will make their predictions” but he’s “confident we’re providing the right support”.
When asked why a wage rise would be inflationary but pensions rising to 10 per cent isn’t, he said while it was “right we reward our hard-working public sector workers” any rise in pay “needs to be proportionate and balanced” as well as “affordable for the tax-payer.”
Earlier today, Dominic Raab, the deputy prime minister, said pensioners need a double digit pensions rise, but striking rail workers don’t.
The difference, Sunak said was pensions are “not an input cost into the cost of producing goods and services we all consume, so they don’t add to inflation in the same way.”
He added critics are “confusing two things”, in questioning why workers should show pay restraint amid the pensions rise. “We already know what pensions are going to be for this year. People are speculating on what they might be next year.
“We have a long-standing policy in place. Pension rates are decided in the Autumn.”