Chancellor needs to be ‘clever’ to help UK through cost-of-living crisis

COMMENTS by Bank of England governor Andrew Bailey who gave an “apocalyptic” warning over rising food prices and blamed global factors including the war in Ukraine, have under under fire from Scottish entrepreneurs Sir Tom Hunter and Lord Willie Haughey.

Speaking on yesterday’s Go Radio Business Show, Lord Haughey agreed with UK Treasury Select Committee chairman Mel Stride MP that Mr Bailey was “asleep at the wheel” amid spiralling cost-of-living costs, rising inflation and the UK Government’s handling of the crisis.

Last week, the Bank of England governor appeared before the committee when he defended the Bank’s performance following criticism it has not done enough to try to rein in rising prices.

UK inflation soared to 9 per cent in the 12 months to April, up from 7% in March, to its highest level for 40 years. The Bank has warned that inflation could reach 10% by the autumn.

Lord Haughey said: “We’ve been saying for months that Andrew Bailey is asleep at the wheel – he has been shown to be weak. There are things he should have done months and months ago and now he is being called out.

“Inflation is above 9% for the first time in 40 years and that is frightening. It is criminal and it should not have been allowed to happen.”

Alluding to Foreign Secretary Liz Truss describing the cost-of-living crisis as a global problem, he said: “People have reacted in other countries and are not in as bad a position as we are in the UK.

“To hear Liz Truss say that no-one can predict an economic downturn … that is absolute nonsense. That is part of the problem because we have people running the country who actually believe that.

“What need is to see is Chancellor Rishi Sunak be really clever as to how we help people get through the problems they are going to have to face over the next few months.”

Sir Tom said that what was happening to the economy now was “something I’ve never seen in my lifetime”, adding: “We have inflation running at a 40-year high, yet interest rates are still historically low, the unemployment rate in the UK is still at an all-time low.”

Asked by show host Donald Martin, editor of The Herald and The Herald on Sunday why the Scottish unemployment rate was at a record low of 3.2%, Sir Tom suggested that people must have left the workforce during Covid, retired, or stopped working for other reasons. “It’s a very strange mix,” he said.

With the UK facing the risk of “stagflation” after the Bank of England warned that surging energy prices will drive inflation to 10% by the end of the year as the economy falters, he said: “The worst thing that can happen to a central bank is stagflation. What we have to do is be smart.”

He warned: “If the Tories don’t come up with something clever right now then the cost-of living crisis could bring the Government down.”

Discussing Rishi Sunak’s hints that a one-off windfall tax on oil and gas firms – which have seen a sharp rise in profits since Russia invaded Ukraine – could be on the cards, Lord Haughey added: “The energy companies should not be allowed to make more than 10% of what they made last year.

“It is unacceptable that the energy companies are complaining – they are saying to the Government ‘you have to help us with this’. What about you helping us? What about taking less?”

Sir Tom, pointing out that “fundamentally I don’t agree with windfall taxes”, added: “Maybe this is the one time there should be – we need to find a way for UK consumers to get through this.

“If you have families asking should I put my heating on or feed my kids … that should be against the law.”

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