Sunday 19 June 2022 11:04 PM Bank of England 'may force recession' top economist claims trends now
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The Bank of England may have no choice but to ‘force a recession’ to bring down inflation, a top economist warned last night.
Paul Johnson, director of the Institute for Fiscal Studies, said drastic action may be required as the economy appears to be contracting.
It came as Gordon Brown said Chancellor Rishi Sunak will inevitably be forced to ditch his corporation tax rise this summer.
The former prime minister said fuel tax increases will also have to be cancelled to prevent inflation soaring even further.
Gordon Brown said Chancellor Rishi Sunak will inevitably be forced to ditch his corporation tax rise this summer
Mr Brown advised chancellor Rishi Sunak to scrap planned increases in fuel duty to avoid inflation
Yesterday Mr Johnson told Times Radio: ‘It looks like we’re already in a period of negative growth. And I think the tough judgment the Bank may have to make is we may actually – and this is why they’re independent – they may have to, as it were, force a recession in order to get inflation out of the economy.’
Discussing concerns about public sector wage rises, the economist said: ‘I think there are two really important points here. One is energy prices have gone up, there’s been a world economic shock, we as a country are poorer. And so the question really is about how that pain is going to be distributed.
‘I think the danger is everyone gets high pay rises right across the economy, then the pain will come through higher unemployment, and higher inflation for a long period of time.
