Bank may need to ‘create a recession’ to halt inflation, says adviser to chancellor
Government borrowing outstrips 100 per cent of GDP for the first time since 1961
The Bank of England might need to spark a recession to get inflation under control, an adviser to Chancellor Jeremy Hunt warned on Wednesday amid a slew of grim economic data – including government borrowing surpassing 100 per cent of GDP for the first time since 1961.
Karen Ward, an economist with JP Morgan, said that inflation might persist because of a price-wage spiral, where companies hike prices and workers demand pay rises.
“The difficulty for the Bank of England – I mean, no one envies them their job at the moment – is they have to therefore create a recession,” Ms Ward, who sits on the Chancellor’s economic advisory council, told BBC Radio 4.
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