Huw Pill gave the sobering bit of advice on a US podcast
The chief economist of the Bank of England has told Brits they need to accept they’re poorer and stop playing “pass-the-parcel” in comments that have sparked outrage.
Huw Pill said that people and businesses have responded to higher bills and costs by asking for higher wages or charging their customers more money.
But households and companies trying to pass on their higher costs, he said, adds to inflation, pushing up prices even further across the economy.
UK inflation – the measure of the rising cost of goods and services – hit 10.1 per cent in the year to March. It was a fall from 10.4 per cent in February, but still remains stubbornly high – and above the 9.8 per cent that experts had predicted.
Much of the inflation is being driven by external factors such as unseasonal weather conditions and the war in Ukraine.
The annual inflation rate in the food and non-alcoholic drinks category was 19.2 per cent, up from 18.2 per cent in the year to February 2023.
The Bank of England is tasked with keeping inflation under control, targeting 2 per cent a year.
Speaking on the Beyond Unprecedented podcast from Columbia Law School, Pill said: “The UK, which is a big net importer of natural gas, is facing a situation where the price of what you’re buying from the rest of the world has gone up a lot, relative to the price of what you’re selling to the rest of the world, which is mainly services in the case of the UK.
“You don’t need to be much of an economist to realise that if what you’re buying has gone up a lot relative to what you’re selling, you’re going to be worse off.
“So, somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices whether through higher wages or passing energy costs on to customers etc.
“What we’re facing now is that reluctance to accept that, yes, we’re all worse off and we all have to take our share; to try and pass that cost onto one of our compatriots and saying, ‘we’ll be alright, but they will have to take our share too’.
“That pass-the-parcel game that’s going on here, that game is one that’s generating inflation, and that part of inflation can persist.”
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