With the Bank of England set to raise interest rates for the 13th time in a row later today, James Cleverly has insisted that no one in government subscribes to the “idea that we should knowingly go into a recession”.
Mr. Cleverly, the Foreign Secretary, insisted on sky news that the Bank of England is “independent in its decision-making with regard to interest rates” and has an inflation target that it must pursue.
Policymakers at the Bank are widely tipped to raise interest rates at noon in a move that would increase the level of pain to be placed on homeowners with mortgages.
It comes after inflation remained stubbornly high at 8.7 percent in May, according to the Office for National Statistics. The figure, released Wednesday, was unchanged from the previous month and higher than the 8.4 percent that experts had forecast.
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This morning, the Foreign Secretary was questioned about comments made by Cabinet Minister Mark Harper, who claimed that Rishi Sunak had forecast inflation while the Bank had not.
Cleverly said the prime minister has a “great wealth of experience from his time as chancellor” and “warned the implications of inflation, which is why we have been so determined not to do the things that increase inflation.”
He blamed high inflation for “upward pressure” on fuel and food prices, a factor that is being “amplified by the war in Ukraine.”
Asked if the Bank of England should be deliberately stoking a recession to control inflation, Cleverly replied: “What we have to do is grow the economy; high interest rates don’t help with that. This idea that we should consciously go into a recession, I don’t think anyone in government feels comfortable subscribing to it at all.”
The line of questioning followed comments by an adviser to Chancellor Jeremy Hunt, who yesterday urged the Bank of England to “create a recession” to control price rises.
Karen Ward, a member of a four-member advisory council to the chancellor, said the bank had to “create uncertainty and fragility” to cool the economy.
She told the BBC’s Today programme: “It’s only when companies are nervous about their future that they think, ‘Well, maybe I won’t pay that raise.’ Or workers, when they feel less confident in their job, think: ‘I’m not going to pressure my boss to pay me more.'”
Downing Street responded by saying the chancellor “will receive advice from a number of experts” but that the aim is “to grow the economy”.
Elsewhere this morning, James Cleverly wrestled to establish what short-term steps the prime minister was taking to cut inflation in half.
Asked repeatedly on BBC Radio 4’s Today program to detail the actions the government was taking, the foreign secretary said: “One of the main vehicles for tackling inflation in the short term is interest rates.”
But pressed on what Rishi Sunak could do given interest rates are in the hands of the independent Bank of England, he continued: “We do what we can to try to address issues over which we have direct control.”
“One of the reasons we’ve been thoughtful but cautious about public sector wage allocations is that we know it’s one of those things that adds inflationary pressures.
“We are very aware that increasing government borrowing is one of those things that spins around and increases inflationary pressures.”