London Daily

Focus on the big picture.
Friday, May 09, 2025

Bank of England economist says people need to accept they are poorer

Bank of England economist says people need to accept they are poorer

The Bank of England's top economist has said people in the UK need to accept that they are poorer otherwise prices will continue to rise.

Huw Pill told a podcast in the US that there was a "reluctance to accept that, yes, we're all worse off".

He said in response to higher bills and other costs rising, workers had responded by asking for wage increases and businesses were charging more.

UK inflation, the rate of which prices rises, was 10.1% in the year to March.

The rate dipped last month from 10.4% but that does not mean prices are falling. It means they are rising at a slightly slower pace.

Inflation in the UK has been higher than the Bank of England's target of 2% for some time.

Part of the Bank's job is to keep inflation at its target rate. In response to rising prices it has increased interest rates, which make the cost of borrowing money more expensive.

This move, in theory, is suppose make people reduce spending, so that demand for goods cools down and price rises slow down.

With households being hit by soaring energy bills and food costs, many workers have been asking for pay rises to help ease the pressure on budgets.

Job vacancies have been falling, but are still higher than they have been for decades, strengthening people's hands as they ask for pay rises.

Although pay has been going up, it has not matched inflation, meaning people are worse off.


'Someone needs to accept they're worse off'


Mr Pill said people demanding pay increases and businesses putting prices up added to inflation and caused prices to rise even further across the economy.

"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," he told the Beyond Unprecedented podcast from Columbia Law School.

"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."

Mr Pill is not the first Bank of England official to warn about wage rises contributing to inflation.

Last year, the Bank's governor Andrew Bailey urged people not to ask for big pay rises, to try and stop prices rising out of control.

His comments were immediately met with backlash, with unions saying they were "ill-founded". At the time, Downing Street and the Treasury distanced themselves from Mr Bailey's comments.

Mr Bailey later urged moderation in price rises from businesses.

Inflation was expected to fall below 10% last month but soaring food prices meant it fell by less than expected.

The British Retail Consortium said it expected food prices to start falling "over the next few months".

But the retail industry body said there was a three to nine-month lag to see price falls reflected in shops.

Newsletter

Related Articles

0:00
0:00
Close
Historic Papal Conclave Set to Commence in Rome
Huge Copper, Gold, and Silver Discovery in Argentina and Chile — But the Profits Go Abroad
Prince Harry is pleading for reconciliation — but the royals are just as sick of his victimhood as everyone else
The Road to Freedom: She Protested Putin, Escaped House Arrest, and Survived a 2,800-Kilometer Journey
OpenAI's Flip-Flop: No Longer Going Commercial, Back to Nonprofit, After Musk Lawsuit and Backlash
“Trump Supporter” Aims to Bring a MAGA-Style Shift to Romania
First From China: Zhao Xintong Wins the Snooker World Championship
Nvidia Faces Billion-Dollar Losses – Warns: China Is on Its Way to Becoming an AI Superpower
Trump Rules Out Third Term, Names JD Vance and Marco Rubio as Potential Successors
Mexico Says ‘No’ to U.S. Troops: President Sheinbaum Rejects Trump’s Offer to Fight Cartels
Nigel Farage’s Reform UK Storms the Map, Wrecking the Two-Party Monopoly
DOGE: Reimagining Government Operations with AI
Common Sense Returns to Britain's Legal System: UK Supreme Court Declares a Woman Is… a Woman
Beijing Says U.S. Is ‘Reaching Out’ for Tariff Talks Amid Soaring Trade Tensions
U.K. Court Rejects Prince Harry’s Final Appeal Over Police Security
Prince Harry’s Heartfelt Outburst Rocks the Royal Family
Trump Shares AI-Generated Image of Himself as… Pope, Prompting Outrage Reaction
Transgender Swimmer Secures Five Gold Medals at U.S. Masters Championship
Prince Harry: “I Want Reconciliation with My Family”
Germany's Alternative für Deutschland (AfD) party has now been officially labeled “right-wing extremist” by the federal office for the so-called “protection of the constitution.”
Amazon Launches Satellite Internet Service Amidst Competition with SpaceX
Transformative Changes in Women's Wrestling: The Rise of WWE Superstars
The Rush to the White Gold: Global Investment Surge in Natural Hydrogen Exploration
This is a day in Spain without electricity and internet
Reform UK Surprises in British Elections, Challenging Traditional Two-Party System
180-Year-Old Christian University in South Carolina Announces Closure Due to Unmet $6 Million Fundraising Goal
Brazilian Woman Jailed for Fourteen Years for Writing “You Lost, Idiot” on Statue During Protest
Trump Administration Removes National Security Adviser Mike Waltz Amid Signal Chat Controversy
Dutch Politician Eva Vlaardingerbroek Receives Spyware Threat Alert from Apple
Paramount Board Considers Settlement in Trump’s $20 Billion Lawsuit Over "60 Minutes" Interview
U.S. Economy Shrink in Trump’s First Quarter as Tariff Policy Raises Questions
Deadline Looms for RTS Meter Replacement: Hundreds of Thousands at Risk of Heating Disruption
Sweden Grapples with Deadly Gun Violence: Suspect Arrested After Three Young Men Killed in Uppsala Hair Salon
Walz Reveals Why Harris Chose Him as Her Running Mate and Reflects on Democratic Losses
Spain Restores Power After Unprecedented Nationwide Blackout
Carney Secures Liberal Mandate in Canada’s Federal Election
Death Penalty Sought as Luigi Manion Pleads Not Guilty in CEO Murder Case
President Trump contacts Jeff Bezos after reports of Amazon considering listing tariff surcharges; company clarifies no such plan for main platform
Spain and Portugal Recover from Massive Blackout
Liverpool Clinches Record-Equalling 20th English League Title Under Arne Slot
Singapore Politicians Warn Against Foreign Interference in Election
Driver Ploughs into Vancouver Festival Crowd, Killing Nine
Depression, Fear of Defamation, and a Tragic End: New Details on Virginia Giuffre’s Suicide
“Sharia for UK, Allah Akbar!”
Massive Explosion at Iran's Bandar Abbas Port Linked to Suspicious Chemical Shipments
Incident Reflection: A Harsh Reality Check
Pakistani migrants to Danish man: “ “We have 5 children while you have 1 or 2. In 10 years, there will be more Pakistanis than Danes here.“
Clashes Erupt in London as Tensions Rise Between Indian and Pakistani Communities
Specialized anti-drone weapons deployed among security personnel Ahead of Papal Funeral
How do you fix this culture?
×