The Bank of England Taketh Away. Rishi Sunak Should Giveth.
With monetary policy focused on curbing inflation, fiscal policy needs to ease to help avert a U.K. recession.
Chancellor of the Exchequer Rishi Sunak in Downing St, London.
Photographer: Stefan Rousseau - PA Images/PA ImagesWith the Bank of England raising interest rates for a third consecutive monetary-policy meeting on Thursday, attention now turns to what the government can do via fiscal policy to alleviate the cost-of-living crisis facing Britons. Chancellor of the Exchequer Rishi Sunak should abandon April’s planned tax increase, to avoid shell-shocked consumers from driving the economy into recession.
The U.K. central bank was obliged to push up borrowing costs this week, or risk accusations that it was reneging on its remit to keep inflation in check. With consumer prices rising at their fastest pace in 30 years and the inflation rate expected to peak at close to 10% this year, a further increase in the official interest rate to 0.75% was clearly warranted.