Former Governor of the Bank of England Mervyn King said UK Prime Minister Rishi Sunak was “not wise” to promise to cut inflation in half this year because the government has little control over prices.
(Bloomberg) — Former Governor of the Bank of England Mervyn King said UK Prime Minister Rishi Sunak was “not wise” to promise to cut inflation in half this year because the government has little control over prices.
“If you think that the high energy and food prices of last year are going to drop out of the measure of inflation … if you are confident it will happen, it’s not a bad thing to claim credit for, when it’s actually got nothing to do with you at all,” King said Tuesday evening in an interview on LBC’s Andrew Marr show.
The remark underscores the difficulty Sunak faces in reining in soaring inflation, which reached a four-decade high of 11.1% last year. While that pace has slowed to 8.7%, it has remained stronger than the Bank of England and most economists expected.
Sunak’s inflation pledge is one of five things he said voters should judge the government on at the next election, which must be held by early 2025. The ruling Conservative Party is trailing the opposition, with a poll by Focaldata showing the Labour party is on track for a landslide.
King also said the reaction to Liz Truss’s premiership last year was “a bit hysterical” and that, “I don’t think the economic consequences were that bad. And frankly, they’ve gone away, they’ve disappeared now.”
The remark sidestepped the swift surge in mortgage costs that followed Truss’s budget program and that the cost of those loans has risen again along with concerns inflation is more sticky than the BOE had hoped.
On Britain’s decision to exit the European Union, King said the government’s handling has been a “shambles” due to poor negotiations and that it created a “bad” atmosphere with EU nations.
“Parliament has been unable to decide which of eight or nine versions of Brexit work,” he said. “We could have done more — I think to try to ensure that we had access to education and research opportunities in Europe. These things have all proved very damaging.”
Read more:
- Labour Is on Course for UK Election Landslide, Poll Shows
- UK Labor Market Tightens, Adding Pressure on Bank of England
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