‘Instead of blaming inflation on workers’ wage rises, it’s high time the governor of the Bank of England tackled the profiteers of corporate Britain.’
On June 22, the Bank of England raised interest rates to 5 percent in a bid to tame rampant price growth. Andrew Bailey, the Bank’s governor, has blamed ‘unsustainable’ pay rises for stoking inflation.
Speaking after the larger-than-expected hike of 0.5 percent had been announced, the governor warned that if inflation is to fall, pay ‘cannot continue’ to go up at its current pace.
Bailey, who is under pressure as inflation continues to rise in Britain and is higher than in the US and Europe, says he still expects inflation to ‘come down markedly this year.’
“It’s important, then, that price setting and wage setting reflects that because the current levels, I’ll be absolutely honest, are unsustainable.
“We cannot continue to have the current level of wage increases,” he added.
The remarks ignited criticism from economists, unions, and opposition parties. Former deputy governor Sir Charlie Bean, said rises were unlikely to be heeded by workers trying to protect their living standards, and suggested that the Bank did not have a clear plan.
Unions quickly shared their criticism of the comments. TUC general secretary Paul Nowak said that “this interest rate hike is the result of dangerous groupthink in the Bank of England and Downing Street.”
“Inflation was caused by global energy shocks and government should be doing more to ensure households and businesses benefit as prices fall.
“Instead of scapegoating workers who are desperate for their pay to keep up with prices, ministers should focus on a credible plan for sustainable economic growth and rising living standards,” Nowark continued.
Sharon Graham, general secretary of Unite, shared similar concerns saying that the Bank was “yet again … making the wrong choice” by “inflicting pain on ordinary households across the UK by hiking up interest rates.”
“This latest rise is nothing more than a handout to the banks who have already made bumper profits from 12 other interest-rate hikes.
“The 13th could put hundreds of thousands of mortgage holders in peril of not being able to pay their mortgage.
“Instead of blaming inflation on workers’ wage rises, it’s high time the governor of the Bank of England tackled the profiteers of corporate Britain.
“They are to blame for the current crisis,” said Graham.
Meanwhile, Shadow Chancellor Rachel Reeves took aim at Rishi Sunak and Jeremy Hunt, who she said are “buying their heads in the sand and failing to clean up the mess this Tory government has made.”
Sentiment echoed by Maggie Chapman, economy spokesperson for the Scottish Greens, who said: “These are real people who are suffering real consequences.
“After 13 years of Tory misrule, we urgently need to change the economy and the assumptions that underpin it.”
Gabrielle Pickard-Whitehead is a contributing editor to Left Foot Forward
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