The UK’s Chancellor of the Exchequer responded to the Bank of England interest rates decision.
Jeremy Hunt said: “Inflation is a stealth tax that is the biggest threat to living standards in a generation, so we support the Bank's action, so we succeed in halving inflation this year.
“We will play our part by making sure government decisions are in lockstep with the Bank's approach, including by resisting the urge right now to fund additional spending or tax cuts through borrowing, which will only add fuel to the inflation fire and prolong the pain for everyone.”
Countries around the world are facing high inflation, largely driven by the aftermath of Covid-19 and Putin’s invasion of Ukraine. The Monetary policy is the responsibility of the independent Bank of England and the government remains fully committed to the Bank’s independence, and the inflation target of 2%.
According to December figures, UK inflation is lower than in 14 EU countries - including the Netherlands and Italy, with the IMF predicting that 90% of advanced economies will see a decline in economic growth this year.
The Governor of the Bank of England, Andrew Bailey, recently said that any UK recession this year is likely to be shallower than previously predicted. And, according to the IMF, cumulative growth over the 2022-24 period is predicted to be higher than Germany and Japan, and at a similar rate to the United States – the world’s largest economy.
The government has announced further support on the cost of living in 2023-24, targeted at those most in need:
- UK households on means-tested benefits will receive a further £900 Cost of Living Payment;
- Pensioner households across the UK will receive an additional £300 Cost of Living payment;
- People across the UK on non-means-tested disability benefits will receive a further £150 Disability Cost of Living payment, to help with the additional costs they face.
“We have extended the Household Support Fund for another year in England”, said Mr. Hunt, “with £1 billion of extra funding (including Barnett funding for the devolved administrations)”.