Danny Blanchflower, the former policy maker of the Bank of England, says that a UK recession will lead the next PM to scrap talks about possible tax cuts. It would also deliver a blow to hopes of a huge aid programme to prevent their economy from collapsing.
Bank of England’s former policy maker’s remarks sharply contrast with a consensus that believes that borrowing costs need to rise to battle inflation. Inflation rose to 10.1%, which is the highest in 40 years.
Blanchflower believes that the protagonist in the crisis would not be the Bank of England ( BOE ) but the government. He also took a dig at Liz Truss and Rishi Sunak of the Conservative Party as they compete to be the next Prime Minister by replacing Boris Johnson .
Both contenders have promised to cut taxes but have not been clear about how they would be helping the poor class.
Blanchflower said that the looming problem had not been solved with what both contenders had said. He added that the idea of cutting taxes and changing corporate taxes isn’t going to help someone who rides the Mile End Road omnibus.
He also took a swipe at Andrew Sentance , a former colleague, and said that Santance’s advice on the radio on Wednesday was completely disastrous for the economy. He asked what increasing rates to four percent would do to ordinary people. He said that the bank forecasts a horrible recession and they should stop.
He expects an adverse turn in inflation once the recession hits and notes that the cost of corn, shipping and oil is already declining.
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