Mervyn King: Needless money-printing fuelled inflation
Spectator (UK)Nov 24, 2021
The Facts
On Wed., the Office for National Statistics reported that consumer price inflation in the UK hit 9% in April. Although lower than the predicted 9.1%, this marks the highest annual rate in 40 years.
Up from the 7% annual rate in March, the rise has been driven primarily by soaring energy bills following the energy price cap increase in April, as households face a worsening cost-of-living crisis. Energy prices are expected to increase again in October.
The Spin
Right narrative
Sunak is taking appropriate action to tackle inflation by providing incentives - such as plans for corporate tax cuts - for businesses to "invest more, train more, and innovate more." Stimulating businesses could boost productivity and growth, which would help people cope with the record-high inflation and potentially pull the British economy back from the brink of recession.
Left narrative
The BoE has taken a ham-fisted approach to rising inflation. Not only have they acted too slowly to raise rates and are now forced to overcompensate, but they have also failed to adopt protective measures seen in other countries, such as France's 4% cap of price rises or Italy's windfall tax on energy firms. The result of their inaction is higher inflation than the rest of the G7.