Chancellor responded to the Bank of
England's December interest rates decision.
He said:
"High inflation, exacerbated by Putin's war in Ukraine, continues
to plague countries across the world, eating into people's pay
cheques and driving up food and energy prices.
"I know this is tough for people right now, but it is vital that
we stick to our plan, working in lockstep with the Bank of
England as they take action to return inflation to target.
"The sooner we grip inflation the better. Any action which risks
permanently embedding high prices into our economy will only
prolong the pain for everyone, stunting any prospect of economic
recovery."
Notes to editors
Additional information:
- The inflation rate dropped down to 10.7% in November but this
remains close to a 40 year high, with October's inflation rate of
11.1% the highest for 41 years.
- The government remains fully committed to the Bank of
England’s independence and mandate. At the Autumn Statement the
Chancellor set out that this government will not change the
definition of price stability.
- The UK is not alone in facing the challenge of high inflation
– with inflation at near record highs of 10.0% across the Euro
area, 11.3% in Germany and 12.5% in Italy.
- Energy is a central driver pushing up inflation. The war and
Putin’s weaponisation of gas have added to pressures from the
covid-19 recovery and severe weather events, leading to an
eightfold increase in gas and electricity prices. UK spend on
energy is expected to increase from £40bn (2% of GDP) to £190bn
(8% of GDP) – equivalent to money for an entire second NHS.
- Slow growth is also proving a global challenge, with the
International Monetary Fund forecasting that a third of the world
economy will experience a recession this year or next.
- The government acted decisively to protect households and
businesses from significant rises in their energy bills this
winter, with the Energy Price Guarantee holding down peak
inflation. The Chancellor is continuing to work with the Bank of
England as it takes action to return inflation to the 2% target.
- Over eight million of the most vulnerable households across
the UK are eligible for at least £1,200 of additional
cost-of-living support this year, and a further £26 billion
package will follow next year. More information on government
support for the cost of living can be found at https://helpforhouseholds.campaign.gov.uk/
- The government has accepted independent pay review body
recommendations for the NHS, teachers, police and the armed
forces for 2022-23, providing the largest uplifts in 20 years –
in many cases higher than settlements seen in the private sector
around this time.
- An inflation-matching pay increase of 11 per cent for all
public sector workers would worsen debt and risk embedding
inflation in our economy.
