Bank of England governor is slammed for ‘adding to sense of panic’ following doom-laden UK forecast
- Beleaguered banker Andrew Bailey is facing backlash over economy handling
- Was accused of adding to sense of panic with doom-laden finance forecasts
- Critics said he was being downbeat at time when country needs reassurance
- Comes after Liz Truss insisted recession was not inevitable
Business leaders and economists last night accused the Bank of England Governor Andrew Bailey of talking down Britain’s prospects.
The beleaguered banker is facing a backlash over his handling of the economy.
Mr Bailey was accused of ‘adding to a sense of panic’ with doom-laden forecasts that Britain will endure 15 months of recession and that inflation will pass 13 per cent.
Critics said he was being too ‘downbeat’ at a time when the nation needs reassurance and called for ‘more optimism’.
It came after Tory leadership contender Liz Truss insisted that a recession was not inevitable if the Government helped the economy grow by cutting taxes.
There has been increasing criticism that the Bank has been ‘asleep at the wheel’ and was too slow to increase interest rates to tame soaring inflation.
Business leaders and economists last night accused the Bank of England Governor Andrew Bailey of talking down Britain’s prospects. The beleaguered banker is facing a backlash over his handling of the economy
Mr Bailey was yesterday forced to insist he will not quit early despite the mounting backlash at his position.
On Thursday, he and his colleagues on the Bank’s Monetary Policy Committee (MPC) predicted inflation would hit 13.3 per cent in October and Britain would tumble into a recession lasting five quarters as they raised interest rates to 1.75 per cent.
They also forecast household income, taking into account the rise in the cost of living, will fall by the largest amount since records began in the 1960s both this year and next.
Former Tory leader Sir Iain Duncan Smith said: ‘Andrew Bailey is in damage limitation mode. The Bank have got this past year badly wrong and they don’t want to own up to it.
Mr Bailey was yesterday forced to insist he will not quit early despite the mounting backlash at his position. On Thursday, he and his colleagues on the Bank’s Monetary Policy Committee (MPC) predicted inflation would hit 13.3 per cent in October and Britain would tumble into a recession lasting five quarters as they raised interest rates to 1.75 per cent (stock image)
House prices start to dip
House prices fell in July for the first time in more than a year, figures from the UK’s largest lender revealed.
The average cost of a home dropped by 0.1 per cent to £293,221 – the first monthly decline since June 2021.
Experts warn it is a sign the red-hot housing market is set to cool as the impact of the cost of living crisis and higher interest rates puts pressure on buyers.
The dip last month caused the average annual house price growth to slip to 11.8 per cent, Halifax said.
Of all the regions, Wales came out on top, with prices rising 14.7 per cent to £222,639. The South West saw the biggest rise in England. A typical property cost £310,846, up 14.3 per cent.
Russell Galley, from Halifax, said: ‘Looking ahead, house prices are likely to come under more pressure as the headwinds of rising interest rates and increased living costs take a firmer hold.’
‘There’s no reason why we have to head into a recession. We don’t have to go along with this ridiculous, miserable orthodoxy.
‘Liz is right – we can cut taxes to boost growth.’
He added: ‘Andrew Bailey is not just talking the economy down, he is taking it down.
‘The British people get this idea that a recession is inevitable – nothing is inevitable.’
Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research think-tank, also criticised Mr Bailey for talking down Britain’s prospects. ‘The [Bank’s] forecast looks worse than most others and, if anything, has added to a sense of panic,’ he said.
The Bank’s gloomy predictions intensified the row between Miss Truss and her leadership rival Rishi Sunak over how to respond to the bleak economic outlook.Mr Sunak says the Foreign Secretary’s plan to cut taxes will fuel inflation.
Meanwhile tens of millions of people have resorted to self-imposed rationing of hot water, light, food and other essentials such as clothes, according to the Office for National Statistics.
Gerard Lyons, economic adviser to wealth manager Netwealth and adviser to Boris Johnson during his time as London mayor, also said Mr Bailey was ‘very downbeat’ when delivering the doom-laden news on Thursday.
He compared Mr Bailey’s sombre delivery with that of his peers at the US Federal Reserve when they forecast a recession in America last month. Mr Lyons said: ‘The Fed were essentially delivering the same message, but they were far more reassuring. There was a bit more optimism which Bailey just didn’t have.’
Tony Danker, head of the Confederation of British Industry, said: ‘I hope that the Bank of England are overly pessimistic about the length and depth of any recession.’