Cost of living crisis to deepen as UK falls into recession and inflation hits 13%
Britain’s next prime minister must find billions of pounds of support for households and public services, Paul Johnson, director of the Institute for Fiscal Studies think tank, has said.
Speaking to BBC Radio 4’s Today programme about the Bank of England’s forecasts, Johnson warned that the Conservative leadership debate is not focusing on the challenges facing the public finances.
But the thing that I find remarkable about the Conservative leadership debate is that they don’t seem to be talking about the things that’s really going to be in need of public finances.
“The first is, of course, they’re going to have to find many more billions to support households. I mean, this is a much bigger increase in energy bills than was expected even a few months ago when the support packages were announced, and that’s not going to be helped by the sorts of tax cuts that are being talked about.
“Secondly, of course, there’s going to need to be more money for public services – the health service education and so on – because with inflation at 13%, and pay rises there in the 5-6% range, that means that the level of increases that were put in place this year and announced a year ago are looking far too small, because that was done in the expectation that inflation will be 3-4%.
“There will be families and pensioners across the country waking up this morning reading the news who are absolutely terrified because a juggernaut is heading its way which will smash through family finances.
So, action is needed. We’ve got time to plan.
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