Bank of England governor criticized for ‘increasing sense of panic’ after UK doom forecast
- Troubled banker Andrew Bailey faces backlash over his handling of the economy.
- Doom-filled financial forecasts were blamed for adding to the sense of panic.
- Critics said he was being desperate at a time when the country needed reassurance.
- It comes after Liz Truss insisted the recession was not inevitable.
Business leaders and economists last night accused Bank of England Governor Andrew Bailey of downplaying Britain’s prospects.
The beleaguered banker faces a backlash over his handling of the economy.
Mr Bailey was accused of ‘increasing the sense of panic’ with doom-filled predictions that Britain would endure a 15-month recession and inflation would pass 13 per cent.
Critics said he was being too ‘dubious’ at a time when the nation needed reassurance and called for ‘more optimism’.
It comes after Tory leadership contender Liz Truss insisted a recession was inevitable if the government helped the economy grow by cutting taxes.
Criticism is growing that the bank is ‘sleeping’ and was too slow to raise interest rates to tackle rising inflation.
Business leaders and economists last night accused Bank of England Governor Andrew Bailey of downplaying Britain’s prospects. The beleaguered banker faces a backlash over his handling of the economy.
Mr Bailey was forced yesterday to insist he would not resign early despite a growing backlash over his position.
On Thursday, he and his colleagues on the Bank’s Monetary Policy Committee (MPC) predicted that inflation would hit 13.3% in October and Britain would fall into a five-quarter recession as they has increased the interest rate to 1.75 percent.
They also forecast that household incomes, adjusted for cost-of-living increases, will fall this year and both next year by the largest amount since records began in the 1960s.
Former Tory leader Sir Iain Duncan Smith said: ‘Andrew Bailey is in harm’s way. The bank has it horribly wrong last year and they don’t want to own it.
Mr Bailey was forced yesterday to insist he would not resign early despite a growing backlash over his position. On Thursday, he and his colleagues on the Bank’s Monetary Policy Committee (MPC) predicted that inflation would hit 13.3% in October and Britain would fall into a five-quarter recession as they Raised interest rate to 1.75% (stock image)
House prices start to fall.
House prices fell in July for the first time in more than a year, data from Britain’s biggest lender showed.
The average house price fell 0.1 per cent to £293,221 – the first monthly fall since June 2021.
Experts warn that this is a sign that the red-hot housing market is about to cool as the effects of the life crisis and high interest rates put pressure on buyers.
Halifax said the average annual increase in house prices fell to 11.8 percent last month.
Wales topped all regions, with prices up 14.7% to £222,639. The highest increase was seen in England in the South West. A typical property cost £310,846, up 14.3%.
Russell Galley, from Halifax, said: ‘Looking ahead, house prices are likely to come under further pressure as rising interest rates and the rising cost of living strengthen prices.’
‘There is no reason we have to go into 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 public is led to believe that recession is inevitable – nothing is inevitable.’
Douglas McWilliams, deputy chairman of the Center for Economics and Business Research think tank, also criticized Mr Bailey for discussing Britain’s prospects. ‘Give [Bank’s] The forecast looks worse than most others and, if anything, the sense of panic has increased,’ he said.
The bank’s gloomy forecasts fueled a row between Ms Truss and her leadership rival Rishi Singh over how to respond to the bleak economic outlook.
Meanwhile, according to the Office for National Statistics, millions of people resorted to self-imposed rationing of hot water, electricity, food and other essentials such as clothing.
Gerard Lyons, economic adviser to wealth manager NetWealth and an adviser to Boris Johnson during his time as London mayor, also said Mr Bailey was ‘very disappointed’ when he broke the doomsday news on Thursday.
He compared Mr Bailey’s dire delivery to his colleagues at the US Federal Reserve when he predicted a US recession last month. Mr Lyons said: ‘The Fed was basically giving the same message, but they were much more reassuring. There was a bit more hope that Bailey didn’t have.’
Tony Danker, head of the Confederation of British Industry, said: ‘I hope the Bank of England is overly pessimistic about the length and depth of any recession.’