Bank of England: People Need to Accept Economic Stress

Facts

• The Bank of England's chief economist, Huw Pill, said British households and businesses must accept they're poorer and stop seeking pay increases or pushing prices higher. He said there's a game of “pass the parcel” going on in the economy — as households and companies try to pass on their higher costs.¹
• Inflation in the UK is at 10.1%, a slight dip from last month when it was 10.4%. It has been higher than the Bank of England's target of 2% for a substantial period of time.²
• Speaking on a Columbia Law School podcast, Pill said, “You don’t need to be much of an economist to realize that if what you’re buying has gone up a lot relative to what you’re selling, you’re going to be worse off."³
• His comments came on the same day that Nestle, PepsiCo, and McDonald’s all reported higher prices helped their sales this year. A leading food bank charity has also said the number of emergency food parcels going to struggling households across the UK has reached an all-time high.⁴
• Pill's remarks echoed warnings from Bank of England Governor Andrew Bailey that large wages and costs push up inflation. While much of the inflation is from factors like energy and food costs, issues like wages are considered important secondary effects.⁵
• Some analysts also fear stagflation — when there is low or no economic growth and high inflation — due to imports, a weak British pound, and stagnant wage growth, among others.⁶

Sources: ¹Guardian, ²BBC News, ³Huffington Post, ⁴The National, ⁵Sky News, and ⁶CNBC.

Narratives

• Pro-establishment narrative, as provided by Herald Scotland. Some in the UK must accept that they're poorer, otherwise, inflation will stay persistent. Many people are reluctant to accept this fact. People and businesses continue to ask for higher wages or charge their customers more money as a response to higher bills and costs. It will increase inflation. We are all worse off, and we all have to take our share.
• Establishment-critical narrative, as provided by The Sun. Food prices have risen at their fastest rate in 45 years, and inflation is above 10% — five times the target. And Pill, a six-figure Bank of England official says Brits must "accept they're worse off and stop demanding pay rises." The former Goldman Sachs banker is out of touch with reality, and people are suffering from economic distress.

Predictions