HOUSEHOLDS and businesses across the UK “need to accept” they are poorer and stop looking for pay increases and pushing prices higher, a chief Bank of England economist has said.
Huw Pill has said a game of “pass the parcel” is currently taking place in the economy as households and companies try to pass on their higher costs.
Speaking on a podcast produced by Columbia law school, Pill said it’s natural for a household to seek higher wages in response to soaring energy bills, or for a restaurant to increase its prices.
He said: “If the cost of what you’re buying has gone up compared to what you’re selling, you’re going to be worse off.
“So somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers.
“And what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share.
“Instead [people] try and pass that cost on to one of our compatriots, saying we’ll be ‘all right, but they will have to take our share too’.
“That pass the parcel game that’s going on here […] that game is generating inflation, and that part of inflation can persist.”
Pill’s comments came on the same day that Nestle, PepsiCo and McDonald’s all reported higher prices helped to boost their sales this year as UK families bear the brunt of record inflation.
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.
Meanwhile, the SNP's policy development convener Toni Giugliano said that Westminster parties can no longer boast about the “broad shoulders” of the UK.
“Brexit Britain is making people poorer”, he told The National.
“The UK has the worst economic forecast in Europe and that’s not by accident, it’s a direct consequence of Tory policy choices - a disastrous Brexit that Scotland didn’t vote for and years of Tory austerity and years of Tory austerity that destroyed the fabric of society as we know it.
“I’ll tell you who should stop asking for pay rises – millionaires and corporations making huge profits who are cheating the public out of billions in tax.”
He added that the comments “are emblematic of a privileged system where the wealthiest remain untouched and the poor get poorer”.
“The wealth gap between those at the top and the rest of society is widening, our living standards are sinking.
“We need independence to escape Westminster’s dysfunctional economic policy and build a fairer country that puts people first.”
According to the central bank’s annual report, Pill was paid £88,000 for his first five months and 24 days at the Bank of England, taking his annual salary to £180,000.
The latest official data shows that the median average household disposable income last year was £32,300.
The rate of inflation in the UK fell by less than expected in March, to 10.1% from 10.4% in February.
Meanwhile, the Bank of England is widely expected to raise interest rates for the 12th time in a row next month.
During the podcast, Pill explained how “inflation has been higher than we expected for longer, for an undesirably long time” and that interest rates had been raised to fight inflation.
