Cabinet ministers launch unprecedented attack on Bank of England over inflation crisis

The interventions came as Sir Howard Davies, the chairman of NatWest, warned in an interview with The Telegraph that “unless the government does something more I think we will see quite a big push”.

Sir Howard revealed NatWest calculations showing the bottom fifth of households will need to cut discretionary spending by almost 20% to offset the hit of rising costs, such as energy and food, without going into debt.

Calling for urgent tax cuts, Lord Moylan, who was Mr Johnson’s senior adviser at City Hall, said: “It’s just this constant standoff between the Prime Minister and his Chancellor. The Prime Minister must be the one who clearly takes the lead.

“He shouldn’t go head in hand to the Chancellor. It’s becoming unseemly that we’ve had 25 years of two big beasts dominating everything and they end up being at constant disagreement and that cripples the government.”

A Treasury source insisted that Mr Sunak and Mr Johnson were ‘exactly on the same page’ and pointed out that the Chancellor had introduced higher national insurance thresholds and lower pension entitlements. fuel, as well as the promise of a future income tax cut.

But many senior Tories want him to go further urgently – Mr Johnson telling MPs last week he was among them. A Cabinet Minister said: “The Chancellor is expected to present options showing which taxes could be reduced, how will they be reduced and the [difference] it would go into people’s pockets.”

The Minister said the Bank’s handling of inflation raised “fundamental questions” about its “readiness and the compatibility of some of these institutions”, adding: “People are now questioning its independence”.

The Minister said that while many in government thought “we cannot cross that line” of passing judgment on the work of the Bank, the Chancellor could do more to hold him to account.

The other Cabinet Minister said: “The Bank hasn’t been doing it right for a long time. Haldane has been a loss to them, and the fact that he turned out to be right should be a realization that the thought of Bank group is quite risky.”

Last week, Liam Fox, the former defense secretary, broke ranks to say the Bank had “[underestimated] the threat” of higher inflation.

He said: “The Bank of England persisted beyond any rational interpretation of the data to tell us that inflation was transitory and then peaking at 5%.” The Bank now expects inflation to hit 10% this year.

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