Bank of England boss Andrew Bailey warns Rachel Reeves’ tax-and-spend Labour Budget will increase inflation and it may not come down again for two years [Video]

04:03 EST 08 Nov 2024, updated 04:04 EST 08 Nov 2024

Rachel Reeves‘ tax-raising Budget will increase inflation, the governor of the Bank of England warned last night, raising fresh fears for the UK’s economic recovery.

Andrew Bailey said the rise triggered by the first Labour Budget in 14 years, which set out to raise £40billion mainly through tax increases for businesses, would be small compared to that triggered by Liz Truss‘s mini-Budget.

But while he told LBC that economists predicted it would eventually drop again,  it might take two years. The CPI rate fell to 1.7 per cent in September, the lowest level since April 2021.

The news of a blip in inflation, however small, is likely to un-nerve businesses already facing tax increases and families struggling with the cost of living. 

The Bank’s Monetary Policy Committee (MPC) decided to reduce the base interest rate from 5 per cent to 4.75 per cent at its latest meeting. …