JEREMY Hunt today admitted he’s ok with Britain being plunged into recession – but only if it would help reduce inflation.
The Chancellor said inflation is a massive source of instability and must be brought under control.
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He pledged full support for the Bank of England if it decides to hike interest rates again, potentially towards an eye-watering 5.5 per cent.
This could potentially lead to GDP shrinking for two quarters – the definition of a recession.
Last week the expected peak for UK rates was just above 4.75 per cent.
But following higher than expected consumer prices index stats released this week, that prediction rocketed to 5.5 per cent.
Mr Hunt told Sky News: “There’s nothing automatic about bringing down inflation, it is a big task, but we must deliver it and we will.
“It is not a trade-off between tackling inflation and recession. In the end, the only path to sustainable growth is to bring down inflation.”
He added: “If we want to have prosperity, to grow the economy, to reduce the risk of recession, we have to support the Bank of England in the difficult decisions that they take.”
Rishi Sunak has made halving inflation by the end of the year one of five key pledges to define his premiership.
UK inflation fell to 8.7 per cent in April, the latest official figures show.
It is the first time the rate has dropped below 10 per cent since August last year.
It is also the second consecutive month the inflation rate has fallen, after dropping to 10.1 per cent in March following an unexpected rise.
The fall was driven by dips in energy and fuel prices.
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But the inflation rate was higher than forecast by economists, who had pencilled in a drop to 8.2 per cent in April.
Mr Hunt said: “I have to do something, which is to make sure the decisions that I take as chancellor, very difficult decisions, to balance the books so that the markets can see that Britain is a country that pays its way – all these things mean that monetary policy at the Bank of England (and) fiscal policy by the Chancellor are aligned.”
