Inflation forecast: Sunak to take us ‘back to 1970s’ as expert warns ‘mighty storm’ coming

Government 'hasn't reacted' to rising inflation says economist

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The cost of living disaster has caught lawmakers worldwide off guard, including Chancellor Rishi Sunak – and one expert predicts the crisis could take us back to the dark economic times of the 1970s. John Bell, director and founder of licensed insolvency practitioners Clarke Bell, told that further rises could spark chaos in Britain.

He said: “All the indicators suggest we are reaching a serious world problem and inflation is beginning to run out of control.

“This means that we are likely to see interest rates rising to counter this.

“However, this may not be effective because the inflation we are seeing is being caused by supply chain as well as money supply problems.”

Of the UK, USA, the euro area and other advanced economies globally, 60 percent currently have annual inflation rates over five percent, according to the Bank for International Settlements – a bank for central banks.

Central banks typically target inflation at two percent but in the UK, inflation has now reached seven percent, and shows few signs of slowing or dropping.

Higher energy prices are the main driver of inflation, with far fewer signs of significant wage increases to bring British workers into line.

But Mr Bell predicts that Rishi Sunak’s measures, outlined in the recent Spring Statement, will only add to the UK’s inflation woes and could take us back to the 1970s, when high commodity prices and double-digit inflation were the norm.

He said: “The quantitative easing programme is most likely adding to the inflation and Governments across the world are working on reigning this back rapidly. We are in danger of stagflation.

“We saw this happen in the 1970s because of oil prices. It was also seen in the 1840s.

“The western world was changing from being agrarian to industrial and new technology was replacing people.

“By the end of the 19th century, there were, in fact, more jobs created by the new technology factories.

“The numbers employed in farming dropped from 30 to 40 percent to two percent. Those employed by factories increased and surpassed the jobs previously available.

“However, two generations suffered shocking poverty while the world adjusted to this new paradigm.”

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Inflation in the UK is now at its highest level in three decades – and the forces behind high inflation are likely to be persistent for some time.

Mr Bell analysed the real-life effects of a struggling economy on ordinary Brits – and the picture he painted is an unhappy one.

He said: “When the crunch comes it will come quickly and the crisis will be critical.

“Consumers are struggling and this will mean that we will see no sector go unharmed. The high street gloom will get even darker as we see more job cuts and store closures. Mass closures will lead to mass unemployment.

“It is going to be a rough ride. It was staggering to hear the Chancellor’s Spring Statement recently and hear how accurate he could be with the predictions of public borrowing in 5 years’ time as well as promising future tax cuts.”

But Mr Bell acknowledges that future tax cuts will do little to stem the crisis happening to ordinary people across the country.

He said: “In my view, his statement was somewhat desperate – he is saying there will be hard times ahead whilst conjuring up visions of sunlit uplands for when we make it through.

“I predict an almighty storm coming. In the USA, some senators are saying interest rates should rise by 0.5 percent and should rise to three percent to stop inflation.

“The same should be done in the UK. Giving people more money to pay for increased prices will only fuel inflation.”

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