Central banker to the Brits: You’re worse off. accept it.

In the podcast, Mr. Bell was asked to break down how much current inflationary pressures were temporary or permanent. Britain has been hit by a series of shocks—the pandemic, mounting energy pressures from the war in Ukraine, disruptions to food supplies—that were individually fleeting but so close together that inflation never abated.

He added that there is another factor at play. Britain, a large net importer of natural gas, faced a significant increase in the price of what it was buying from the world compared to what it was selling, especially services. This changes the economic situation of the country.

This is what he said:

You don’t need to be an economist to realize if what you buy is much higher than what you sell, you’ll be worse off.

So somehow in the UK someone needs to accept the fact that they are worse off and stop trying to conserve their real purchasing power by raising prices, whether it be higher wages or passing energy costs on to customers.

And what we’re facing now is that, this reluctance to accept that — yeah, we’re all worse off and we all have to take our share — to try to pass that cost on to one of our fellow countrymen and say we’ll be okay, but they’re going to have to take our share as well. The “pass” game that is going on here, that game is a game that generates inflation, and this part of inflation can continue.

This is not the first time a Bank of England official has come under fire for his inaccurate suggestions on how to rein in inflation. Early last year, Andrew Bailey, the bank’s governor, said there Need “restraint in wage bargaining” So inflation did not get out of control.

Some policymakers at the European Central Bank have expressed similar concern, albeit in gentler terms and more focused on corporate behaviour. Europe also suffered from what is called a terms-of-trade shock, as the price of an imported commodity, energy, rose. This depressed the economy, and European policymakers urged companies to accept some losses, just as workers had to accept lost real profits.

“It is important that there is fair burden-sharing” between businesses and workers, Christine Lagarde, President of the European Central Bank, He said last month.