Millions of people might lose their jobs, economists have warned, if the Bank of England does not take prompt action.
Without significant action from the Bank of England, the UK is on track to experience a recession “on a scale not seen since the 1930s,” a group of respected economists has warned.
A former senior BoE official is one of those advocating for a massive infusion of “government-created money” in an open letter to the Financial Times in an effort to prevent a “economic disaster.”
The writers of the letter claim that a combination of actions, such as interest rate reductions and nationalising the energy industry, may be sufficient to “rescue us from the calamity currently awaiting us.”
In the near future, analysts predict that millions of jobs could be lost.
According to three prominent economists, there is a “very high” probability of a recession that will result in millions of job losses and home foreclosures unless the BoE steps in.
They caution that rising energy costs, which are forcing millions of people to choose between paying their bills and buying basic necessities, will have a significant negative impact on the retail, leisure, and hospitality industries as a result of a decline in consumer spending.
The letter’s authors expressed worry that the effects of rising energy prices and interest rates on the overall economy are “being overlooked.”
They declared: “Many businesses will collapse. There will probably be a loss of millions of jobs. Repossessions of mortgages and evictions of tenants will rise.
They declared: “Many businesses will fail.”
They declared: “Many businesses will collapse. There will probably be a loss of millions of jobs. Tenant evictions and mortgage repossessions will rise. Due to increased costs, public services in healthcare, education, and care will also be severely hampered. There is a very high possibility of a recession on a scale not seen since the 1930s. All of this is not required. Using government-created money and the Bank of England’s quantitative easing programme, economic disasters in 2008 and 2020 were averted. On four times, interventions totaled at least £150 billion. If the collapse of our economy is to be prevented, it is very likely that an additional £200 billion will be needed in the upcoming year.
Not much else can prevent the catastrophe that is currently looming, except intervention on this magnitude, along with interest rate reductions, reform of the energy market, nationalisation of the energy supply, and investments in new technologies
The letter’s signatories included Richard Murphy, a professor of accounting practise at Sheffield University Management School, Lord Sikka, an emeritus professor of accounting at the University of Essex, and David Blanchflower, a professor of economics at Dartmouth College and a former member of the BoE’s monetary policy committee.
The ominous warning comes as the race for the Conservative leadership is about to be decided.
Liz Truss, who is widely seen as the contest’s potential winner, has proposed solutions to the rising cost of living crisis that have been labelled as “fundamentally unserious.” Truss has made hints that she would provide additional direct assistance to households, but as of right now, she has only detailed specific proposals to reduce taxes and pause green energy prices.