Bank of England is “overdoing it”, says IPPR

The UK’s leading progressive thinktank, IPPR, has responded to the announcement that the Bank of England has increased its interest rates to 5.25 per cent.

Carsten Jung, senior economist at IPPR, said:

“The UK economy is weakening. The labour market is slowing down, and productive activity is falling. Increasingly there is a realisation that the Bank of England is already overdoing it.”

“By raising interest rates to 5.25 per cent, the Bank is tightening the screws too much and causing excessive harm for households and businesses. Interest rates might well be more than a percentage point too high now.

“Instead of further rate rises, we need a more balanced approach to tackling inflation, using more government support. Countries like Spain have kept energy prices lower, temporarily limited rent increases and tackled excessively high profits through taxation. Their inflation rate has recently fallen back to target. The UK should take inspiration from their example.”