BoE economist apologizes for telling Brits to ‘accept’ being poorer

Huw Pill, the Bank of England’s chief economist, took a blunt approach last month to explaining the realities of life amid high inflation, saying people should accept that they now worse than ever. But after the stunning criticism, Pill apologized for what he said this week—that.

Pill struck by other economists, labor unionsand even his own boss last month after he called inflation a game of “pass the parcel” during a podcast interviews conducted by Columbia Law School. He explained that companies raising their prices or individuals demanding higher wages are passing the effects of inflation on to the wider economy, rather than simply coming to terms with the fact that they are poorer than before.

“If the cost of what you’re buying goes up compared to what you’re selling, you’re worse off,” he said. “So in a way in the UK, someone has to accept that they are worse off and stop trying to maintain their real spending power by bidding up prices.”

Pill tried to make changes in time a virtual Q&A session Monday night, where he admitted that his choice of words was not very good. But while he took responsibility for his “inflammatory” words, he also painted himself as a messenger with the difficult task of conveying a reality that is almost impossible to sugarcoat.

“If I had the opportunity to use different words I would use slightly different words to describe the challenges we are facing,” he said.

“Although we have some difficult messages to deliver. I will try and deliver those messages in a way that is perhaps less inflammatory than I have been in the past.

Annual inflation in the UK today 10.1%with food and drink prices much higher at 19%, so it’s no surprise that Pill’s comments last month largely fell on flat ears. Even Bank of England governor Andrew Bailey stepped up last week to reassure Brits that the central bank is “very sensitive to the position of people, all people, but especially people on low incomes. ” He also admitted that Pill’s choice of words “wasn’t the right one.”

“I have to be honest and I think he would agree with me,” Bailey said.

In his apology on Monday, Pill said he and the central bank were well aware “we are living in difficult and challenging times,” while acknowledging that the problems of high inflation “are particularly sharp in some parts of society.”

But he also reiterated that part of his job is to break these hard truths to the public. Pill insisted that it was “important” to deliver messages on the realities of inflation in a “coherent and strong way,” while also suggesting that the “viral response” to his first response would not help manage the central bank communication on inflation.

Pill’s comments highlighted an ongoing debate in the UK and US over how central banks should deal with inflation. While Pill and Federal Reserve Chair Jerome Powell rising wages as a key reason behind inflation, some detractors point to excessive corporate profits as a more primary cause, a phenomenon known as “ashamed.”

The greedflation argument says that companies are using existing inflation and other factors such as the pandemic and the war in Ukraine as a cover to raise their prices and increase their profit margins. Catherine Mann, a senior official at the Bank of England, warned in March that UK companies could BENEFITING the cost of living crisis to raise income, while a March study by Unite, the largest trade union in the private sector, found that average profit margins in the UK rose to 10.7% in the first half of 2022 from 5.7% in the first half of 2019.

Some British economists push against the greedflation narrative, however. Michael Saunders, a senior economic adviser at Oxford Economics and a former rate-setter at the central bank, shared his corporate profit analysis in his letter to clients this week suggesting. most corporations have seen profits decline. Outside of oil and gas companies, “the share of corporate income in GDP has fallen significantly,” Saunders wrote, adding that the recent surge in food inflation is likely due to “general delays rather than profit.”

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