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Queue in front of a food bank in London: It's about saving the local economy
Photo:
Frank Augstein/AP
The British economy is in bad shape, with inflation recently hitting a 40-year high – but the reason for this has long been a matter of debate in the UK.
The British central bank has now blamed Brexit for the poor economic situation in Great Britain.
Leaving the EU has had a disproportionate impact on trade, Swati Dhingra, a member of the Bank of England's Monetary Policy Committee, told the House of Commons Finance Committee on Wednesday.
The government of Prime Minister Rishi Sunak, on the other hand, has tried to cite the Ukraine war and the pandemic as the main reasons for the economic situation.
However, Dhingra said: "There is no denying that trade in the UK has weakened much more than in the rest of the world." wages have fallen.
Budget hole of at least £40bn
The British central bank had already warned after the Brexit referendum in 2016 that the British economy would shrink as a result of leaving the EU.
The bank is sticking to this forecast, said central bank chief Andrew Bailey.
The timing of this blame game is tricky: Treasury Secretary Jeremy Hunt will present his new budget later today.
According to media reports, he is likely to announce tax increases and cut public spending by up to £60 billion.
For Hunt, his »autumn statement« is about nothing less than saving the local economy.
The relief and tax cut package put together by the previous government under ex-Prime Minister Liz Truss, which was to be financed with additional loans, caused panic on the financial markets and caused price slumps.
The turmoil forced Truss to resign.
However, because of their disastrous financial policy, Hunt and Prime Minister Sunak now have to calm the markets.
Sunak has made fighting inflation a top priority.
"My absolute priority is to ensure that we deal with the economic situation we are facing at home," Prime Minister Sunak announced.
Consumer prices rose 11.1 percent in October, significantly higher than expected, authorities said on Tuesday.
It is already certain that almost all Britons will have to accept significant real wage losses.
In order to contain inflation and the consequences of Trussonomics, Hunt needs a lot of money.
The budget gap is already at least around £40 billion.
Apr/AFP/dpa
