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Bank of England Economist Urges Brits to Accept Higher Inflation Instead of Trying to Recover Historic Drop in Living Standards

Bank of England Chief Economist Huw Pill has urged Brits to accept that they are poorer due to higher inflation instead of trying to recover a historic drop in living standards.[0] Speaking on the “Beyond Unprecedented” podcast, Pill said that people and businesses have responded to higher bills and costs by asking for higher wages or charging their customers more money, but this adds to inflation, pushing up prices even further across the economy.[1] He added that there was a “reluctance to accept” that Britain had become collectively poorer but claimed it was an inevitable consequence of the surge in energy prices since the invasion of Ukraine.[2] On the podcast, Pill said that the UK, which is a big net importer of natural gas, is facing a situation where the price of what you’re buying from the rest of the world has gone up a lot, relative to the price of what you’re selling to the rest of the world, which is mainly services in the case of the UK.[1] The cost of living crisis is two things at once: a big, macroeconomic phenomenon (the country has gotten poorer) and a distributional phenomenon (some people are feeling the pain).[3]

0. “Bank of England's Huw Pill: Brits ‘need to accept' they're poorer” City A.M., 25 Apr. 2023, https://www.cityam.com/bank-of-englands-huw-pill-brits-need-to-accept-theyre-poorer/

1. “Brits must accept they're poorer and stop demanding pay rises says Bank of England chief” The Mirror, 25 Apr. 2023, https://www.mirror.co.uk/news/politics/brits-must-accept-theyre-poorer-29809304

2. “Britons ‘need to accept' being poorer says Bank of England economist on £190k salary” GB News, 26 Apr. 2023, https://www.gbnews.com/money/bank-of-england-accept-being-poor-huw-pill

3. “Bank of England economist tells people to ‘accept they're worse off'” HeraldScotland, 26 Apr. 2023, https://www.heraldscotland.com/politics/23481272.bank-england-chief-people-must-accept-worse-off

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