The economy is going to ‘get worse before it gets better’, the chancellor has said – as he defended the decision not to give public sector pay rises in line with inflation.
Jeremy Hunt, who made the comments following the release of yesterday’s gloomy figures showing a 0.3 per cent fall in growth, also insisted 12 years of Conservative rule and Brexit were not to blame for the UK’s financial woes.
Mr Hunt instead highlighted global issues, such as the war in Ukraine and the pandemic.
Speaking to Sky News, he added: ‘I think it’s a very challenging international picture. About a third of the world’s economies are predicted to be in recession, either this year or next. We’re no different in this country.
‘And truthfully, it is likely it will get worse before it gets better. Which makes it even more difficult when we have big public sector strikes going on at the moment. But we have a plan that will more than halve inflation over the next year. So if we stay the course, we can get back to strong economic growth.’
He described strikes as a ‘symptom’ of inflation, which hit a 40-year-high of 11.1 per cent in October, and said tackling that would ‘deal with the underlining anger many people feel’.
However, while Mr Hunt described unions as being ‘completely sincere’ in wanting better salaries for workers, he insisted that independent review bodies were best placed to make recommendations on pay.
He also claimed increasing wages for the likes of nurses risked ‘locking in’ inflation – a stance that is disputed by many economists, including the Institute for Fiscal Studies.
Labour accused Mr Hunt and the Conservatives of trying to dodge responsibility for Britain’s economic problems and claimed the UK was ‘lagging behind on the global stage’.
Shadow chancellor Rachel Reeves said: ‘These are challenging economic times, but there is a choice.
‘We can continue down the road of managed decline, falling behind our competitors, or we can draw on bold thinking to propel us forward.’
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