As the Tory leadership contest rumbles on, questions are being fired at Liz Truss and Rishi Sunak about what they’ll do to tackle the economic crisis facing Britain. The Foreign Secretary has promised to suspend green levies and Sunak said he would axe VAT on household energy – something he had ruled out as chancellor. But there are mounting fears neither of these strategies will go far enough to help a public facing the devastating combination of rising bills and soaring inflation.
Analysis published today by the National Institute of Economic and Social Research think-tank paints a stark economic picture, warning of soaring inflation – forecast to hit 11 per cent in Q4 of this year, broadly in line with the Bank of England’s most recent forecast – and a long recession lasting into next year. RPI – which sets interest payments on index-linked bonds, student loans and some pensions, mobile bills and rail fares – is predicted to peak at almost 18 per cent.
People on average incomes could find themselves on the breadline simply by paying to live
Britain is expected to fall into a recession, according to Stephen Millard, deputy director of NIESR, as the economy shrinks between the end of this year and the beginning of next.
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