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UK spending to help squeezed voters would risk spiralling inflation -minister

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By Reuters
UK spending to help squeezed voters would risk spiralling inflation -minister
UK spending to help squeezed voters would risk spiralling inflation -minister   -   Copyright  Thomson Reuters 2022

By William James

LONDON – Britain risks an inflationary spiral if the government bows to pressure to help voters hit by rising food and energy bills, environment minister George Eustice said on Wednesday before what he predicted would be difficult local elections this week.

Voters will go to the polls on Thursday to elect thousands of regional officials in what is seen as a rough gauge of how well Prime Minister Boris Johnson is performing against a backdrop of scandal, war in Ukraine and a cost of living crisis.

A sharp rise in global energy prices that has pushed up consumers’ gas and electricity bills is now also feeding through to the cost of goods in shops, putting more pressure on household budgets.

Having raised taxes to help pay off money spent during the COVID-19 pandemic and with only a limited package of relief to offset price rises, the government has been forced to resist calls during the election campaign to commit to more spending.

“We’ve just got to show restraint or there is a danger that this will become an inflationary bubble that gets out of control,” Eustice told BBC radio.

“We can’t go too far, we can’t mitigate all of the impacts.”

Johnson was forced to defend his economic record on Tuesday when he was confronted in a television interview with the story of one elderly lady who uses her free pass to ride London buses each day, simply to avoid sitting in the cold at home.

Opposition Labour Party leader Keir Starmer said the government was putting up taxes at exactly the moment people needed more help, and called for a windfall levy on oil and gas companies.

“People are really, really struggling with their bills across the country, saying ‘I can’t pay my bills’,” he said.

Eustice defended the government’s approach as “proportionate” but conceded it had created a difficult situation for the governing Conservative Party going into Thursday’s vote.

Such elections are often dominated by local issues but also provide a snapshot of national sentiment and will be read as a verdict on Johnson’s leadership after a troubled few months in which he has been fined by police for breaking his own COVID lockdown rules.

“A good night would be to hold as many of our seats as possible. But, you know, we are in a difficult environment, so we recognise that there will be some pressures and challenges in some areas,” Eustice told LBC.