AUSTERITY measures set to be imposed on the working class by the collapsing Tory government will be harsher than those endured for the past 14 years, former Bank of England Governor, Lord Mervyn King warned yesterday.
Furthermore, living standards are being slashed as a result of the UK’s support for the NATO-led war against Russia in Ukraine, he added.
Speaking to the BBC’s Sunday with Laura Kuenssberg, King said the average person faces ‘significantly higher taxes’, adding that ‘it is time to front up’ with the public about the difficulties the country is facing.
He said: ‘Public expenditure isn’t going down, if anything it will go up, therefore taxes will have to rise to fill the gap which is there at present.
‘That doesn’t make a very happy picture for the next few years.
‘But what we need is a government that will actually tell us honestly there is a reduction in our national standard of living because we’ve decided to help Ukraine and confront Russia and that means that all of us are going to have to share the burden, we can’t just put all of it on our children and grandchildren.’
Asked if the UK could be facing a similar period of austerity that was introduced by the then Tory Chancellor George Osborne in 2010, King replied: ‘In some ways it could be more difficult.’
He said: ‘The challenge is if we want European levels of welfare payments and public spending, you cannot finance that with American levels of tax rates, so we may need to confront the need to have significantly higher taxes on the average person.
‘There isn’t enough money there among the rich to get it back.’
King also reiterated criticism of central banks for failing to curb inflation which is now running at a 40-year high of 10.1%.
He said that major central banks, including the Bank of England, had continued to ‘print money’ – through ‘quantitative easing’ – to support their economies during Covid lockdowns. This, he said, had contributed to rising inflation.
King was governor of the Bank of England between 2003 and 2013 during which time it launched quantitative easing.
Pointing the finger of blame for rising prices directly at Rishi Sunak, King went on: ‘Here in the last couple of years the amount of money in the economy has grown very rapidly and at a pace that was bound to lead to higher inflation.’