Andrew Bailey shares ‘apocalyptic’ warning about food prices
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Andrew Bailey has attacked Liz Truss’ mini-budget, saying the Monetary Policy Committee had no advance warning of the measures. He said there was “no formal communication of the sort we normally have”, describing it as an “extraordinary process”. Ms Truss and her chancellor, Kwasi Kwarteng, decided not to involve the Office for Budget responsibility in their fiscal event, something wich Mr Bailey said “underlined the lack of structured presentation and communication.
Speaking to the House of Lords Economic Affairs Committee, the Governor of the Bank of England (BoE) said: “It was not at all clear to me what was going to be in that statement.”
While Mr Bailey had some idea of the measures that had been “preannounced and trailed around”, there were parts of the budget that he said the Monetary Policy Committee “had no idea” were coming.
The so-called mini-budget, unveiled in September, caused chaos in the markets.
Ms Truss’ proposals included cutting the basic rate of income tax from 20 to 19 percent and abolishing the 45 percent top rate of tax.
In the wake of the announcement, the pound fell to a record low against the dollar, while borrowing costs reached their highest levels since August 2008.
The BoE was forced to intervene over a “material risk” to the UK economy, announcing it would start buying bonds in order to stabilise what it described as “dysfunctional markets”.
Speaking to the Lords Economic Affairs Committee, Mr Bailey said: “We did not know what was going to be in the statement.
“We had some ideas, and some things were sort of better ideas than others, but I’m afraid there were parts of it that we had no idea. Some bits of it had been preannounced and trailed around.”
He added: “There was no formal communication of the sort we normally have. It was quite an extraordinary process in that sense.
“And just to reiterate the point, the absence of the OBR part of that underlined that lack of structured presentation and communication.”
Ms Truss resigned in October after being forced to admit that she could not “deliver the mandate on which [she] was elected by the Conservative party”.
This came after most of the measures in her mini-budget were reversed by Chancellor Jeremy Hunt.
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According to the Resolution Foundation, Ms Truss’s mini-budget cost the country a staggering £30billion.
In an interview with the BBC, the former Prime Minister apologised for her budget, saying the Government “went too far and too fast”.
She said: “I do want to accept responsibility and say sorry for the mistakes that have been made.
“I wanted to act to help people with their energy bills to deal with the issue of high taxes, but we went too far and too fast
“I put in place a new chancellor with a new strategy to restore economic stability.”
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