Why the Bank of England can’t fix inflation being driven by Brexit, war and a Covid hangover

The UK economy is in trouble – it is time the government stepped in to help the Bank get rising prices under control, writes Sean O’Grady

The Bank of England has raised interest rates for the 13th time in a row. The base rate now stands at 5 per cent, up from 4.5 per cent (PA Archive)

Britain’s problem isn’t so much that it now has runaway inflation but that it’s the wrong kind of inflation altogether. It’s therefore being fought in the wrong way.

Of course, if the governor of the Bank of England, Andrew Bailey, pleaded that, he’d be ridiculed. But it is nonetheless true, and it means that the weapons that are being used to fight inflation are the wrong ones, and, like clunky trebuchets being used to take on a fighter jet, belong to a previous age. No wonder the Bank of England’s economic levers aren’t working. They’re barely even plugged in.

We should at least recognise that fact, and understand why interest rate rises are going to be much more painful in the months ahead. People will be made homeless needlessly, their lives destroyed. It need not be that way.