Kwasi Kwarteng has dismissed those calling for a recession to end the inflation crisis as “mad”.
Speaking to GB News just days after the Bank of England hiked interest rates by 0.5 percentage points to 5 per cent, the Conservative MP warned it would be irresponsible to cause a recession to help curb price rises.
He said: “It’s mad. But let me be very clear, I don’t think that’s the corporate view.
“I just think there are one or two. You hear whisperings.”
His intervention comes after one of Jeremy Hunt’s economic advisers suggested the Bank of England needed to “create a recession” to get rampant inflation under control.
Earlier this week Karen Ward, who is the Chancellor’s chief market strategist for Europe and UK, had suggested that an economic downturn was necessary to get a grip on the current economic situation.
Last month Hunt also said he was “comfortable” with a recession if it helped to take inflation closer to 2 per cent.
Responding to the remarks today, Kwarteng said: “I don’t know what Jeremy [Hunt] meant by his remarks but to openly will a recession when you’re responsible for an economy is not responsible.”
While he said he didn’t think Treasury officials were “actively” pushing for recession, he warned: “I think there will be one or two people who think ‘actually a recession would probably be quite a good idea because then we would deal with inflation’.”
The former Chancellor warned many in the Treasury and Bank of England bought into the same “orthodox” thinking about the economy.
He continued: “I’m very struck by the fact that nobody is talking about growth.
“We’re always fire-fighting, we’re always talking about obviously having to deal with inflation, we’ve got to put up interest rates to do that.
“The whole growth agenda has been sidelined.”
The Spelthorne MP rejected criticisms that the mini-budget he presented to Parliament last Autumn had been responsible for the current rate of inflation and interest rates.
He said: “At the end of November 2021, which wasn’t a million years ago it was only 18 months ago, the interest of the Bank rate was at 0.1 per cent and what we had was huge public spending because of Covid.
“As Rishi Sunak observed, I remember talking to him when he was Chancellor, inflation was a problem.
“And I’m afraid I’m one of those who thinks the Bank was a bit slow in reacting to it and in fact, Andrew Bailey himself acknowledged he and his colleagues had made a mistake in terms of their forecasts.”
