Public satisfaction with Bank of England falls to lowest on record
Public satisfaction with the Bank of England’s way of keeping inflation under control has fallen to all-time lows as most Britons expect prices to continue to rise sharply over the next five years, according to official data released on Friday. published.
In May, 28 percent of the British population was dissatisfied with the central bank’s handling of inflation, its own survey found. In April, UK consumer price growth soared to a 40-year high of 9 percent, the highest among the G7 countries.
With 25 percent satisfied with the BoE’s performance, net satisfaction fell to minus 3 percent, down from 6 percent when the question was last asked in February, and the lowest since registration began more than two decades ago.
The BoE figures also showed that 59 percent of the British population expected inflation to remain above 2 percent in the long term, while more than a third expected inflation to rise above 4 percent in the longer term. This is the highest percentage since the measurements started in 2009.
Adrian Lowery, financial analyst at investment platform Bestinvest, said the data means “people don’t believe the Bank of England will succeed in bringing inflation back to its 2 percent target in a few years.”
The findings also provide an indication of how entrenched inflation could become, contributing to a further rise in interest rates at the BoE monetary policy meeting next week. Markets expect the central bank to raise interest rates by 25 basis points for the fifth consecutive time.
Higher inflation expectations among employees could lead to higher wage demands and thereby potentially exacerbate the inflation spiral, especially in a tight labor market. High inflation has already led to transport workers announcing strikes and public sector unions threatening action.
The BoE said it could not comment as it was in its “quiet period” prior to the MPC decision. Last month, however, Governor Andrew Bailey told MPs he couldn’t keep inflation from hitting double digits this year. “To predict 10 percent inflation and say there’s not much we can do about it is extremely difficult to be,” he said. “This is a bad situation to be in.”
Separate figures released on Friday showed the vast majority of consumers are concerned about the cost of living crisis, resulting in budget cuts, increased anxiety and lower well-being.
In the month to May 22, 77 percent of the British population said they felt very or somewhat concerned about the rising cost of living, according to data released Friday by the Office for National Statistics.
The proportion rises to 90 percent for parents with young children, and similar rates are reported among ethnic minorities and house renters.
People concerned about the cost of living reported much higher levels of anxiety and generally lower well-being, including lower happiness, life satisfaction, and a sense that life is worth living.
Nearly two in three people said they were cutting back on non-essentials and two in five said they were spending less on food, the ONS data showed.
Another 40 percent had made fewer non-essential trips and the majority of the population said they use less gas and electricity at home.
This bolsters expectations of another economic slowdown as forecast by the OECD, which this week lowered its 2023 UK growth forecast to zero, the lowest in the G20 excluding Russia. Official figures released on Monday are expected to show that the economy barely grew in April, after stagnating in February and March.