UK chancellor backs cutting inflation, even if it spells recession

Chancellor Jeremy Hunt batted off any speculation that policymakers would stray from higher interest rates if it meant avoiding a recession, suggesting he was “comfortable” with the prospect.

In an interview with Sky News on Thursday, Hunt stressed the importance of bringing down inflation rates in the UK, which fell from 10.1% to 8.7% between March and April.

When asked if he was “comfortable with the Bank of England doing whatever it takes to bring down inflation”, Hunt replied, “yes, because inflation is a source of instability”.

“We have to support the Bank of England in the difficult decisions they take,” he added, following repeated interest rate hikes which added up to 4.5% from mid-May. “There’s nothing automatic about bringing down inflation,” Hunt then warned.

Sky economics editor Ed Conway then prompted “even if it means precipitating a recession”, to which Hunt responded, “we will deliver this task and we will make sure the government plays its part”.

“It is not a trade-off,” Hunt reassured, but reiterated “the only path to sustainable growth is to bring down inflation”.

The consumer price index (CPI) fell less than expected between March and April, with city estimates having placed the figure at 8.2%.

Core CPI, which excludes energy, food, alcohol and tobacco, rose unexpectedly meanwhile, jumping from 6.2% in the 12 months to March, to 6.8% in April.

Hunt’s comments echoed government promises made in January to halve inflation by the end of the year, which would mark an over five percentage point-drop from the 10.5% recorded in early 2023.