‘Welsh households paying the price for Westminster inaction’ after interest rate hike says MP

Wales is paying the price for Westminster’s inaction in controlling inflation, a Welsh Mp has said.

The Bank of England announced today that it would hike interest rates to 1% as it warned the economy will go into reverse and that inflation will peak at more than 10%.

Plaid Cymru’s Treasury spokesperson Ben Lake MP called for an emergency Budget when Parliament returns for the Queen’s Speech next week in order to tackle the cost of living crisis.

He said: “The writing was on the wall at the Spring Statement but the Chancellor chose to do nothing. The wheels are coming off the Tory spin bus and Welsh households will pay the price for Westminster inaction.

“After months of glossy reports and headline grabbing, the reality is that we face a long-term cost of living crisis. As my colleague Liz Saville Roberts has noted, we need an emergency budget after the Queen’s Speech to set in place support for businesses and households ahead of an Autumn of further price hikes.

“More long-term, the UK Government needs clearer delivery mechanisms that work with, rather than against, devolution to ensure equitable levelling up, a faster green transition and informed decision-making.

“The pandemic has shown that when Wales has the tools it delivers – now is the time for Westminster to listen and give us the tools to support our economy, businesses and communities.”

‘Large shocks’

Members of the Bank of England’s nine-strong Monetary Policy Committee voted 6-3 to increase rates from 0.75% to 1% – the fourth time they have voted for a rise in a row and taking rates to a level not seen since 2009.

Three members called for a bigger increase to 1.25% due to worries over rocketing inflation, with the Bank ramping up its forecast for Consumer Prices Index (CPI) inflation to rise from 7% currently to over 10% in October – its highest level for 40 years – due to soaring energy prices.

In minutes of the latest decision, the Bank said further rate hikes will likely be needed to cool rampant inflation.

It said: “The UK economy had recently been subject to a succession of very large shocks and disturbances. Russia’s invasion of Ukraine was another such shock.”

Rising costs will hammer household and business finances, but the Bank said “this was something monetary policy was unable to prevent”.

Most of the Bank’s policymakers believe “some degree of further tightening in monetary policy might still be appropriate in the coming months”, the Bank added.

The update sent the pound, which had been positive against other major currencies earlier in the day, sharply lower.

The pound was 0.8% lower at 1.240 against the US dollar and it was 0.9% lower at 1.174 against the euro.