Larry Summers says departure from EU ‘contributed to higher inflation’ and calls economic policy ‘substantially flawed’
In a stark critique of Britain’s management of the economy, Summers did not spare the Bank of England. He blamed the central bank for higher levels of inflation, saying these were “reinforced by very ill-judged monetary policies that were substantially too expansionary for too long”.Asked if the Bank would be right to keep raising interest rates in order to tackle persistently high inflation, Summers said he believed this was the right path, even if it may not seem palatable.
“There is a lesson from experiences we have all had,” he said, comparing it to treatment for illness. “Usually when you are prescribed a course of medication, even if the drugs are not so pleasant themselves, and even if they possibly have some side effects, it’s usually better is to take the whole course of medicine, the first time it’s prescribed, than to stop taking the medicine early and wish a recurrence of the underlying infection.
Summers said he did not want to forecast the trajectory of the UK economy, and would leave this to British experts, but said he would “be surprised if two more years passed without the UK entering into recession”. Lower growth, coupled with higher inflation, was a “real concern in much of the industrialised world,” Summers added.
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