While Liz Truss and Rishi Sunak battle for the Conservative party leadership, millions of households across the country are faced with a looming recession as inflation hit a 40-year high at 10.1 percent. The former member of the Bank of England’s Monetary Policy Committee said that the country is “on the edge of a precipice” as it is headed into a deep recession.
He claimed that the current financial predictions are “hugely optimistic” and developments in the markets will, in fact, be “much worse”.
Mr Blanchflower stressed: “It appears that the policymakers once again, messed up, haven’t got it right, haven’t seen what’s coming, and the harsh reality is going to hit them in the face.”
The economist and Dartmouth College professor spoke over the upcoming recession and the two candidates’ policy strategies, calling Liz Truss’ tax cuts proposals a “joke”.
He told Bloomberg Radio: “The reality is that nothing that they have said, goes anywhere close to dealing with the problem that’s coming.
However, Rishi Sunak has insisted he still has a “shot” at being the next prime minister, warning his rival’s tax-cutting plans could fan the flames of inflation.
Mr Sunak said his less radical plans are honest and deliverable, as economists said weak public finances mean large tax cuts are implausible.
Moreover, he rejected Labour’s proposal to freeze energy costs, partly to be paid for by a new windfall tax on oil and gas giants’ soaring profits, saying that would be a “very blunt instrument”.
He argued it would provide “a lot of support for people who don’t need it”, and warned that borrowing during high inflation would be “really risky”.