Inflation threat is biggest since Black Wednesday, warns Andy Haldane

Andy Haldane expects that the UK economy “will move from bounce-back to boom without passing ‘go’” JASON ALDEN/GETTY IMAGES

Thursday June 10 2021, 12.01am BST, The Times

The Bank of England is facing its biggest policy challenge since Black Wednesday because of the looming threat of inflation, its chief economist has warned.

Britain risks an economically impoverishing 1970s-style inflation spiral if the Bank does not act quickly to bear down on prices as the country rebounds from the Covid-19 pandemic, Andy Haldane said yesterday. “In my view this is the most dangerous moment for monetary policy since inflation-targeting was first introduced into the UK in 1992 after the European Exchange Rate Mechanism debacle,” Haldane wrote in the New Statesman.

Black Wednesday in 1992 led to the UK crashing out of the rate mechanism and interest rates hitting 12 per cent.