Britain needs growth. Instead, the BoE is deliberately causing a recession

Despite Hunt’s relentless tax onslaught our national debt continues to grow and is now more than double our annual income. The only way solution is to inject some sustainable growth into the economy, yet instead we are doing the opposite.

Many of today’s political and monetary polices seem to be deliberately destroying our growth prospects.

A key reason why UK inflation has been so high is that we import most of our energy, which means we’ve been hit harder than most by rocketing wholesale gas prices.

We should be going flat out to boost our energy supply, instead we’re scaring away investment by slapping windfall taxes on any North Sea oil operator that dares to makes a profit.

Climate change is a real threat and many on the right have done themselves a disservice by pretending otherwise.

I have no truck with the deniers.

But our ailing economy is an even more immediate threat. It will blight the lives of millions and threaten social cohesion until we can get it growing again.

The NHS, the state pension, our defence budget, roads, and everything else society needs will all deteriorate unless we make enough money to pay for them.

Liz Truss was right to identify growth as the nation’s number one priority, but her rash solutions did more harm than good.

Today, we find ourselves in an even weirder situation, as the UK’s central banker seems determined to engineer a recession, when what we need is the opposite.

Despite signs that inflation is on the retreat, the Bank of England remains hellbent on hiking interest rates again and again just to make sure.

Governor Andrew Bailey made the mess of a lifetime when he claimed in the summer of 2021 that looming inflation was “transitory”, despite warnings from all sides.

He has caught so much flak since then that now he is racing in the opposite direction, by hiking interest rates higher than they need to go.

The BoE’s rate-setting monetary policy committee (MPC) has already increased bank rate for 13 successive meetings to today’s five percent.

Despite last week’s higher-than-expected drop in inflation to 7.9 percent in June, the MPC is expected to hike base rates again at its next meeting on August 3, potentially to 5.5 percent.

Markets believe it hike by another 25 basis points both in September and November, taking bank rate to six percent by year end.

This will kill any hopes of meaningful growth and worsen the mortgage crunch in a disaster for millions of homeowners whose dirt-cheap fixed-rate mortgages are set to expire.

Bailey and the MPC should show some true courage for once, and hold fire. Monetary policy acts with a time lag. Today’s higher interest rates are only starting to feed through to the mortgage market. There is no point thrusting more medicine down our throats until we see whether the current dose is working.

READ MORE: ‘Good as it gets.’ Five things that are set to get better as inflation falls

Hiking borrowing costs will do little to reduce imported gas and food prices, except by making the pound a bit stronger.

They’re falling anyway, with petrol prices down sharply, too.

Yet they will pile yet more pressure on millions of consumers and businesses, who are paying for the BoE’s earlier mistakes.

The BoE thinks our pay rises are too generous, with earnings up 7.3 percent in May threatening a wage-price spiral. It wants to prevent that by making us poorer.

Basically, it wants Britons to lose their jobs, so workers have less bargaining power.

Yet hiking interest rates is actually making inflation worst, as cash-strapped workers push for higher pay to keep up with the cost of servicing their debts.

Our economy needs growth above everything. Instead, Bailey and the MPC are engineering a crash. They still have time to change course but I see another big policy error coming on. With the BoE, there always seems to be one just around the corner.