UK’s Johnson: higher public spending and wages risk fanning inflation

LONDON (Reuters) – British Prime Minister Boris Johnson on Thursday said that the surge in inflation meant the government could not simply spend more to support people through the cost-of-living crisis, and to increase wages sharply would risk fuelling further price rises.

Johnson said it was right that the government increased spending during the COVID crisis but a strong and healthy economy would not emerge if it carried on in the same way.

“When you face inflationary pressure, you can’t just spend your way out of it. On the contrary, you have to be careful not to add to inflationary pressure,” Johnson said in a speech in north-west England, adding that increasing wages to match inflation risked a wage-price spiral.

“When a country faces an inflationary problem, you can’t just pay more and spend more. You have to find ways of tackling the underlying causes of inflation.”

(Writing by William Schomberg)