Bank may need to ‘create a recession’ to halt inflation, says adviser to chancellor

Government borrowing outstrips 100 per cent of GDP for the first time since 1961

Further interest rates are now inevitable, economists warn (PA Archive)

The Bank of England might need to spark a recession to get inflation under control, an adviser to Chancellor Jeremy Hunt warned on Wednesday amid a slew of grim economic data – including government borrowing surpassing 100 per cent of GDP for the first time since 1961.

Karen Ward, an economist with JP Morgan, said that inflation might persist because of a price-wage spiral, where companies hike prices and workers demand pay rises.

“The difficulty for the Bank of England – I mean, no one envies them their job at the moment – is they have to therefore create a recession,” Ms Ward, who sits on the Chancellor’s economic advisory council, told BBC Radio 4.