Bank of England governor Andrew Bailey said he was sounding “pretty apocalyptic” about the risk of food like wheat and cooking oil being produced in Ukraine but not being able to get out
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The governor of the Bank of England today issued an “apocalyptic” warning that war in Ukraine could mean food shortages and prices soar.
Andrew Bailey used the eye-catching phrase when he admitted the situation was “very, very difficult” amid rising inflation.
And despite talks over whether rate hikes should be used to bring inflation under control, Mr Bailey admitted “there’s not much we can do, about 80% of it”.
The normally reticent bank boss said “Ukraine and Russia are in some ways the big risk,” including the risk of another energy price shock if gas and diesel supplies are disrupted.
Speaking to the Commons Treasury Committee, he added: “I’m afraid what I’m going to address in a rather apocalyptic way is food.
“So I was in Washington for the IMF-World Bank spring meeting… we had the Ukrainian finance minister there… I have to tell you that I find that very worrying.
“Because I think the finance minister said two things – one is that Ukraine has food in stock, but they can’t get it out at the moment.
“Secondly, while he was optimistic about growing crops, as you know, Ukraine is a major supplier of wheat and… edible oils… we have no way of shipping it as things stand and it’s only getting worse.” .
“This is a major concern – and I don’t just have to tell you a major concern for this country, it is a major concern for the developing world as well.
“Sorry to be apocalyptic at the moment, but that’s a big problem.”
It came as he claimed he was “sleeping at the wheel” because of inflation, claiming “we can’t predict things like wars.”
Mr Bailey said critics had the benefit of “hindsight” when faced with figures showing runaway inflation at 7%, with the rate tipping to 10% – despite the Bank’s abandonment of keeping it at 2% to keep.
The committee’s chairman, Mel Stride, told him: “The bank’s ability to predict inflation appears to have been pretty poor for some time.”
Mr Stride told him critics accused the bank of “sleeping at the wheel” and told the governor they felt “you should have done more on the monetary side and gotten a grip on inflation much sooner if you would have been wiser in what you were doing”.
Mr Bailey hit back: “I see comments with hindsight.”
Ukrainian state emergency service)
Pointing to supply-side “shocks” like backlogs, China’s “zero Covid” policy and Russia’s invasion of Ukraine, he told MPs: “We can’t predict things like wars, it’s really in our power – we’re not.” sure if it’s anybody’s power, really.”
Discussing the factors the bank uses when looking at the economy, he said: “World wheat prices are up almost 25% since I think we were here at the last hearing.
“So we use those prices and of course those prices therefore include a view of what might develop.
“But I have to tell you, based on what we’ve seen over the last year – and going back to our earlier discussion – there’s a lot of uncertainty, a lot of uncertainty about this situation.”
He added that spot prices for natural gas have fallen in the last month or so, but forward prices – on which the energy bill cap is based – have not.
He seemed to be predicting another big spike in bills on October 1st, saying: “I’m afraid we have a head start later this year”.
He added: “It’s very, very – more than uncomfortable, I’ll try to think of a word that’s even stricter – it’s a very, very difficult place for us.
“To forecast 10% inflation and then say…there’s not much we can do, about 80% of it.
“I can tell you, it’s an extremely difficult place. We need to recognize the reality of the situation we are facing.”
https://www.mirror.co.uk/news/politics/breaking-bank-england-governor-gives-26979296 Bank of England governor issues 'apocalyptic' warning of Ukraine war food prices