The Bank of England’s chief economist has urged people to accept they are poorer, warning inflation risks remaining stubbornly high.
Huw Pill told a podcast that people and businesses have responded to higher bills and costs by asking for higher wages or charging their customers more money.
His remarks echoed warnings from Bank governor Andrew Bailey that large wage and further cost increases damage the Bank’s efforts to cool inflation.
The headline measure, the consumer prices index (CPI), remains above 10% despite consecutive interest rate increases since December 2021 to help cool demand, and therefore the pace of price growth in the economy.
While much of the inflation can be attributed to factors outside the Bank’s control, such as energy and food costs, it is worried about the ability of secondary effects, such as wage increases, making its job more difficult.
Its argument has consistently been dismissed by unions seeking pay deals to help cushion their members from the cost of living crisis.
Inflation is due to ease naturally, and sharply in the coming months, when the effects of the first big energy bill hikes are stripped out of the inflation data.
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But the latest official figures showed higher wage increases than expected by economists, causing financial markets to price in that the Bank of England would respond with a further interest rate rise next month.
Mr Pill told the Columbia Law School’s Beyond Unprecedented podcast: “The UK, which is a big net importer of natural gas, is facing a situation where the price of what you’re buying from the rest of the world has gone up a lot, relative to the price of what you’re selling to the rest of the world, which is mainly services in the case of the UK.
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Image: Huw Pill is the Bank of England’s chief economist
“You don’t need to be much of an economist to realise that if what you’re buying has gone up a lot relative to what you’re selling, you’re going to be worse off.
“So, somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices whether through higher wages or passing energy costs on to customers etc.
“What we’re facing now is that reluctance to accept that, yes, we’re all worse off and we all have to take our share; to try and pass that cost onto one of our compatriots and saying, ‘we’ll be alright, but they will have to take our share too’.
“That pass-the-parcel game that’s going on here, that game is one that’s generating inflation, and that part of inflation can persist.”
Britain is at the lowest risk of a winter power blackout than at any point in the last six years, the national electricity grid operator has said.
Not since the pre-pandemic winter of 2019-2020 has the risk been so low, the National Energy System Operator (NESO) said.
It’s thanks to increased battery capacity to store and deploy excess power from the likes of windfarms, and a new subsea electricity cable to Ireland that came on stream in April.
The margins between expected demand and supply are now roughly three gas power stations greater than last year, the NESO said.
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Renewables overtake coal for first time
It also comes as Britain and the world reached new records for green power.
For the first time, renewable energy produced more of the world’s electricity than coal in the first half of 2025, while in Britain, a record 54.5% of power came from renewables like solar and wind energy in the three months to June.
More renewable power can mean lower bills, as there’s less reliance on volatile oil and gas markets, which have remained elevated after the invasion of Ukraine and the Western attempt to wean off Russian fossil fuels.
“Renewables are lowering wholesale electricity prices by up to a quarter”, said Jess Ralston, an energy analyst at the Energy and Climate Intelligence Unit (ECIU) thinktank.
In a recent winter, British coal plants were fired up to meet capacity constraints when cold weather increased demand, but still weather conditions meant lower supply, as the wind didn’t blow.
Those plants have since been decommissioned.
But it may not be all plain sailing…
There will, however, be some “tight” days, the NESO said.
On such occasions, the NESO will tell electricity suppliers to up their output.
The times Britain is most likely to experience supply constraints are in early December or mid-January, the grid operator said.
The NESO had been owned by National Grid, a public company listed on the New York Stock Exchange, but was acquired by the government for £630m in 2023.
A woman accused of stalking Madeleine McCann’s parents shouted: “Why are you doing this to me?” and was led away in tears by officers, during her trial.
Giving evidence against 24-year-old Julia Wandelt, Mrs McCann said her first contact with the Polish woman happened “about three years ago”.
Wandelt insisted that she was Madeleine, who went missing in Portugal in 2007, while stalking the missing girl’s parents by sending emails, calling them and turning up at their address, prosecutors allege.
Image: Wandelt claims to be missing Madeleine McCann (pictured)
Wandelt is accused of one count of stalking causing serious alarm and distress to Mrs McCann and Gerry McCann between June 2022 and February this year. She denies stalking.
She is on trial with 61-year-old Karen Spragg, from Cardiff, who is accused of the same offence and also denies the offence.
Speaking from behind a blue curtain screening her from the dock at Leicester Crown Court, Mrs McCann spoke about the defendants visiting her home address in Leicestershire on 7 December last year.
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Image: A court sketch of Karen Spragg (left) and Julia Wandelt (right), with Kate McCann sitting behind a blue curtain. Pic: PA
Mrs McCann told the court that Wandelt had been “pleading” with her, asking why she wouldn’t agree to do a DNA test.
Spragg, who accompanied Wandelt, was “slightly more aggressive”, asking her whether she didn’t want to find her daughter, Mrs McCann added.
“I told them to leave. I told them I was distressed,” she told the court.
Image: Karen Spragg arrives at Leicester Crown Court. Pic: PA
Asked how the incident had made her feel, Mrs McCann added: “I felt quite distressed to be honest. I think I had been on edge anyway because of the recent communications from her.”
After Mrs McCann had given her first round of evidence, Wandelt was led away from the dock after sobbing loudly and shouting: “Why are you doing this to me?”.
Mrs McCann told the jury that Wandelt had been “incessant” with her messages, which left her with a “little niggle” about doing a DNA test.
Image: Kate and Gerry McCann are pictured in 2012 with a missing poster depicting an age progression computer-generated image of Madeleine. Pic: AP
She said part of her brain was “saying ‘what if'” because of Wandelt’s frequent messages, but added: “Having seen a photo of her, she’s Polish … it doesn’t make sense.”
“I can’t say what Madeleine looks like now, but if I saw a photo of her, I would recognise her,” she said.
But she added that the “persistance” of Wandelt’s behaviour started to “get to” her, making her “almost [want] a DNA test to put it to bed”.
Asked about the impact on her between June 2022, when Wandelt first made contact, and February this year, when the 24-year-old was arrested, Mrs McCann said: “I feel like it has escalated, the level of stress and anxiety it’s caused me has increased over that time.”
She added that she has felt “more relaxed” since Wandelt’s arrest.
Gerry McCann told the court he answered the phone to Julia Wandelt on one of the many occasions that she tried to call Kate. He said he told Wandelt: “You’re not Madeleine.”
He said: “I made it very clear these were unwanted calls. To be honest, it was a bit of a blur.”
There’s no question that Kemi Badenoch’s on the ropes after a low-energy first year as leader that has seen the Conservative Party slide backwards by pretty much every metric.
But on Wednesday, the embattled leader came out swinging with a show-stopping pledge to scrap stamp duty, which left the hall delirious. “I thought you’d like that one,” she said with a laugh as party members cheered her on.
A genuine surprise announcement – many in the shadow cabinet weren’t even told – it gave the Conservatives and their leader a much-needed lift after what many have dubbed the lost year.
Image: Ms Badenoch with her husband, Hamish. Pic: PA
Ms Badenoch tried to answer that criticism this week with a policy blitz, headlined by her promise on stamp duty.
This is a leader giving her party some red meat to try to help her party at least get a hearing from the public, with pledges on welfare, immigration, tax cuts and policing.
In all of it, a tacit admission from Ms Badenoch and her team that as politics speeds up, they have not kept pace, letting Reform UK and Nigel Farage run ahead of them and grab the microphone by getting ahead of the Conservatives on scrapping net zero targets or leaving the ECHR in order to deport illegal migrants more easily.
Ms Badenoch is now trying to answer those criticisms and act.
At the heart of her offer is £47bn of spending cuts in order to pay down the nation’s debt pile and fund tax cuts such as stamp duty.
All of it is designed to try to restore the party’s reputation for economic competence, against a Labour Party of tax rises and a growing debt burden and a Reform party peddling “fantasy economics”.
She needs to do something, and fast. A YouGov poll released on the eve of her speech put the Conservatives joint third in the polls with the Lib Dems on 17%.
That’s 10 percentage points lower than when Ms Badenoch took power just under a year ago. The crisis, mutter her colleagues, is existential. One shadow cabinet minister lamented to me this week that they thought it was “50-50” as to whether the party can survive.
Image: (L-R) Shadow business secretary Andrew Griffith, shadow environment secretary Victoria Atkins and shadow housing secretary Sir James Cleverly. Pic: PA
Ms Badenoch had to do two things in her speech on Wednesday: the first was to try to reassert her authority over her party. The second was to get a bit of attention from the public with a set of policies that might encourage disaffected Tories to look at her party again.
On the first point, even her critics would have to agree that she had a successful conference and has given herself a bit of space from the constant chatter about her leadership with a headline-grabbing policy that could give her party some much-needed momentum.
On the second, the promise of spending control coupled with a retail offer of tax cuts does carve out a space against the Labour government and Reform.
But the memory of Liz Truss’s disastrous mini-Budget, the chaos of Boris Johnson’s premiership, and the failure of Sunak to cut NHS waiting lists or tackle immigration still weigh on the Conservative brand.
Ms Badenoch might have revived the room with her speech, but whether that translates into a wider revival around the country is very hard to read.
Ms Badenoch leaves Manchester knowing she pulled off her first conference speech as party leader: what she will be less sure about is whether it will be her last.
I thought she tacitly admitted that to me when she pointedly avoided answering the question of whether she would resign if the party goes backwards further in the English council, Scottish parliament and Welsh Senedd elections next year.
“Let’s see what the election result is about,” was her reply.
That is what many in her party are saying too, because if Ms Badenoch cannot show progress after 18 months in office, she might see her party turn to someone else.