Churches should consider setting up benevolence funds to help members struggling with the cost of living crisis, a Christian economist has urged, as inflation proves more persistent than expected.
Former IMF economist and Treasury manager of government debt, Dr Paul Mills said the step was needed for those on fixed incomes or losing their jobs.
“Christians can help out through making sure vulnerable people are protected and looked after in churches”, he told Premier Christian News. “Congregations, make sure you've got a benevolence fund in your church”, he said “and the better off can contribute to that so that churches can help out.”
He was speaking after comments by an advisor to the Chancellor Jeremy Hunt said the Bank of England might need to spark a recession to finally get rising prices under control.
Latest figures published today saw inflation stuck at 8.7% in May, with prices worse at the shopping till, hitting over 18 per cent. The Bank of England's target from the government is to get inflation down to 2 per cent.
“The concern is that inflation remains sticky”, Paul Mills said, “and expectations were that it was going to fall as petrol prices have come down. But it hasn't”.
“If anything, what's called core inflation, that’s the price of services that aren't affected by volatile food and energy costs, that’s has gone up”, he continued. “And so it looks as though inflation is becoming embedded.”
Speaking to BBC Radio 4's Today programme, the Chancellor's economic advisor, Karen Ward of J.P Morgan, said the Bank of England has to interrupt this spiral by creating a recession.
"They have to create uncertainty and frailty, because it's only when companies feel nervous about the future that they will think 'Well, maybe I won't put through that price rise', or workers, when they're a little bit less confident about their job, think 'Oh, I won't push my boss for that higher pay'”, she said.
Commenting on this economic strategy, Dr Mills said the aim of such a policy is for unemployment to go up to restrain wages.
“What is being proposed is that interest rates go up, then demand in the economy falls as people save more, spend less, borrow less”, he explained.
“And the expectation is that that will then reduce wages and prices, or the rise in them to try and get inflation down. When they say spark a recession that effectively means, start getting unemployment up higher than it would otherwise be”, he said.
Warning that the public has yet to see pain that is coming through the economy from interest rate rises, Paul Mills said it would help to pray for the nation, but then for medium to long-term steps to turn things around.
“Trying to get less debt in the economy, both for government for households”, he proposed, “and try and reduce prices where we can,” by “removing government subsidies.” He said this should include “removing subsidies for green energy”, which “would be one of the easiest things to do to get energy prices down”.
The Monetary Committee of the Bank of England is expected to increase interest rates when it meets on Thursday.