Jeremy Hunt tells Sky News that to loosen the purse strings significantly would exacerbate the inflation problem and keep interest rates higher for longer.
Asked if there were any circumstances in which he would consider increasing pay offers to avert more public sector pay strikes the Chancellor told Sky News:"It's not a no, but I'm saying we'll talk about absolutely anything, except things that will dig in the very high inflation that is causing people to see the cost of their weekly shop go up and the value of their wages erode.
Many economists dispute the argument that increasing public sector pay can entrench inflation, but Mr Hunt said it was a key factor in holding down pay.on Thursday who said that if you fund higher wage settlements through borrowing, that is inflationary, and that's why it's a very difficult situation. We want to get back into a situation where people's real wages are growing.
The Bank of England is forecasting a recession this year, albeit slightly less acute than previously, and forecast the UK will not recover to its pre-pandemic scale until 2026.
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