On June 24, 2022, Union Jack flags are seen in front of the Elizabeth Tower, known as Big Ben, beside the Houses of Parliament in London. FRANK AUGSTEIN AP LONDON Prime Minister Boris Johnson came under criticism on Monday for allowing a political vacuum at the heart of his government to threaten an even deeper economic crisis in Britain before his successor takes office in September.
Britain is bracing for a long recession as energy prices surge to unprecedented levels, leaving millions of people at risk of economic hardship.
The political response has been overshadowed by a leadership campaign to find a new prime minister that runs until Sept 5, with candidates Liz Truss and Rishi Sunak arguing over how far they will cut taxes, and when. The favorite, Truss, said she does not favor handouts and Gordon Brown, a Labour prime minister during the 2008 financial crash, warned that the country was facing an economic time bomb if it did not draw up a plan for the difficult winter ahead.
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This week is the key week, Brown told LBC Radio, the government should work with the two leadership contenders before energy bills rise by an expected 70 percent in October.
The first minister of Scotland, Nicola Sturgeon, told Johnson in a letter that the paralysis had to stop now.
The business lobby group, the Confederation of British Industry, said that the new government would need a plan in place for when it takes over.
Director General Tony Danker said that we simply can't afford a summer of government inactivity while the leadership contest takes place.
The Bank of England raised interest rates by the most in 27 years to tackle inflation that is poised to reach 13 percent, a scale of the economic hit facing Britain, even as it warned of a long recession.
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On November 1, 2017, Pedestrians walk past the front of The Bank of England in the City of London. DANIEL LEAL-OLIVAS AFP Energy regulator Ofgem will publish its next price cap on August 26, with average household prices expected to increase from 1,277 pounds $1,547. It was 47 at the beginning of the year, to around 3,400 pounds in October, and will rise again in January.
With energy prices predicted to stay high, the central bank said Britain is facing its biggest slump in living standards since records began in the 1960s.
Johnson's government set out a 15 billion pound package of support in May, but wholesale energy prices have gone up since then, according to Sunak at the Treasury.
Johnson's spokesman said on Monday that it would be up to the next British leader to decide whether further support was needed.
The opposition Labour Party criticized Johnson and his finance minister, Nadhim Zahawi, for going on holiday as the economy deteriorated, dubbing it a zombie government that has checked out of office.