Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory and asset management organisations with $14 billion under advisement, has urged the Bank of England to acknowledge the growing risk of stagflation in the UK. Green criticised the central bank’s narrative, which currently frames the situation as solely an “unavoidable” inflation problem driven by external shocks. This warning comes as the Bank of England’s Monetary Policy Committee maintained interest rates at 3.75%, despite inflation rising to 3.3% in March and expectations for it to increase further this year due to escalating geopolitical tensions in the Middle East and surging energy prices.
Green argues that focusing only on inflation misses a “bigger and more dangerous picture” for the UK economy. He explains that energy-driven inflation is a classic indicator of stagflation, simultaneously pushing prices higher while weakening growth. This scenario forces consumers to spend more on essentials, businesses to face rising input costs, and ultimately slows investment. The UK economy, already grappling with sluggish growth, weak productivity, and a prolonged cost-of-living squeeze, is particularly vulnerable to this renewed inflationary impulse.
The deVere Group CEO highlights the policy dilemma facing the Bank of England. Raising rates to combat inflation risks stifling already fragile growth, while cutting rates to support the economy could embed inflation further. Green stresses that “honesty” about the stagflation risk is crucial for central bank credibility and for investors. Markets are already adjusting, scaling back expectations for aggressive rate cuts as they reassess monetary policy in light of persistent inflationary pressures driven by structural and geopolitical factors that are difficult to manage.
