Bank of England chief economist Huw Pill on visit to Southampton

But Huw Pill, chief economist at the bank, has “reasons for optimism” as it emerges from the shadow of the pandemic and enjoys a recovery.

Mr Pill, who sits on the Monetary Policy Committee that decides interest rates, met businesses, voluntary organisations and a citizens’ panel on a visit to the city.

He spoke to shipping and logistics businesses which are contending with rising costs – and to people in the voluntary sector who were helping households on the breadline.

He warned that inflation could rise even higher in the coming months but pledged the bank would work to bring it down by raising interest rates while minimising damage to the recovery.

Asked about Southampton’s future, as it looks to freeport status and a bid to be UK City of Culture, he said: “I think there are reasons for optimism.

“We spoke to a couple of people in the retail sector, we spoke to some people in the city centre and I think it’s self-evident that there’s a hope that the City of Culture etc can be a real catalyst for shifting forward the way the city thinks about itself and the way it’s seen outside and as a catalyst for reviving some of the activity coming out of the inevitable slowdown that we’ve seen in some of the retail activities but also generally customer-facing activities.

“So I think having had a difficult period, as we’ve all had across the country with Covid and so forth, the pandemic, the lockdowns etc and of course compounded now by this cost of living pressure, it’s not an easy time but I think the recovery from the depths of the pandemic is an ongoing and still continuing recovery.

Huw Pill

“If you go back 18 months, that was not self-evident, that we’d be in the place we are today, so there’s some comfort to be drawn from that and I think looking forward there’s further recovery to come and I think Southampton is the beneficiary of that but also a contributor to it.”

He said of his talks with the voluntary sector: “The quote ‘heating or eating’ is something that was front and centre in the discussion and that’s a very real issue. And it’s a very real issue of course which people at the bank and the discussions at the Monetary Policy Committee recognise and see as a challenge but it was brought home a little bit through this type of discussion.

“We had some very concrete and immediate examples of what that means in practice.”

Mr Pill later spoke to a citizens’ panel at Southampton’s Central Hall, at which he heard about the problems facing ordinary people in the city. People spoke of rising utility bills and of struggling to make ends meet, with some taking two jobs.

The Bank of England is tasked with keeping inflation to two per cent, but soaring energy bills helped push it to 5.5 per cent in January.

Mr Pill said: “Inflation is uncomfortably high. I think unfortunately in the coming few months, inflation may be set to go a little higher because some of the impact of energy price increases that we’ve seen are still to feed through to utility prices.”

But he pledged that the bank would be looking to bring inflation down in a “measured way” and “in a way that doesn’t disturb the rest of the economy, growth and employment in a way that’s unnecessarily costly”.