The Bank of England's chief economist has said that people in the UK have to "accept that they're worse off" amid the cost of living crisis.

The former Goldman Sachs employee, whose annual salary stands at around £190k, stated that people should avoid trying to maintain their spending power by asking for wage rises, or in the case of businesses by passing costs on to customers.

A study by the Economic Policy Institute in the U.S found corporate profits were the biggest driver of inflation, rising from a 13 per cent contribution in normal times to around 33 per cent since the second quarter of 2020.

Research by the union Unite found that in the UK profit margins for the FTSE's biggest listed companies were 73% higher in 2021 than pre-pandemic levels in 2019 despite lower sales.

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Even removing energy companies from the tally, average profit margins still jumped 52% according to the research.

Unite found that just 8.3% of inflation was due to labour costs, while the jump in profits contributed 58.7%.

Mr Pill said on the Beyond Unprecedented podcast: "Somehow in the UK, someone needs to accept that they're worse off and stop trying to maintain their real spending power by bidding up prices, whether through higher wages or passing energy costs on to customers etc.

"What we're facing now is that reluctance to accept that, yes, we're all worse off and we all have to take our share; to try and pass that cost onto one of our compatriots and saying: 'We'll be alright, but they will have to take our share too'.

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"That pass-the-parcel game that's going on here, that game is one that's generating inflation, and that part of inflation can persist."

The Bank of England's governor Andrew Bailey last year urged workers not to ask for big wage increases to help curb inflation.

The banker, who earns around £575,000 per year, said: "We do need to see a moderation of wage rises, now that's painful. I don't want to in any sense sugar that, it is painful. But we need to see that in order to get through this problem more quickly."

He later urged businesses to avoid price rises as inflation "hurts people".

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