LONDON (BBC) - The UK faces a “more difficult” era of austerity than the one following the financial crisis in order to stabilize the economy, a former governor of the Bank of England has warned.
Lord Mervyn King said the average person could face “significantly higher taxes” to fund public spending.
Chancellor Jeremy Hunt is scheduled to set out his economic plans on 31 October.
He has already scrapped almost all the tax cuts announced under Liz Truss.
Hunt has said: “This government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances.
“That means decisions of eye-watering difficulty.”
Speaking on Sunday with Laura Kuenssberg, Lord King said that “it is time to front up” with the public about the difficulties the country is facing.
He said “public expenditure isn’t going down if anything it will go up therefore taxes will have to rise to fill the gap which is there at present”.
“That doesn’t make a very happy picture for the next few years,” said Lord King.
“But what we need is a government that will actually tell us honestly there is a reduction in our national standard of living because we’ve decided to help Ukraine and confront Russia and that means that all of us are going to have to share the burden, we can’t just put all of it on our children and grandchildren.”
Asked if the UK could be facing a similar period of austerity that was introduced by the then Chancellor George Osborne in 2010, Lord King said: “In some ways it could be more difficult.”
He said: “The challenge is if we want European levels of welfare payments and public spending, you cannot finance that with American levels of tax rates, so we may need to confront the need to have significantly higher taxes on the average person.
“There isn’t enough money there among the rich to get it back.”
Uncertainty remains, however, about public spending, as the Conservative Party undertakes another leadership race to choose a leader and prime minister to replace Ms Truss.
Last week, Ms Truss said she was committed to a Tory manifesto pledge in 2019, made by the then Prime Minister Boris Johnson, to raise pensions in line with prices.
The triple lock means state pension payments rise by whatever is higher - inflation, average earnings or 2.5%.