Bank of england

Helena Morrissey: my manifesto for the next govenor of the Bank of England

The start of term at Oxford University is bittersweet for the close-knit Morrisseys; we have just ‘lost’ three offspring to their undergraduate studies. Dropping them off at their colleges (Wadham, Christ Church and Keble, with another Morrissey at All Souls), my husband Richard and I felt a little wistful as well as proud. Every year we observe the striking diversity of the students in every sense bar one: they all seem very clever. Oxford is getting something right — broadening accessibility by contextualising offers, while unashamedly sticking to high standards. This is helping it maintain its crown as Britain’s highest-ranked university, one of four in the global top ten (the

Why Downing Street still hasn’t named a new Bank governor

Private secretary: ‘The Bank of England governorship, Prime Minister… opposition MPs have been saying it’s a political stitch-up and calling for the shortlist to be made public. Have you had time to look at the file?’ Boris, distracted: ‘Stitch-up piffle! I thought we’d picked my economist chum Gerard Lyons — very sound on Brexit.’ ‘Treasury wouldn’t have him, Prime Minister. They’re trying to fix it for one of their own, Sir John Kingman, former second permanent secretary, now chairman of Legal& General.’ ‘And weren’t we going to pad the list with women and, ah, minorities? Like Baroness Wossername?’ ‘You mean Labour peer Shriti Vadera, chair of Santander UK, Prime Minister?

Get ready for Boris vs the Bank of England

Westminster is, naturally, fixated on Boris Johnson and his first speech since his Conservative leadership victory. But it’s just possible that the most interesting and important speech of the day took place in Scunthorpe. That’s where Andy Haldane, chief economist of the Bank of England was delivering a speech called ‘Climbing the Jobs Ladder’. His speech was, nominally, about wage progression and the quality of employment. But about halfway through, the speech becomes something very different, something that looks an awful lot like a warning to a new prime minister: don’t bank on the Bank to bail you out over Brexit. Haldane’s argument is that the major downside risks to

The Bank’s search for a female governor is a good thing

If you’re a bloke in a suit who’d like to apply for the governorship of the Bank of England (deadline 5 June), I suggest you browse the website of Sapphire Partners, the headhunters appointed by Philip Hammond to conduct the search. Run by ex-JPMorgan banker Kate Grussing with an all-female team plus Cherie Booth and Lady (Barbara) Judge on its board, the firm declares: ‘We are trailblazers [as] advocated for women in business.’ You’ll probably already have read the job spec on the Cabinet Office website, which refers to candidates as ‘she/he’. None of which means a man can’t win; the Chancellor himself, in a recent select committee appearance, made

Is there any point listening to the Bank of England’s growth forecasts?

The Bank of England today downgraded its forecast for UK GDP growth in 2019 from 1.7 per cent (a forecast it made in November) to 1.2 per cent. That is a chunky fall, but really, does anyone really care? As I have pointed out here many times before, the Bank’s record for forecasting is pretty lousy. The past year has been no exception. What has caught my eye is just how over-optimistic it was about Euro area growth a year ago. In its inflation forecast in February 2018 the Bank foresaw GDP growth in the Eurozone over 2018 running at 0.75 per cent per quarter. In the event, growth slowed dramatically

Mervyn King: May’s deal is a shameful betrayal of Brexit

It’s safe to say that Mervyn King,  former Bank of England governor, does not quite agree with Mark Carney on Brexit. In an incendiary article for Bloomberg, he says that the sight of Boris and Blair uniting against the deal shows  that “something has gone badly wrong”. How wrong? Here’s his argument. “The withdrawal agreement is less a carefully crafted diplomatic compromise and more the result of incompetence of a high order. I have friends who are passionate Remainers and others who are passionate Leavers. None of them believe this deal makes any sense. It is time to think again, and the first step is to reject a deal that

The interest rate rise is better late than never

When interest rates were lowered to an ‘emergency’ level of 0.5 per cent in 2009, the market consensus was that rates would probably rise again by the following February. I am sure that absolutely no-one would have predicted we would have to wait until 2nd August 2018. Not even Mark Carney, then still governor of the Bank of Canada. How many times has he given us ‘guidance’ on when interest rates would rise – only for it to be no guide at all? Exactly five years ago, for example, he said that rates would rise once the unemployment rate, then 7.8 per cent, fell below 7 per cent. It is

How ‘safe’ is the Bank of England?

‘Safe as the Bank of England.’ So goes the old phrase. And yes, with walls 8ft thick, the Old Lady is pretty impregnable. Even the keys to her vaults are more than a foot long (the locks also now incorporate voice-activated software). Until 1973 the building was guarded at night by soldiers from the Brigade of Guards, who received a pint of beer with their dinner there. With all this security, how can you hope to get in? One answer came in 1836, when the directors received an anonymous letter inviting them to meet the letter writer in the bullion room late one night. At the agreed hour they heard

It’s not always true that bosses should walk the plank when something goes wrong

Should he stay or should he go — or will he already have gone by the time you read this? These are frequently asked questions about chief executives whose businesses hit troubled waters. It’s true that the higher you rise, the higher the risk if you don’t deliver, but it’s not always true that bosses should walk the plank whenever something major goes wrong: sometimes it makes more sense to stick around, take the flak and solve the problem. However, in the cases of Gavin Patterson of BT (ousted a week ago) and Paul Pester of TSB (still in post as we go to press), it would be fair to

Broadbent’s faux pas puts the focus on female candidates to follow Carney

If Ben Broadbent’s Daily Telegraph interview last week was the launch of a bid for the governorship of the Bank of England, then it spectacularly misfired. The deputy governor’s use of ‘-menopausal’ to describe an economy past its productive peak — damned by the Guardian as ‘un-abashed misogyny’ even though his awkward metaphor, on closer inspection, was also about loss of male potency — has significantly lengthened the odds on Broadbent succeeding Mark Carney in June next year. Indeed, even though he has the golden qualification of a decade at Goldman Sachs, I hear he’s no longer the favourite even among the four current deputy governors and their immediate predecessors.

Is Carney’s growth forecast anything to get excited about?

It is really worth bothering with Mark Carney’s upgrading of the Bank of England’s growth forecast for 2018 from 1.5 per cent to 1.7 per cent? Carney, you might just remember, warned before the EU referendum that the UK would most likely suffer a technical recession if Britain voted to leave. Even in August of that year, six weeks after the vote, when it was already clear that the economy was not diving into the abyss, he was predicting a sharp slowdown. Growth in 2017, he suggested, would come out at 0.8 per cent. In the event it was 1.8 per cent. We have seen enough forecasts over the past

The Brown delusion

Gordon Brown has pitched his memoirs as the honest confessions of a decent man. He failed to win the one general election he fought, he asserts, due to a personality that was unsuited to an age of Twitter and emotional displays. His is the Walter Mondale response to failure — the former US vice president said of his defeat in the 1984 presidential election: ‘I think you know I’ve never really warmed up to television, and in fairness to television, it’s never really warmed up to me.’ Admitting to poor media skills is not genuine self-examination on the part of Brown, more an attempt to shift the blame for his

Martin Vander Weyer

The interest rate rise is a tiptoe back towards the economic normality we have almost forgotten

There are occasions when an apparently negative economic indicator is also in some sense positive. September’s 9 per cent drop in new car registrations compared with the same month last year was no bad thing if it means fewer people are loading themselves up with debt to buy cars — and won’t hurt British car factories that are part of a global supply chain. Likewise, falling London house prices may carry a negative message about international confidence in the UK, but will help London workers to buy homes. And a quarter-point interest rate rise may look like a sign of concern at the Bank of England and a worry for

Fraser Nelson

The Bank of England has finally raised interest rates. More, please

Finally, interest rates are back on their way up. The Bank of England’s rise today – from 0.25 per cent to 0.5 per cent – is the first rise for 10 years and long overdue. Ever since the Brexit vote, there has been much hyperbole about the underperformance of the UK economy when in fact employment has soared to ever-greater highs and economic growth has steadily continued. There is no need for emergency interest rates, and hasn’t been for quite some time. There is pretty much no spare capacity left in the economy, we are at any sensible person’s definition of full employment. Mark Carney had allowed his Brexit gloom

Monarch was an airline from an earlier era – but were its owners to blame for its demise?

Monarch Airlines was the ghost of an earlier age of holiday travel. When I used to see its planes lined up at Leeds-Bradford airport alongside those of Ryanair and its brash northern rival Jet2, I sometimes wondered why Monarch was still there. Now it has been brought down by a combination of the weak pound, too much competition on Iberian routes and too little demand for terrorist-threatened ones to Turkey, Tunisia and Egypt. Even the orderly repatriation of 110,000 Monarch passengers has had an old-fashioned feel to it (perhaps even a touch of Dunkirk, for those who have seen that excellent film), enhanced by the reassuring tones of Dame Deirdre

Capitalism is the best system, but it has been undermined by Quantitative Easing

The Prime Minister spoke today at the Bank of England to celebrate its 20 years of independence. But she has failed to recognise the irony of trumpeting the virtues of capitalism in the seat of monetary policymaking which has, for the past ten years, undermined many of the principles on which capitalism is based. In theory, the central bank operates independently of Government, but in practice, its unconventional monetary policies have acted as a democratically unaccountable arm of the Treasury. It is understandable that, in the face of the 2008 financial crisis, policymakers were looking for new ideas to save the banking system. They used monetary policy as the weapon

A rate rise in November? After years of dithering, don’t bet on it

It is more than three years since Bank of England governor Mark Carney was accused by Labour MP and Treasury Select Committee member Pat McFadden of behaving like ‘an unreliable boyfriend, one day hot, one day cold’ in his hints about forthcoming interest-rate rises. And it’s more than a decade since the last time the official UK bank rate actually moved upwards: the only shift since McFadden’s remark has been a cut from 0.5 per cent to 0.25 per cent in August last year. In fact there’s a palpable sense that the Bank, in common with other central banks, has all but lost the power to deploy interest rates as

The Bank of England can’t remain in its ‘Brexit’ parallel universe forever

House prices are in freefall. Unemployment is rising relentlessly. The pound is plunging on the markets, and companies are re-locating to Paris and Frankfurt in droves. In the parallel universe Mark Carney increasingly seems to live in, that is a pretty accurate description of the British economy. In this universe, however, the picture is very different. The economy is doing just fine – and that is making it increasingly hard to understand why interest rates are being held at ‘emergency’ levels to cope with the ‘catastrophe’ of leaving the European Union. At a meeting of the Monetary Policy Committee yesterday, the Bank left rates on hold at 0.25 percent, while

Crunch time

For anyone considering a career in economic forecasting, the Bank of England’s inflation report for August 2007 ought to be required reading. A graph illustrating its Monetary Policy Committee’s ‘best collective judgment’ of annual economic growth two years ahead is fixed around a central prediction of 2.5 per cent, with extreme boundaries of 0.8 per cent and 4.2 per cent. But after two years, economic growth was running at –5.6 per cent, and the economy had just completed its fifth consecutive quarter of negative growth. The finest minds of Threadneedle Street could not see two years ahead. In this case, the Bank of England could not even see a few

Ross Clark

Mark Carney’s gospel: give us an interest rate rise, Lord – but not yet

Is there anything more predictable than a Mark Carney press conference? The poor sod in Groundhog Day got to enjoy more variety and suspense. Explaining why, yet again, the Bank of England had decided not to raise interest rates, Governor Carney told us that rates could rise ‘faster than markets expect’. That wouldn’t be all that hard, given that markets have pretty well given up on Carney ever shifting rates. Maybe they believed him the first time, in June 2014, when he said that a rate rise could come ‘sooner than markets expect’. Maybe they were still inclined to take a little bit of notice in July 2015 when he