A lucky Governor of the Bank?


Since Mr Carney arrived as Governor, the economy in the UK has taken off. Unemployment has come down. Inflation has come down. Output and jobs are up. There are even signs that real incomes are stabilising after a large fall in the recession and further downwards movement since.

Is this just good luck and good timing? After all, many of the policies which are now yielding and assisting recovery were in place before he arrived. I think it’s a bit more than that. You do have some influence over your own  luck. If you do the right things you can get luckier. The Governor has helped.

Mr Carney clearly decided from the outset that what the UK needs is a decent recovery. If you wish to solve the continuing weakness of some banks, what better way than to assist more profitable businesses, and rising asset prices? Those assist a bank by reducing the number of bad assets, and improving loan cover.  If you wish to help bring down welfare spending and cut the government’s deficit, what better way than to have an economy generating a lot of new jobs in the private sector that people can take instead of being on benefits. If you want to bring down inflation, why  not encourage more output to ensure competitive prices, and obviate the need for so many tax and government inspired prices rises.

As Governor there were some things he could do to encourage that recovery. He told markets he was going to keep interest rates low, so businesses borrowing to expand would not face large bills. He presided  over the Funding for lending scheme which helped banks find the cash to lend more to business.

The markets have been fighting him, by putting up longer term interest rates despite the Governor’s reassurances, and arguing for an earlier increase in Base rate than the Governor seems to want. Events have also surprised the Bank’s forecasters, with unemployment falling much more quickly. The Governor has moved to reassure those who want low interest rates. The fall in unemployment to 7% does  not mean an early short term rate rise.

Most things are looking a lot better for the UK economy. However, the government does need to respond to the beginnings of a shift on energy policy in the EU. Dear energy remains a foe of a UK industrial revival, and an enemy of the consumer, delaying rises in real incomes to power more growth. I will return to this soon.



  1. Keith
    January 25, 2014

    Luck always runs out

  2. Mark B
    January 25, 2014

    I think it is the Government that is lucky. If it was not for Jimmy Goldsmith and his anti-Euro party, we might be in a far worse position than say, Greece.

    1. Leslie Singleton
      January 25, 2014

      Mark B–Absolutely right–Why doesn’t another emerge like him able and willing to arrange a Referendum this afternoon and to Hell with the current Tory plan, which isn’t going to work anyway. This is what I meant the other day, and still mean, viz why do we need in this day and age the say-so of what passes for a Government just to ask a question?

    2. Lifelogic
      January 25, 2014

      Had we been in the EURO the UK would have probably had to leave the EURO, default and hopefully leave the EU too & it might thus have ended rather better. At least some people learnt something from Major’s idiotic self inflicted ERM disaster (still no sorry from the man). Even if Cameron with a front row seat beside Lamont did not.

      Iceland is doing quite well now I see.

      1. Denis Cooper
        January 25, 2014

        I doubt that Major himself learnt anything from it, except that those who wanted to get us into the euro, including himself, would have to wait until the memory of the ERM had faded before making another attempt.

        1. Hope
          January 25, 2014

          Iceland recently made a trade agreement with China, as did Swizterland. More than the UK can do.

          It is becoming ridiculous what the UK can or cannot so without the say so of the EU. Osborne lost a case last week over short selling, Grayling is going to take a case about charter of freedoms which the UK allegedly had an assurance that it would not be affected. The government should be sovereign and have the ability to do what it pleases, not do what it is told by the EU. How about just getting out of the EU mess.

          It also begs the question why we need to pay for so many MPs and Lords when they wave through laws and regulations without the ability to stop any of them from the EU. There is only one to change the situation and that is to change your voting pattern front he LibLab CON.

  3. Arschloch
    January 25, 2014

    John this internet thing is a boon for those of us who are part of the lower orders. It allows us to read Canadian newspapers and listen to the CBC. Has not Marky created a massive property bubble there that is about to go pop? Is he not about to create another one here too? You can probably write the first paragraph because money printing gives you the illusion that all is well. The value of your stock market portfolio has no doubt shot up in value, while your parliamentary expense account insulates you from the increasing cost of food and petrol. However its noticeable that you never comment about the real value of the wages from all these “jobs” that are being created. Sticking your professional head on you know that this is a mirage that cannot last. The deficit reduction programme is way off target and the debts continue to pile up. While all is not well with the stock market either. It is being driven up, just as it was at the turn of the century, by companies that make few profits or none at all. While companies that make things report that it is incredibly tough to make money. Its only a matter of time before the house of cards collapses ….

    Reply You will be pleased to learn as an MP I do not make claims for food or petrol! I may talk about spending power soon as it is topical. I do not accept there is a Canadian bubble in property about to burst.

  4. lifelogic
    January 25, 2014

    Well most banks are still not lending freely they are very restrictive, very slow and have expensive fees and high margins. They are often limiting terms to 5 years maximum and looking for rapid repayments of capital then using that demand to limit new borrowings on income grounds. These income limits can often then restrict lending to only 40% of asset values or less, thus preventing capital being released for new investments. They often also stop you giving second charges and then borrowing elsewhere.
    They are also looking for any excuse they can to call perfectly good old loans in so they can re-lend at new large margins.

    It is hard to get confidence going with Labour arriving in 15 months, expensive religious energy, daft waste everywhere like hs2 and wind/pv nonsense, 300 tax increases, daft employment laws, the prospect of an increase in the minimum wage, daft slow planning laws, an incompetent environment agency, daft laws like gender neutral insurance, endless lunacy from the EU, and far too large a state sector which is still borrowing and wasting hand over fist.

    It is impressive that, despite this, we do have some confidence finally returning. Largely driven by the non dom UK tax haven rules and the Arab spring and problems in EURO area pushing many wealthy people to London and the UK.

    What was needed was a small government, cheap energy, sensible banking and less EU vision from Cameron in 2010 – but he threw the election as he is simply not a Tory – why is he in the party let alone leader?

    1. Lifelogic
      January 25, 2014

      I see council still have money to burn and staff with nothing useful to do other than installing 63 no parking signs and yellow lines on a quiet country lane – this in order to mug and deter the summer tourists one assumes. Might the money not have been better spent on some car parking provision for the summer tourists? A field in summer perhaps?


  5. Richard1
    January 25, 2014

    Its a good thing he has been prepared to speak out against some of Miliband’s ridiculous populism – such as his new plan to limit market shares of banks which would limit rather than enhance competition. The coalition could and should have cut govt spending much more than they have, and had they done so we would have a stronger economy now. But there is a return of confidence, and the main risk to potential new investment now is fear of the return of a Labour govt. Let’s hope the people don’t hand back the keys to the driver who crashed the car!

    1. A different Simon
      January 25, 2014

      Yep , Labour getting back in would be a disaster .

      Miliband has even less experience of the real world than Cameron .

      That said , Cameron must implement the changes which other parties might propose , i.e. shift the burden of taxation from productive activities onto natural monopolies like land , address pensions apartheid by sowing the seeds for a proper livable partially funded state pension which is ringfenced outside politics , reserving ownership of housing to British citizens etc .

      1. lifelogic
        January 25, 2014

        Land a natural “monopoly” what on earth are you on about? Millions of people own land and property and anyone can buy it if they want to.

    2. Lifelogic
      January 25, 2014

      “Let’s hope the people don’t hand back the keys to the driver who crashed the car!”

      Well Blair and Brown (& Major with his ERM) crashed the car.

      First clear Labour will win without a UKIP deal and secondly will Miliband be much worse than Cameron anyway? Is there any real difference. Both are big government, pro EU, endless green crap, high minimum wage, over regulate, more trains, expensive energy, tax borrow and waste merchants.

      Milliband does seem to be more against the counterproductive wars, more sensible on pay day loans and betting shops and he achieved fairish (ABB) in Maths, Further Maths and Physics A levels & at a state school. Perhaps he is a little numerate and logical. Maybe it would be better to give him a chance rather than just watching the silver spoon, pro EU, rich boy, lefty Cameron flounder and rat for a second time?

      Anyway Milliband it surely will be.

      1. Denis Cooper
        January 25, 2014

        As things stand Labour will win the next election whether or not there is some kind of deal stitched up between the Tories and UKIP, which in my view is in any case extremely unlikely because the leaders of those two parties want entirely different futures for the country. The Tories will face two separate and equally massive problems at the next general election: firstly, that because the LibDems blocked the boundary changes the Tories will still need to be about 6% ahead of Labour to have a chance of getting a majority, when for the past eighteen months they have been running about 6% behind, and secondly that support for the LibDems has collapsed from about 24% to about 10%, and of those 14% of voters who have deserted the LibDems about 11% have transferred their support to Labour. Compared to the effect of the LibDems no longer splitting so much support away from Labour it is a small problem for the Tories that on balance UKIP is splitting rather more support away from them than from Labour. Even if UKIP were to completely disappear from the political scene the net benefit to the Tories would be small, maybe closing the gap on Labour by 2% from 6% to 4%, meaning that the Tories would still have to persuade at least 4.5% of the electorate to switch to them from Labour, instead of at least 6% as now. But you wouldn’t believe this from the anti-UKIP campaign launched by the Tory leaders, you might even think that UKIP was their main opponent rather than Labour.

        1. lifelogic
          January 25, 2014

          I tend to agree they are clearly doomed barring a miracle, if only Cameron had not thrown the last election and then proved to be such a pro EU, fake green “BBC think” man.

          But then he seems to be getting daft advice from people like Martin Sorrell and those with a vested interests the CBI and some big businesses protecting their interests.


          1. Hope
            January 25, 2014

            With such a poor turn out at recent general elections do not be surprised by the electorate choosing a different option altogether. People are fed up to the back teeth do the current crop and the 60 percent who have not voted are worth targeting. I would bet my house on the voting polls. It going for the outsider as it has nothing to lose from the LibLabCON. LibDems are dead in the water, tuition fees saw to that the recent scandals will finish them off.

          2. Denis Cooper
            January 26, 2014

            If Cameron had not thrown the last election then the Tories would have been able to get the boundary changes (and also reduction in the number of MPs) that they wanted, said to be worth something like 6% on their poll rating in terms of the seats won.

            In other words, they would only need to be equal to Labour in total votes won to get an equal number of seats, rather than needing to be about 6% ahead.

            If you put these %’s in the prediction facility on the Electoral Calculus website:

            Tory 38%
            Labour 32%
            LibDem 10%

            then the Tories just scrape an overall majority of 4.

            Whether this is fair or not, it is the reality that the Tories will still face at the next election.

        2. yulwaymartyn
          January 25, 2014

          Denis – this is an interesting analysis and one that I mostly agree with. Do you think though that UKIP is scaring fomer liberal democrat voters towards Labour ie if UKIP disappeared from the scene some of the liberal democrat votes would go with the Tories and the contest would be much closer between the two main parties?

          1. Denis Cooper
            January 26, 2014

            Not really.

            A small fraction of the 14% who deserted the LibDems in the eight months or so after they went into coalition with the Tories may have turned to UKIP, and a larger fraction may have turned to the Tories, but most, about 11%, appear to have transferred their support to Labour, presumably because they are of a generally leftish persuasion.

            You can see that happening on the left hand side of the charts here:


            with the red line rising as the yellow line falls.

            You can also see support for the Tories beginning to fall at the end of that period while support for UKIP was static at about 3%.

      2. Richard1
        January 25, 2014

        I don’t agree with this. The current govt is far from perfect. But Labour would mean: abandonment of such spending discipline as there has been; power and influence to their union funders; abandonment of reform in social security and education: anti-enterprise taxation etc; And of course no attempt at EU reneogitiation, no referendum and reaffirmation of the global warming religion with all its attendant costs. Add it up and Labour would be materially worse than what we have now.

    3. uanime5
      January 25, 2014

      Its a good thing he has been prepared to speak out against some of Miliband’s ridiculous populism – such as his new plan to limit market shares of banks which would limit rather than enhance competition.

      Please explain how preventing banks from getting too big will limit competition. Make sure you explain why you think a market with a lot of small companies competing is less competitive than a market where few companies compete.

      The coalition could and should have cut govt spending much more than they have, and had they done so we would have a stronger economy now.

      Given that the cuts resulted in over 3 years of stagnation it’s clear that more cuts would have made the problem worse, not better.

      Let’s hope the people don’t hand back the keys to the driver who crashed the car!

      The Conservatives haven’t exactly been much better.

      1. Richard1
        January 26, 2014

        What is needed for more competition in banking is to make it easier for people to switch accounts and to enable new entrants. An artificial limit – eg 25%- means a bank approaching that limit has an incentive not to compete for business. The forced sale of packages of branches has been shown to be a failure – there is no reason these should be viable businesses for another buyer.

        What is happening is a return of confidence. We would have had it sooner and stronger had there been a more serious attempt to cut needless expenditure and reduce taxes. The prospect of a Labour govt is already discouraging investment and lowering potential prosperity.

        The coalition is far from perfect, but they are beginning to pull Britain out of the terrible mess in which the last Labour govt left us.

  6. Mike Stallard
    January 25, 2014

    I do not pretend to understand banking and am not sure what effect a Base rate actually has.
    Even so, it is really heartening to see a professional politician sincerely congratulating someone who, by tradition, has been an Aunt Sally. Well written!

    PS It was rather touching to see our Prime Minister speaking up for fracking at Davos, when every sensible person knows that if you do fracking, CO2 comes out of the taps and the Tooth Fairy Never Visits and the Green Dragon comes out from under the bed…

    1. bigneil
      January 25, 2014

      green dragon under the bed? – -I am NOT going to sleep well tonight.

  7. Andyvan
    January 25, 2014

    Yes Mr Carney is certainly good at printing money and preventing interest rates rising to a proper market level. In short carrying on with the same policies that have put most of the western world close to, or in, bankruptcy. etc

    1. Denis Cooper
      January 25, 2014

      Mr Carney has yet been called upon to add to the £375 billion printed under his predecessor with authorisation from two successive Chancellors.

  8. oldtimer
    January 25, 2014

    Any sense of rapture should be qualified. Some of the recovery looks like an old fashioned, consumer led spending spree fuelled by more consumer debt. Increased house and car sales, and a rising trade deficit, spring to mind – not forgetting an election some fifteen months away. Nevertheless luck can be helped by getting the timing right, and he does appear to have achieved that.

    1. A different Simon
      January 25, 2014

      Pity your Govt wasted the first 18-24 months in office .

      Look at the debacle with the implementation of the computer system which was supposed to support I.D.S.’s changes .

      A few of us who work in I.T. who post on this blog stated at the time that there was no way to get the I.T. system in place before the next election and that any attempt to do so would result in a cluster .

      This makes me wonder how many other Govt I.T. projects have been doomed to fail because of completely unrealistic expectations and time scales .

      Rising asset prices help the banks but only at the expense of mortgagees and future generations .

      Pretty soon the number of young/middle aged who have nothing (to lose) is going to outnumber those who have just about enough , are too old to start again so need to preserve the status quo .

      1. bigneil
        January 25, 2014

        not just I.T. – – -has there EVER been any govt project -of any party – that has actually come out at the price originally said ??? – -I really doubt it. I suppose its really easy to spend someone else’s money.

        and to JR – IF the expenses claims reported in one paper are correct – -doesn’t it show how disconnected from reality our politicians are? – -millionaires claiming PENCE ? – -Isn’t their high wages – and proposed 11% increase enough ? It really shows we are NOT all in it together.

        Reply I have not read these articles about people claiming pence, but maybe if they have office costs there are small ones on invoices as well as bigger ones. Surely the issue is are they legitimate costs of running an office for constituents and doping the job? Most people do not have to go through the business of claiming the cost of the paper clips and the paper back from their employers, as employers just buy it direct.

        1. A different Simon
          January 25, 2014

          bigneil ,

          I think you may have misunderstood the point I was trying to make .

          This particular I.T. project is not in trouble because of cost overruns and budget blowouts .

          The problem is that the time allowed was always simply insufficient to develop the software .

          Also , as Fred Brooks points out in The Mythical Man Month , adding people to a late software project makes it later .

    2. acorn
      January 25, 2014

      Yesterday, this one raised a smile. Think of it like a Formula One car. We have been drafting the leader, we are in the DRS zone, flaps open. We hit the KERS button and slingshot past the German, we have the lead, and hopefully those carbon ceramic brakes will slow us enough to get round the bend.

      Good old George is fiscally stimulating the economy only we have to pretend we can’t see it. The Treasury creates some Gilts at the DMO, it lends them to the BoE at minimal cost, but never actually lets go of them; so it is not classed as new government borrowing. The BoE lends them on to the commercial banks at cost plus but as this is “stock lending” it never appears on the BoE balance sheet. Some call it funding for lending or special liquidity scheme or help to buy.

      A sovereign fiat currency issuing economy can do this. When it admits that it is doing some Keynesian fiscal stimulus, it can do it a lot simpler, as it doesn’t have to hide it with trickery.

    3. alan jutson
      January 25, 2014


      Rise in GDP may not just be just due to a growth in consumer debt, it also may be fuelled by some savers who have realised that holding investments that pay little return, means that you lose value in the longer term, so you may as well spend it before inflation really starts to rise.

      Such spending would therefore give the economy a once only shot in the arm.

      After 5 years of low returns, we know a number of our friends who have given up on the rainy day scenario.
      To a certain degree we have the same view ourselves, may as well get the benefit now of spending some of the savings rather than wait for inflation to decimate them.

      As a by product it also reduces the IHT bill.

      1. oldtimer
        January 26, 2014

        You are right about this. Saving for a rainy day is a waste of time; better to spend it now.

  9. Neil craig
    January 25, 2014

    Most of it looks like luck but Napoleon always said a requirement of his generals was that they be “lucky”.

    Outside the bank’s remit is that the government have come round, however slowly, to supporting shale gas. Still an open question how much this is spin and the old policies of spinning out development with lesser bans being still in place. Nonetheless it is a massive improvement on a couple of years ago and, since energy growth = gdp growth gives everybody investing in Britain reason for confidence. It is quite possible that, though it is outside his remit, Carney, knowing how this is working in Canada, has exerted some influence. If not then UKIP’s energy spokesman Roger Helmer must count as the original source of this change to sanity.

  10. James Matthews
    January 25, 2014

    Still no explanation, though, as to how Mark Carney’s remit extends to talking to Alex Salmond about a post-independence currency Union. B of E independence now encompasses future foreign policy, apparently.

    1. Denis Cooper
      January 25, 2014

      And the other way round, as well; as the First Minister of a devolved government Salmond has no remit to discuss it with Carney, given that “Fiscal, economic and monetary policy” and “The currency” are listed as matters reserved to the UK Parliament and not devolved to the Scottish Parliament.

      Reply The Governor is free to comment on the issue of Scotland leaving the currency union of the UK or staying within it on new terms if independent.

      1. James Matthews
        January 25, 2014

        Reply to Reply. Then his remit is much, much, too wide. This is primarily and overwhelmingly an important political issue, not one of mere financial technicality. Politicians should be seen to be responsible for all negotiations and pre-negotiation “discussions”.

        In any event, discussing it with a potential future leader of a foreign country is hardly just commenting.

      2. James Matthews
        January 25, 2014

        True enough, but no one seriously expects Salmond to stick to his brief (or, if they do, it is yet another triumph of hope over experience). We ought to be able to rely on the Bank Governor to do so though.

  11. Ralph Musgrave
    January 25, 2014

    John Redwood’s reasoning has me baffled. He says “If you wish to solve the continuing weakness of some banks, what better way than to assist more profitable businesses, and rising asset prices?” Well it’s not “profitable businesses” that need “assistance” is it? If anything it’s the WEAKER businesses that need help (not that I favour lame duck subsidies).

    As to raising asset prices by having a central bank print money and buy assets (i.e. QE), that policy is blatantly DISTORTIONARY: it channels cash into the pockets of a small proportion of the population, i.e. the asset rich.

    As to “weak banks”, s*d them. It is widely accepted in economics that artificial assistance for particular firms or industries makes no sense: it results in a misallocation of resources. Stimulus should be WIDELY DISPERSED amongst the population: rich, poor, North and South. If the population want to use their new found wealth to engage in any sort of dealing with banks, that’s fine by me. If not, then s*d banks (excuse my language).

  12. Brian Tomkinson
    January 25, 2014

    For years the BoE failed to meet its inflation target. Therefore, Carney invented a new trigger for considering an interest rate rise – the level of unemployment. This was supposed to be “forward guidance” but now that we are almost at that trigger point The Telegraph tells us he is saying: “The Bank’s assessment of how to evolve guidance to changing circumstances will begin in our February Inflation Report. The MPC will consider a range of options to update our guidance”. In other words a host of other “targets” to reach before interest rates will be increased. It’s as clear as day that he has no intention of doing anything about interest rates this side of the general election and that savers are to be the continuing losers. He doesn’t act or sound like a man who is independent from government – quite the contrary. Your party has abandoned savers.

  13. Denis Cooper
    January 25, 2014

    It’s a bit tedious but it does seem necessary to issue another reminder that by law the primary objective of the Bank of England should be to “maintain price stability”, and it is only subject to the achievement of that primary objective that monetary policy should be conducted to support the economic policy of the government, “including its objectives for growth and employment”.

    That is in Section 11 of the Bank of England Act 1998:


    and while that may or may not be a wise law it is the law as passed by Parliament and should be obeyed.

    Unless and until Parliament agrees to suspend that section and possibly reverse that order of priorities through the activation of “reserve powers” under Section 19, which has never happened.

    It is of course no coincidence that the wording of Section 11 closely parallels that of Articles 127 and 282 TFEU and Article 2 in the Statute setting the objectives for the European System of Central Banks including the European Central Bank.

    Mark Carney is lucky in that at present the annual rate of CPI inflation has come down to target and so he has less to worry about in regard to that primary objective than his predecessor; he does not have to fret about the possibility of a deflationary spiral and nor does he have to find weak excuses for the excess inflation which actually materialised, quite probably as a consequence of the policy of printing vast sums of new money which two Chancellors persuaded his predecessor to adopt, ostensibly to ward off deflation but in reality to indirectly fund the government’s appalling budget deficit.

    I find from this source:


    that CPI is now 17% higher than five years ago, and that is 6% higher than it would have been if the Chancellor’s target of 2% per annum had been met over that period, and while there have no doubt been other factors it doesn’t seem unreasonable to connect part of that 6% excess inflation, akin to a stealth tax, with the creation of £375 billion of new money to help fund the government’s budget deficits.

    Unlike his predecessor Mervyn King the present Governor will not be the object of execration for allowing inflation to rise above target, at least not yet, nor indeed for his failure to properly supervise commercial banks when in fact he had no responsibility for supervising commercial banks; so, yes, Mark Carney has been lucky, so far.

  14. Alan Wheatley
    January 25, 2014

    As to influencing your own luck, there is a quote attributed to a world class sportsman who had a reputation for being lucky which went something like – “you knows its funny, the harder I practice the luckier I become”.

    1. margaret brandreth-j
      January 25, 2014

      This should be spoken in my work arena, when the newly qualified’s think that they know it all and those who have practiced for many years have no idea.

  15. Gary
    January 25, 2014

    The base rate influences the money multiplier in the fractional reserve banking system. The lower the rate the more valuable the present value of bank reserves and the more credit can be created. In this system credit is new money which is conjured out of thin air when a bank makes a loan.

    It’s all smoke and mirrors and central planning. A monopoly cartel

    1. Gary
      January 25, 2014

      meant as a reply to Mike Stallard.(not apparent on my mobile display)

  16. ian wragg
    January 25, 2014

    I can only see one thing he has done and that is his forward guidance which has collapsed.
    I am sure we could have got someone local too fill his seat and saved the expensive relocation costs.

  17. Leslie Singleton
    January 25, 2014

    Dear John–Misleading I suggest to refer to the markets “fighting”, “putting up…rates” or “arguing” for anything at all. There is no such thing as markets in this sense, that is with singular thought, motivation and action. What there is, of course, is a myriad of individuals and entities acting in what they see as their own particular interests according to their own logics and not against anything at all. Hard to argue with that and if a consequence is higher rates that is very fine with me.

  18. Bert Young
    January 25, 2014

    Mr. Carney is not ” lucky ” . He an outsider with strong views of his own who sees the value in expressing them ; had he ‘d been an ” insider ” he would have been regarded as ” lucky “. It was a very sensible decision to appoint someone from the ” outside ” whose track record was good ; he could review and then bring some ” fresh air ” into , what was regarded , as a ” stuffy ” and heavily breathed upon institution . I like ” the cut of his jib ” and the way he puts his views across . Maintaining the impetus of a recovering economy is a tricky one ; he needs to sustain the atmosphere of confidence and support lending to the manufacturing sector . I wholeheartedly agree that the cost of energy is a vital ingredient in the base cost of manufacturing and its competitiveness ; everything should be encouraged and supported to keep things this way .

  19. Bob
    January 25, 2014

    O/T. Listening to Ken Livingstone and David Mellor on LBC this morning interviewing a spokesman from the Syrian freedom fighters:

    He told them “Syria is for Syrians, not foreigners”.

    mmm, so how long before the UAF supporting David Cameron suggests applying sanctions to them?

  20. Mark
    January 25, 2014

    I do not think that Carney considers higher house prices to be a good thing. That is why he withdrew Funding for Lending for mortgage finance, and has hinted he may resort to a variety of other devices to cool the effects of Help to Buy (which has seen house prices rise at an annualised rate of over 13% since it was expanded), such as setting tougher criteria criteria on asset risk weightings or limiting LTV ratios. Higher house prices do not help existing borrowers to pay for their mortgages – only keeping subsidised low interest rates achieve that.

    He does understand that there is still a lot of underperforming debt on bank balance sheets that will need to be written down – and that will require a large interest margin between what is paid in on loans, and what is paid out on savings to continue – otherwise the banks would become insolvent. He is very wary of adding to the pool of bubble priced mortgage borrowing, because this adds to the future problems without resolving the existing ones. Indeed, I suspect he might prefer modest falls in house prices, and measures that encourage high LTV and interest only borrowers to reduce their borrowings.

    He also understands that the economic recovery is very lop-sided, and over-reliant on property markets – however, it will take measures such as aiming for much cheaper energy to ensure some real balance, which are outside a Central Bank’s remit.

    1. Jennifer A
      January 25, 2014

      It doesn’t matter if the HTB scheme is the cause of the next boom/bust (I don’t think it will be.) This Govt has made itself vulnerable to accusations that it interfered in the housing market through HTB and will be blamed.

      An interest rate rise would be the acid test of this ‘recovery’.

  21. Leslie Singleton
    January 25, 2014

    Back from lunch with the Torygraph, I write to support wholeheartedly the Business Leader Headline, viz Waiting for ‘escape velocity’ is full of risks; for it seems to me that the Government and the Governor (with or without his undoubtedly luckily timed advent) are just being naive with all this stuff about possibly choking off the recovery. A bit more recovery (clinched by further bearing down on excessive Welfare) would be good but that is all, otherwise the whole cycle just starts again. An end to boom and bust you could almost say.

  22. Denis Cooper
    January 25, 2014

    I note that after bumbling along around 80’sh for the past 5 years the sterling trade weighted index went over 86 this week, for the first time since early November 2008:


    It’s probably too early to make any definite statement that it has finally broken upwards out that longstanding range, but if it has then that will make life a bit easier for Carney in terms of inflation but of course it will make life more difficult for exporters.

  23. miami.mode
    January 25, 2014

    Surely the current turbulence in South American and other currencies indicates that you cannot keep a false market going for any length of time. It’s estimated that almost $500bn of US QE have gone into emerging markets and this is now being wound down.

    Longer term interest rates for the UK are going up because people who buy our debt do not fully believe in what we are doing.

    You cannot compare us to the US as it is the world’s reserve currency and they can virtually do whatever they want.

    I’m sure Mr Carney would not do anything against the Chancellor’s wishes and unfortunately these days most politicians only seem to look to the next election.

  24. uanime5
    January 25, 2014

    The main reason the economy has started growing is because Osborne ploughed money into the housing market, not because of businesses expanding (which is why most industries are still below their pre-2008 level). The fall in unemployment has also been more to do with government schemes to hide unemployment levels than more jobs going to the unemployed.

    In other news the bedroom tax and welfare cap is resulting in councils having to cut other services in order to prevent people being thrown onto the streets. Given all the extra funding the government is having to give councils it seems that these policies aren’t going to save money by cutting welfare bills, all they’re doing is forcing local council to pay more towards the cost of housing people (along will all the taxpayers who have to pay higher levels of council tax).


    Reply I am glad you now think the government is increasing public sector payments to Councils – you normally tell us it is all cuts

    1. Mark B
      January 26, 2014

      All Government’s of whatever hue dabble in trying to hide unemployment. Labour tried to get people into Universities of rubbish degrees and taxpayer funded schemes to get employers to take on the youth with no qualifications or skills.

      There is no such thing as a bedroom tax. Please provide more details, eg HMRC links so that I may study the issue.

      As for councils well, I think you might want to have a look at their pension pot first. Always healthy, and regularly topped up with council taxpayers money – no shortage there, believe me !

      The other reason why councils are having to cut budgets is because they cannot raise them above the 2% allowed. Brighton and Hove wishes to but has to hold a referendum first. This is a Coalition policy that I REALLY do approve of. Gawd bless, Eric Pickles MP !!!!!!!

      As for housing, lets just say that is mostly, but by no means all, down to the policies of the previous administration.

      1. miami.mode
        January 26, 2014


        I agree with you on the so-called “bedroom tax”.

        It shows the economic illiteracy of Labour thinking that a reduction in benefit is a tax.

        It’s no wonder they got us in a mess as Gordon Brown and his cohorts probably thought they were taxing people when in actual fact they were handing out benefits.

  25. Bazman
    January 26, 2014

    Was my comment on bankers pretending to be entrepreneurs and Tory party funding a bit to close to the bone for you and the Tories John? LOL! The truth hurts, but not as much as it will in 2015. Good to see Labour getting under the skin of big business and being popular with voters, who of course know nothing.

    Reply Large banks do not fund the Conservative party.

    1. Mark B
      January 26, 2014

      Reply to reply

      What about small ones or their industry representatives ?


  26. Tony C.
    January 30, 2014

    He may be lucky to be in the position he is in now but sooner or later he will face a real test of his skills and we will see how long he lasts.

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