Yesterday the Governor of the Bank of England thought better of the much touted idea that he would cut interest rates by a further 0.25%.
I am glad he made this decision. I had argued here before the event that another cut at these tiny levels could undermine the value of sterling further without doing much positive.
We have got used to Mr Carney’s chronic inability to forecast anything accurately including his own conduct.We had three separate pieces of guidance from him heralding increases in rates, only for him to change his mind and ignore his own triggers for raising them. This time he changed his mind on cutting them.
It looks as if Mr Carney decided better of it thanks to the removal of Mr Osborne from office. The appointment of a new Chancellor less wedded to Project fear and less associated with the absurd gloomy forecast of the pre referendum Treasury may have persuaded him to be more cautious.
The UK economy has just received a monetary stimulus from the devaluation and loosening. It would be an odd time to add to that stimulus by further unusual monetary relaxation.
I am expecting the property market to improve after the strange attempted shake out from open ended commercial property funds. I also expect consumer spending to pick up after a summer and weather induced lull. I see no need for panic measures.
The new Chancellor seems to have dumped the world”austerity” and seems to want to promote prosperity. That is exactly the right approach. Meanwhile share and bond markets continue to prosper. Let’s go for Prosperity, not austerity. Let’s get our contributions back form the EU quickly and spend them on things we want.
July 15, 2016
Hopefully there will be a move to recogniszing ‘the real economy’, people’s real struggles and the unfairness of luck but I suppose some may put share and bond market behaviour down to an expectation of future QE and rate drops (in about 3 weeks). Capital gains from bonds – a QE expectation? Dividend payments due to continuously reducing cost of capital? Is this an expectation that the central banks will continue to support some specific sections of society or a growing understanding of reality?
We will see in a few more weeks.
July 15, 2016
We couldn’t agree more JR. Your opimism has been a constant and welcome change from the doom and gloom which continues to drip daily from the media, from the BoE Governor, and now (very regrettably) from the new Chancellor.
Perhaps a continually positive and upbeat commentary from you, and from people like us, will ultimately overcome the doomsayers.
In the last couple of days we’ve commented in some detail on the new Cabinet and on important subjects such as ‘What does Brexit mean’, which your readers might find interesting.
Today we still live in hope that Mrs May will call you and some other key Brexiteers to serve in the new Government.
Best wishes, the Facts4EU.org Team
http://facts4eu.org/news.shtml
July 15, 2016
Have we got a sensible person to give us cheap reliable energy yet. At least Rudd has gone from that post?
July 15, 2016
How is energy now going to be managed now? First thing to do is kill all the absurd subsidies for intermittent, pointless, greencrap, bird and bat killing machines and solar PV.
July 15, 2016
That is one thing I have never understood about the green energy revolution. We’re on an island, surrounded by seas and tides, so logicially they go offshore, build artificial islands…and put wind turbines on top of them.
Given the success of Pitlochry (in energy production, conservation, and tourism), I would have thought more emphasis on hydroelectric and tidal schemes would have been expected.
July 15, 2016
Just too expensive per Kwh, tidal needs large areas of see to be enclosed.
July 15, 2016
We should also kill off the Swansea Bay tidal scheme and Hinkley Point, eliminate Osborne’s Carbon Floor tax, get fracking, and start looking at more sensible nuclear solutions.
July 15, 2016
Indeed.
July 16, 2016
In fact undo almost everything that Osborne did. If he did it it was very probably bonkers and almost certainly a huge and doubtless a counterproductive tax increase. With a fiscal complexity increase and ( liability for the productive) on top too.
July 15, 2016
Our kind host may not be in government but so long as his voice is heard by government I’ll be content. Elsewhere he refers to his long acquaintance with Mrs May; even if that were not the case, deep knowledge, a clear and fertile mind and a courteous manner rarely fail to win a sympathetic hearing. We Redwoodians have cause for quiet satisfaction, I think.
July 15, 2016
Can I ask JR, how close is David Davis to the Redwood formula for exiting the EU? There were many Brexiteers, some want Norway type options, others such as yourself (in my view sensibly) advocate use of parliamentary legislation to lay the ground. Although a well known Eurosceptic, I have no idea how ‘pure’ DD is?
As it seems TM has put a Brexiteer (although not prominent in the campaign) in charge of brexit, so that if it fails it’s not her fault..
July 15, 2016
Should have dumped Hammond, a Cameron-Blair sycophant.
July 15, 2016
Good morning.
It is not usual for our kind host to adopt some less than praiseworthy language, especially about a colleague. We know his feeling on the Governor of the Bank of England.
Let us hope that the ship can now be steadied and that we can now begin to see the light at the end of a long dark tunnel. It has been too long.
PS Goodbye Department of Energy and Climate Change, you won’t be missed.
PPS Can we please now get rid of that awful and deeply damaging Climate Change Act ?
July 15, 2016
Absolutely right, especially regarding the climate change act. The computer models clearly tend to overestimate mean sea level global temperatures: furthermore, our contribution to the increasing CO2 is minimal.
July 15, 2016
It has never being about the science, settled or otherwise. It is yet another way of parting us from our hard earned cash and also make us feel guilty at the same time for allegedly “killing the planet”.
July 15, 2016
Mark B
Can we be that lucky? Will they have the bottle to do it??
For too long the millions have paid the price for this totally useless act.
July 15, 2016
@Mark B; @Turboterrier; If the statement by or on behalf of Greg Clark, as placed on the DECC website yesterday, is anything to go by I suspect that our luck has already run out (see quote below 🙁 ). Hopefully this was just DECC gilding their lilly one last time before the departments actual chop and not a sign that BIS and DECC are just being merged with all the existing policies intact.
https://www.gov.uk/government/news/statement-from-greg-clark-secretary-of-state-for-business-energy-and-industrial-strategy
July 15, 2016
The clearest and most present danger to the UK economy has been removed from office. Another still remains……
zorro
July 15, 2016
These people have such an exaggerated sense of entitlement that they believe they can get away with any,and any number of,mistakes simply by giving us a version of Keynes’old (and possibly apocryphal)chestnut -“when the facts change,I change my mind.what do you do sir?”
July 15, 2016
I have never warmed to Hammond but he must surely be better than Osborne with with 180 degree out approach. He should start by scrapping Osborne’s complex IHT ratting fudge and just abolish IHT. Rich and hard working people are welcome in the UK without having to spend their lives talking to tax experts and contriving their affairs in particular ways. Then scrap HH2, Hinckley C and the 3% extra stamp duty and other tenant muggings.
The cabinet looks a bit better than I expected but still lots do dead wood and lost of unused talent on the back benches. At least we can rejoice at the good new that Osborne has gone.
I see that someone, I forget who, has said of Cameron:
He is proud of modernising the Conservative Party, leading it back into power in 2010 as the head of a coalition after 13 years in the wilderness and winning an outright victory in the 2015 election that many thought he would lose. He is proud of restoring the country to economic stability after the 2008 crash and fighting for unpopular causes in the party, including gay marriage and international development.
Cameron with a proper Tory, low tax, pro growth, anti EU, no cast iron ratting and no greencrap agenda would have thrashed sitting duck Brown and then won handsomely again against the hopeless ED and threat of the SNP. Essentially he flunked two very easy elections. He has not restored economic stability he is still borrowing hand over fist, the state sector is far too large and incompetent in general and we have a huge trade deficit. He is not repaying the debt as he kept telling us dishonestly. He won the job by pretending to be a EURO sceptic then ratted on that too. A capable man with two open goal elections who achieved almost nothing due to his broken compass and his dishonest cast iron ratting on the EU. His one real achievement is to have given us a referendum (against his and Osborne’s wills) and to have negotiated an EU deal so badly that we won. This despite him sloping the pitch with vast sums of public money and other underhand tricks.
July 15, 2016
It has been refreshing to hear Messrs. Hammond and Fox making comments that are reassuringly positive. It points to how damaging it was to have the lame duck Cameron government hanging around with glum, discredited Remainers relaying a message of doom.
July 15, 2016
Firstly my sympathies go out to those victims and families of the Nice terrorist attack. It is interesting tat it has been reported that the police knew the perpetrator/?s but intelligence didn’t. So much for sharing intelligence !
What has the world become where droves of people can be killed for what reason? Reason is not in the equation. There is a serious collective mental problem which is not recognised. It is called unwarranted aggression. It can be seen in small ways all around us. E.G I was paying for petrol yesterday and trying to get out of the door when a women stopped me from exiting and then shouldered me as I tried to get past and smirked. You might say that this cannot be compared to terrorism , but it can. It is that mental problem which lingers in those whose very life is centred around wanting to hurt others. What can the world do to quell this sort of deep seated anger where in different degrees they want to harm others.
We can not negotiate with these. We have to cut ourselves off and monitor closely the sort who cannot understand the very basic principle of ‘ do no harm.’
July 15, 2016
Less gloom – more vroom!
I am of the opinion that now a lot of the “hoo-hah” over the Brexit has subsided more and more people from the Remain camp and the various string pullers of this world are beginning to see new opportunities for the UK and for themselves.
Tree well and truly shaken. Let’s go!
July 15, 2016
If the new Government follows on from were the failed Cam-borne policies left off expect a rate drop next month, on the other hand if ‘austerity’ has been swept away…
July 15, 2016
Hammond for Osborne is an upgrade. A great pity to see Michael Gove out, a decision which must have been driven by personal animosity. Gove was the most articulate and radical member of the Cameron govt. let’s hope we see him back. I hope Mrs May will have the sense to call on you also in some senior capacity.
July 15, 2016
Hear hear.
July 15, 2016
Congratulations to Mrs M for clearing out the plotters. Google Notting Hill set and Henty Jackson Soc for list of names. Neocons will be so disappointed.
July 15, 2016
I liked Gove’s policies a lot at Education and Justice. However his alleged antics briefing against colleagues directly and via his wife’s newspaper column will surely not have endeared him to the somewhat puritan-seeming May. Maybe after a couple of years in purgatory he’ll be back when one of the other Brexiters makes a mistake and leaves – for example I imagine when the farmers’ muck spreaders turn up outside Leadsom’s constituency office she’ll be gone.
July 15, 2016
Yes lets hope so. The new cabinet appears to include some people who would not make it on merit alone, so perhaps Mrs May will see the advantage soon of having one of the most articulate and intelligent Conservative MPs within the government.
July 15, 2016
May does not seem to want ‘radical’ she is afterall essentially another Libdim remain person not very differently Nick Clegg unless she reinvents herself.. Doubtless why she fired whitingdale, a reward perhaps to the BBC for its appalling bias for remain and generally relentless Libdim magic money tree, fake green agenda.
July 15, 2016
@LL; Unfortunately for people like you Mr Lifelogic the majority of the electorate are centrist (lower-case democratic liberals), not on a mission to heave the ship hard to port or starboard – if Mrs May really does believe in rebalancing the economy she will win in 2020, unless fate intervenes.
July 15, 2016
Dear Jerry–What I reckon is that the word “balancing” is a meaningless cop-out, which I wish could be struck out of all pronouncements by politicians facing a decision. Sort of reminds me of that letter in the Torygraph recently trying to expunge the word “could” from the pre Referendum discussions..
July 16, 2016
Leslie Singleton; I agree, perhaps “re-industrialisation” might be a better word, because that is what is needed.
@LL; Compared to some of your ideas Mrs T was verging on support fort Mr Corbyn! Also John Major did not loose the 1997 GE because of his policies, he lost it because of the behaviour of a few Tory MPs – both in-fighting and sleaze.
Reply He lost it because the ERM he joined trashed the UK economy – another unwelcome EU gift. Look at the polls they slumped when we exited and the damage was clear and never recovered.
July 16, 2016
@JR reply; Black Wednesday was four and a half years before, the various economic sectors had recovered or were well on the road to recovery (hence why the Blair government could go on their post election spending spree!) and the Tory party could have recovered too had the later internal party strife (because the eurosceptics would not let the ERM issue drop), if there was no such strife what was John Major’s infamous unguarded comments about -questioning unnamed people’s parentage, and the 1995 leader contest all about then?!
Reply cons support flatlined from the ERM debacle. The main topic in 1997 was the mortgage horror Majors ERM torture gave us.i fared relatively well in 1997 because I had opposed him
July 15, 2016
Well Heath Major Cameron have been electoral disasters while Thatcher won three plus one with John Major as her man. Until people sussed him for what he really was namely yet another Libdim.
July 16, 2016
@LL; Did Mrs T win those elections or did Labour loose them?… Had Callaghan called the election in 1978 there is a good chance he would have won, whilst Labour lost both the 1983 [1] and ’87 elections due to the continuing influence of the far left.
[1] a wet paper bag, for a manifesto, could have done better for Labour than their actual
suicide note, sorry, manifesto didJuly 15, 2016
” I am expecting the property market to improve “
But what does improve means? For many young people it means falling prices! Prices need to fall so they can afford somewhere decent to live.
The British obsession with property does nothing at all useful for our economy. It doesn’t deliver jobs and it doesn’t even deliver the housing that people need. The levels of homelessness are higher than they been in our lifetimes.
We don’t to look at how other countries plan their investment better than we do so that it goes into something productive, rather than the creation of asset price bubbles.
July 15, 2016
Correction: Should be “We need to look at how other countries plan…….”
July 15, 2016
Oh no we never do that, we never check how other countries run (say) education or the health services, we just try to re-invent the wheel.
July 16, 2016
@Roy Grainger; Not at all, we do study how other countries run their services or what ever, but then decide why re-invent the wheel – unfortunately there are some for who the grass will always look greener on the other side of the divide, what ever the true facts are.
July 15, 2016
Agreed uk property is a ‘capital sink’ tieing up capital that could be put to better use.
July 15, 2016
It does not really sink capital the capital is paid to the vendors. Who then have it to do other things with it. .
July 15, 2016
Like it, or not (I don’t), one needs to accept our economy is driven by selling overpriced properties to each other.
July 15, 2016
It’s what other people HAVE as much as plan: lots of land, and a dispersal of talent and centres of wealth around that land. We have concentrated on the London area just about everything, and the result is a totally lopsided country.
July 15, 2016
petermartin2001
“The British obsession with property does nothing at all useful for our economy. It doesn’t deliver jobs”
Really? So no one works in estate agents, online property portals, mortgage brokers, , mortgage lenders, insurance businesses, thats totally ignoring all the construction trades . Ok if you say so.
The housing bubble is a phenomenon of the South East, right across the rest of the UK there are plenty of reasonably priced homes to buy and to rent. Supply and demand as with ALL commodities based on scarce resources causes bubbles . Thats all
July 16, 2016
@ libertarian,
That’s a fair point about estate agents having jobs. My wording should have been more precise. I should have said the obsession with property doesn’t deliver enough jobs or the right kind of jobs. The jobs that it does create are based on, as well said by Mike Wilson, ” selling overpriced properties to each other”.
In economic terms that’s no different from us all making a living by doing each others’ washing. Someone, somewhere has to work to produce the real goods and services that we can sell overseas. Otherwise we’ll just have a high balance of payments deficit which we’ll have to fund by excess borrowing. As if we don’t have that problem already!
Reply Most of our economy is each of us providing marketed services for others of us. There’s nothing wrong with that. Selling someone a hair cut or a burger is as much a real job as helping assemble a car. Cars only have value because people service them, clean them, fill them with fuel, provide roads for the etc. Nor is it better if you sell something abroad than at home. My output and income is the same if I sell an insurance policy or a car to the home market or one to the overseas market.
July 15, 2016
Dear Peter–Absolutely couldn’t agree more–I think the idea of further lowering interest rates nothing short of barking. Obvious that, if anything, they should be raised to get houses down and returns on savings up, the latter from essentially zero. In any event I simply refuse to believe that a quarter percent cut in base rate would make much difference to businesses, not the ones I knew anyway. Besides maybe they should stop borrowing on overdraft and get some term lending in place.
July 15, 2016
The main thing overhanging the propert market are Osborne’s absurdly high turnover taxes, his extra. 3% stamp duty and interest deduction rules that seem to be designed to mug tenants and his ratting on IHT too. What had he got against tenants, landlords and indeed owner occupiers?
Al least he has gone, start undoing the vast damage he did too please. There is little point in buying a property for the short term when in and out costs are so high (other than on cheap units). Little point to if you are old too and it can creates an IHT problem for you. A sensible fiscal regime could do great deal to help. Stamp duty used to be 1%, rates of up to 15% as a turnover tax are totally absurd and destroys job and other mobility. It is just too expensive to move or trade up or down in the market. Let us hope Hammond understands this. He should also abolish the now 10% tax on medical insurance. He should be encouraging private provision of medical care and indeed education to take the pressure off the often appalling NHS.
July 15, 2016
R.I.P DECC
Now let’s get a sensible energy policy
I see the power companies think we should stay in the EU energy union. No doubt worried about loss of subsidies.
I hope Patel gets her wish and abolishes DFID.
I never did understand why we needed a foreigner for bank governor. Especially a failed Canadian politician.
July 15, 2016
And hopefully lloyds bank shares will react positively to enable the new Chancellor to get rid of them, freeing them from the ‘dead hand’ of government ownership. I wonder whether He will change Osborne’s policy?
July 15, 2016
Central banks work to finance big government and its illegal wars, enriching the elite as it does so.. A good idea would be for Britain to work towards getting rid of the BOE altogether. Be the first country to leave the EU and the first to get rid of a central bank, set a world wide trend.
July 15, 2016
@Pete
You could merge the central bank with the Treasury. That would be one way of getting rid of it. The treasury has issued currency before in the form of Bradbury pounds during WW1 and could do that again. It makes economics a lot simpler too. Pounds are IOUs of government. Bonds are IOUs of government. All issued by the Treasury.
Is that what you have in mind?
July 15, 2016
You mean a glimmer of hope with the climate change department gone and the new departments being set up and leaving Europe that’s now up to brexit politician who have been put in place which nearly everyone on this site wanted also the new chancellor who understands how business fiddles their books and might put a stop to it,
July 15, 2016
I see some posters are pushing for EEA EFTA model.
This is essentially EU lite and would be seen as the end game for the Remainiacs.
Good luck for anyone trying to push the 4 freedoms as the route to nowhere.
Britain is not Hotel California.
July 15, 2016
Somewhat ungrateful of Theresa May to not use Gove’s many talents. This since Mrs May only got her job due to his foolish knifing of Boris and shooting himself in the foot.
Gove is clearly far better than the vast majority of people she has given jobs too. He is actually a conservative too, unlike about 60% of her Cabinet who are clearly just career Libdims who thought they had a better chance of getting a seat in parliament by pretending to be Tories.
July 15, 2016
I suppose May thinks she can do without someone with such catastrophically negative approval ratings in any senior role until the Labour party has been entirely eliminated in 2020.
July 15, 2016
Clearly Gove is much more able and experienced than most of the vast flock appointed by May, but you have the old problem: what can you offer such a man that is not a demotion?
July 15, 2016
David Davis has suggested that in addition Brexit, we should make trade deals with major world players as quickly as possible, including signing up to TTIP; I believe all of that comes now within Mr Fox’s new deptartment; however, there are at least two major objections to TTIP as it stands and those are that whilst we are trying to reclaim our sovereignty, we would be ceding sovereignty via Investor-State Dispute Settlements to corporate lawyers and their extra-territorial courts, and second, at a time when we are trying to get our own agricultural industry off the ground, the last thing that would be needed is competition from US agriculture whose products are neither wholesome or safe, but produced as cheaply as possible. Let us have wholesome home grown food produced as humanely and safely as possible.
July 15, 2016
TTIP is unlikely to be approved as-is in USA by either Presidential candidate as I understand it.
July 15, 2016
TTIP
Is an attempt by the USA to remove themselves to susceptibility to various “odd” European legal systems. The rest of the world on the whole tends to do international business using UK common law and legal services as everyone knows our courts are totally separate from government. I do not believe the US/UK trade deal will be based on anything like the full EU TTIP proposals
July 16, 2016
“I do not believe the US/UK trade deal will be based on anything like the full EU TTIP proposals”
Well, it wouldn’t be TTIP then, would it?
July 15, 2016
“We have got used to Mr Carney’s chronic inability to forecast anything accurately including his own conduct.”
Ha ha. Whatever else I may think of Mrs May she has been pretty ruthless at cleaning out the deadwood and under-performers, pity Carney is harder to shift. As to all this wailing in the Guardian and elsewhere about the commercial property funds, they should ask big investors in those funds for their opinion. I am one, I am not bothered, they go up and they go down, if you don’t understand that you shouldn’t be in them.
July 15, 2016
Dear Roy–All that needs to be understood is liquidity–Like Gove and charisma, property in any form hasn’t got it
July 16, 2016
Roy, yes, I agree. looking at her selections and dismissals she does seem to be looking at people’s performance in office and promoting/dismissing accordingly. (Gove may be an exception but he is in an odd position). The best governors of the BoE usually remain generally invisible.
July 15, 2016
Politicians are having to confess that the dire economic warnings made by the remain side during referendum was just tactical propaganda and had no substance. However it was believed by enough that there is market volatility when in fact post referendum nothing has changed. Only after negotiations have started and we know what the UK will be like after Brexit should markets react.
Some who have not admitted that they were vastly exaggerating the consequences of Brexit have taken the other tack of pretending they were right so as to not look like liars. Carny obviously has taken this path but has made himself look even worse by doing so and has kept the markets destabilised. He should now go. I love Canada (having lived there for a couple of years)and her people but not this particular one.
July 15, 2016
You lived in Canada ? You mean we can live in other countries not inside the EU ? Without free movement ? Amazing. I lived in USA for a while and the amount of paperwork and registration I had to do was FAR less than when I lived in Germany.
July 15, 2016
Dear Roy–Very much agreed–I too lived in America and was pleasantly surprised I could understand my tax returns, and in about 10 minutes
July 15, 2016
Why not spend the £16k a week we send to Mark Carney on the NHS. He appears to be as effective as a clerk who averages the decisions of the MPC.,while meddling in politics. No doubt the deal Gideon gave him will make sacking very expensive. A 100% tax on golden goodbyes could be passed quickly before the boot is applied.
July 15, 2016
Bravo Mr Redwood.
I read that the MPC vote was 8-1, I wonder who the dissenter was?
July 15, 2016
The mood seems to have changed for the better, the Remainers have run out credible things to say but I noticed yesterday that the BBC, reporting a slowdown in some business activity, said it was down to Brexit; I don’t know how long they plan to keep this going; they were knocked sideways when sterling rose after the interest rate decision. How will they report the good news which won’t be long in coming?
July 15, 2016
Naturally Mr Carney’s change of heart had absolutely nothing to do with his meeting with the new chancellor. That would undermine the Bank’s independence in a way that never happened when Mr Osborne was in charge of the nation’s purse strings did it?
Of course, repealing the European Act would mean we stop contributing to the EU coffers with immediate effect. And as I understand it, repealing the ECHR and replacing it with a British Bill of Rights would be another way out of the EU. Membership requires the country concerned to accept the ECHR doesn’t it? So if we repeal it, then we can’t be EU members.
There’s more than one way to skin a cat…
On a separate subject, I’m saddened by the attempts of the remain campaign to hijack a petition from before the referendum to be applied after the referendum when even the bloke that started it said that it wasn’t intended for that purpose. I notice that 4 million signatures are forcing a debate in the House despite such irregularities being identified as the 40,000 signatures from Vatican City which has a population of 800!
When this debate happens, it would be nice if you could point out that there is a counter petition calling for the immediate invoking of Article 50 ( ref 133618 ) which, as I write this, has 98,168 real signatures on it. I am sure it will tip the 100,000 trigger level for a debate by the time the debate takes place.
This debate is, of course, a complete and utter waste of Parliamentary time – but democracy is democracy. Except in the EU of course…
July 15, 2016
Thanks to having our own currency and a national central bank with the power to print it our “austerity” was mild, “austerity-lite”, compared to Greece or even Ireland.
July 15, 2016
Denis–I just love the idea that we can turn to Prosperity by flicking a switch. Is there anybody against Prosperity? Daft thing for both Hammond and our host to say
Reply But you can – pursue the right policies and more people become more prosperous. The skewed austerity of Mr Darling (anti cap ex) Mr Osborne (anti some benefits) was not helpful.
July 16, 2016
But I’m only talking about avoiding austerity, not creating prosperity!
July 16, 2016
There are ways to get the economy moving.
One of them would be to dispense with Gordon Brown’s ridiculous stamp duty rates which prevent people from moving house.
HS2 could be binned and the money put towards badly needed updating of existing infrastructure.
July 15, 2016
I think the Eurosceptics should stop worrying about the short term effects of the referendum decision. I can see it is disappointing to them that their victory has not been greeted with great cries of joy, but I can assure you from personal experience it is nothing like as disappointing as having been on the losing side.
Just remember you have won and be happy with that. The short term volatility will be short term and soon forgotten. The long term – well we will see. That’s where you have to start worrying.
July 15, 2016
Dear Alan–Your last sentence begs the question
July 15, 2016
We need to see a Governor who has confidence and who inspires confidence. Mark Carney has neither quality and his deference towards politicians makes a mockery of the very concept of BOE independence. It looks like the rate cut has been temporarily postponed, for now, but it is coming. Such a cut would be a mistake for three reasons. Firstly it would add to the cost of imported food, 40% of the monthly shop, secondly it will undermine confidence in Sterling and thirdly it will show that the BOE and its master, the Treasury, are putting all their economic eggs in one basket by putting the Property Market ahead of the rest of the economy. A rate cut would be a mistake. Instead we should be aiming for a return to realistic interest rates, to boost confidence in our currency and our economy. Seven years of fake interest rates has left us unsure of what to do next. We have become hooked on fake interest rates. It is no plan for the future.
July 15, 2016
Surely, it’s the MPC which decides the bank rate not the Governor alone. Be less vindictive to a fellow who’s trying to be helpful.
There are many reports of businesses postponing investments because of uncertainty as predicted but denied by Brexiteers. Face the truth. It’s nothing to do with promoting fear.
Rushing for the exit may reduce uncertainty but may be unwise. Let’s get our ducks in a row first.
July 15, 2016
Carney is the one who doesn’t seem to realise the MPC sets rates – he announced rates would most probably fall then they didn’t.
July 15, 2016
Lets get it established that we are leaving first. The ducks in a row can follow on from that.
July 15, 2016
This blog is so good. Please keep laying out the facts in this straightforward way so they are on the record.
July 15, 2016
There was an interesting Blog in ‘The Beacon’ recently by Prof William Shughart. The Beacon is a newsletter of the US Independent Institute and Shughart is a senior fellow of the institute. The blog is headed ‘Brexit’s Opponents Echo the Arguments of Loyalists Fearful of American Independence’. In it he writes, among other things:
“Students of America’s founding era, circa 1763–1787, should be struck by the similarities between the arguments rehearsed by the opponents of a compete break with George III then and those of anti-Brexiters nowadays. Uncertainties about the political and economic consequences of separating from a puissant British Empire, the consequences of expected disruptions to international trade, especially if London retaliated by cutting off access to its Caribbean ports, and the loss of the Royal Navy’s protection of American maritime commerce – all such arguments have been trotted out again recently and energized some opponents of Brexit to call for another vote on June 23rd’s ballot question.
“While it is true that the newfound American nation experienced a brief, but minor recession after the Treaty of Paris was signed on September 3, 1783, granting independence to the United States of America, and many challenges followed that event, it also is true that prosperity returned fairly quickly. Why should the sequel to Brexit be any different?”
An interesting comparison, don’t you think?
July 15, 2016
Agreed John.
July 15, 2016
I see Mrs May is off to Scotland to try to placate angry Scots who want to stay in the EU, while a Scottish MEP says this would not necessarily require Scotland to separate from the rest of the UK and become an EU member state in its own sovereign right:
https://euobserver.com/uk-referendum/134359
“Scottish MEP: ‘Independence not our first option'”
I’m not clear how that could work, but I suppose the UK government might be able to arrange some kind of special deal. It would be an unprecedented special deal, however, as far as I know there is no existing case where part of a country which is not an EU member state is nevertheless treated as though it was in the EU. There are other kinds of special arrangements, but not that one.
July 15, 2016
Hi Denis,
Although an interesting concept the Spanish for one, would never agree to Scotland remaining in the EU while England exits, (because of their Catalonia problem) and they have already said as much.
But can you imagine the scenario if it were ever to happen, – Scotland retains FOM of people whilst we do not, there could be very long queues of EU migrants at Edinburgh Waverley station for the trains south. We would need passport controls here as well as on the M6 and A1 or maybe just build a new Hadrians wall. It really doesn’t sound practical at all.
July 15, 2016
The Catalonia aspect can be distinguished from the UK v Scotland matter because Spain has no plans to leave the EU. Spain may be willing to accept an arrangement that keeps Scotland effectively in the EU, especially if it means Scottish independence is delayed.
I though it significant that Theresa May met with Nicola Sturgeon hours after becoming PM. Mrs May said she is “willing to listen to options” adding that Article 50 would not be triggered until “we have a UK approach to negotiations”.
Where we will have a land border with the EU is between the north and south of Ireland. Yesterday james Brokenshire said Britian did not want to see the return of frontier controls. So perhaps Dublin airport will be the EU migrants first stop.
July 15, 2016
The Scots, or at least some of them, seem to be trying to commit national suicide.
July 15, 2016
Denis,
I’d agree that it doesn’t sound at all feasible.
But on the other hand the Channel Islands aren’t part of the EU but are still considered ‘British’.
So I suppose if we thought about it hard enough we could cobble something together that could keep the Scots happy – if the EU would allow it. This would be to be part of the EU, separated from the UK, whilst still using the UK pound?
How’s that going to work in the longer term? That’s really not a good idea at all. So any happiness would be very short lived.
July 16, 2016
There are various existing arrangements around the EU, but as far as I know not the one hinted at by the Scottish MEP. In fact it would be the opposite of one of those arrangements, Greenland, where Denmark is a member state of the EU but part of the Danish realm is not.
July 16, 2016
I can’t see the issue.
The Scots recently voted to remain British. Then they took part – as Britons – in a clearly explained vote on the EU.
We chose to Leave as Britons.
Why are they being treated as a separate country ? They are NOT a separate country and it is they who chose not to be a separate country. (We English had no choice in the matter.)
So now they could thwart Brexit ?
Had Scotland voted to leave the UK their wishes would have been honoured. A lot less difficult than Brexit – which gives lie to Heath’s promise that the EEC would never become more important than Britain.
July 15, 2016
For me the acid test of the new government will be airport runways. The last PM dithered for six years. Will Mr Grayling be the man of action at transport or just another sad report generator?
July 15, 2016
Airport capacity could be solved by dispensing with HS2 and an additional LHR runway, in favour of Boris Island. This ambitious and exciting project would provide a modern international hub to match the needs of our economy as it expands post Brexit.
July 16, 2016
Agreed. Boris Island is just what is needed.
July 16, 2016
There is a less expensive design for a new four runway airport on the Goodwin Sands. This is just off the Kent coast and could be built very quickly. It would have easy access to HS1 and could take some passengers for Paris. There would be a road bridge that would not have to be be built too high as major shipping already goes around the channel side of the sands.
http://www.goodwinairport.com/?lang=en
You only have to look at how rapidly China has built those islands in the South China Sea to see what could be done.
Expanding Heathrow is utterly pointless. With the predicted expansion of traffic, even with another runway it would continue to run at 98% of capacity. That means that any delay for whatever reason would continue to causes huge backlogs of traffic, inconveniencing thousands.
It would be no more than a very expensive interim solution. We need to be bold.
An better solution could be the second runway at Gatwick which could surely be built in around two years after planning approval with infrastructure to follow.
In the meantime, the new Goodwin Sands airport can be approved and ready to be built. These two projects would take care of our airport needs for several decades.
July 15, 2016
Even if Grayling approved Heathrow expansion it will be years and years before all the legal challenges end – some will be via the EU and ECHR incidentally.
July 15, 2016
Martin. Justine Greening has previously stated that she would resign if Heathrow was allowed an extra runway, so unless Theresa May relishes a quick resignation from her government it seems unlikely that it will go ahead.
Gatwick would therefore seem to be the favourite.
July 16, 2016
Teresa May’s constituency is right under the Heathrow flight path.
Enough said !
July 15, 2016
The pound is rallying it seems because the USA just put us at the front of the trade negotiations queue. Now we get TTIP, probably whether we want it or not ! Farage is a big fan. Talk about going from the frying pan into the fire.
July 15, 2016
TTIP is a treaty that cannot be revoked once signed without agreement from 100% of the other signers. Makes the EU look quite cuddly.
July 15, 2016
Presumably, though, our own MPs will have sight of the terms being negotiated? Or will transparency be restricted in some way to a select few?
I am hoping that TTIP will get proper scrutiny and even discussion in the media. Ooh … I am naïve, aren’t I?
July 15, 2016
Gary
A UK /US trade deal even if based on TTIP ( it won’t be based on the full version as its not necessary) would have the sum total of 2 TWO parties in it so your point about 100% of the signatories is fairly superfluous
July 15, 2016
Firstly Farage doesn’t sound like a big fan of TTIP when he describes it as a “corporate stitch-up”, here :
https://www.youtube.com/watch?v=Qyvrv9OJlB0
Secondly Farage is stepping down as UKIP leader.
July 15, 2016
Today so many individuals drop in on us.Laden with tidings usually dour. They talk to us directly.Bypass our leaders, our government. They say it is their duty, their remit, their responsibility.
So, we have Ms Lagarde of the IMF stopping by.Unasked.Uninvited. I did not ask her. I did not invite her. Yet she is talking to me directly and first.
President Obama popped in. Found him on my doorstep one morning trying to sell me wooden clothes pegs, told me to stay in the EU. Then a British businessman who gave me a piece of his mind on staying in the EU then either by plane or balloon returned to his island off the coast of the USA.
The Governor of the B0E is more welcome. Works here at our invitation. He has said openly, in front of cameras that it is his “remit”; his “responsibility” to inform the UK public.
Mr Carney, seems to have got it fundamentally wrong. We have a Representative Parliamentary Democracy. That means, we have someone , a representative, a Prime representative..a Prime Minister…and a Chancellor for him to offload or progress his “remit”. The international media is not “The Public”, certainly not the UK public. If you wish to speak with the family in a house you do not hire an aircraft and go dropping leaflets all over the world. That is certainly not the remit of a Bank Governor who has a primary responsibility to maintain the confidentiality of his customers.
Has Mr Carney’s …remit… with us finished yet?
July 15, 2016
thanks John, optimistic realism Thanks
July 15, 2016
Off Topic:
Terrorism-as-usual, in France.
The news unravelled last night. Social media showing the horrific photos and video footage in detail. Foreign TV stations showing it with a 15-20 minute delay. The BBC and Sky News in denial; their reports incorrect; in some cases one and a half hours late.
So much for EU-wide “cooperation”. Well all French news outlets were blasting out the truth.
Our mainstream media were saying. “Oh perhaps its JUST an accident.” ” The French media are now saying it’s criminal, that would suggest its NOT terrorist.” Yet, right from the beginning I was looking at the bullet-riddled white truck on Twitter with the UK broadcasters in ignorant denial.
“We should learn the lessons” our media says today. Oh dear. Can we stop this media gunge? They say “Ah he’s JUST a lone wolf”
Well, if Western civilisation, as we call it, can be said to have managed to impart any change of behaviour upon humanity as a whole it is to make us into Individuals separated from the pack. However, individuality is not in truth an exclusively Western or even a Christian concept or watchword.
The lessons which must be learned, from my individual perspective or, from my… minority… perspective which protects me more from legitimate criticism, is that the re-creation in one land of religious, ethnic, racial, national and ideological contradictions and differences from the greater world which has proven all those as death-creating by war and fighting in every manner is a dumbcluck idea. It is not that multiculturalism will fail but that it has failed in the world at large; and, a microcosm of it in a nation-state is only a plus in that it allows all the suffering to be captured on one man’s smart-phone video facility at one go.
July 15, 2016
When the Greeks and Turks had their population exchanges after WWI and likewise after WWII Stalin enforced the separation of Germans,Poles and East Slavs in E Europe,it worked in that whilst the feeling of enmity might have remained,the massacres and wars of the previous centuries stopped.
Subsequently,that line of thinking has of course been turned on it’s head and made illegal.Progress?
July 15, 2016
James Delingpole has retweeted today a hypothetical conversation between terrorist and Regressives. It seems to be a shrewd portrayal of the current stupidity in approach of the liberal left.
July 15, 2016
Chris;
I’ve just read it after reading your reply. Yeah,we’re oh so accommodating aren’t we; literally accommodating.
July 15, 2016
Western civilisation is in peril.
Millions of disatisfied young men who will feel hope and maybe gratitude at first, and then will feel disappointed and sullied by westernisation – perhaps also that inequalities are against them – are headed this way.
The method is crude and just as effective as any bomb.
One is only surprised that it has not happened many times before. Having seen someone dragged beneath a lorry I won’t be posting a useless tweet nor lighting a useless candle.
July 15, 2016
Although I think the sensible option is to continue the payment to the EU just to show its not about xenophobia. If you consider how the referendum campaign was fought – on fears of economic collapse, we absolutely have the right you take that money and use it in the UK economy. Can’t fault that argument.
Just on our media and terrorism, it’s like watching Pravda every day. They are at the moment more scared of the far right gaining ground politically than they are of terror and are busy disscussing that. IF the BBC are found to be in violation of their charter and shut down, can I have a refund on the TV licence for every year they were deemed to be biased.
July 15, 2016
Tangential to this topic: It would be interesting to hear your views on what the May government means, or intends to mean, by the words “industrial strategy”. I would hope that this does not or will not amount to the government telling businesses what they must or should do. But rather it will, I hope, be the government setting out what its strategy should be to create the business environment that will help promote an industrial revival. I imagine it should include such matters as energy policy, simplified regulation, a more efficient tax code, reform of planning laws, and new infrastructure in so far as it is directly the government`s responsibility. Some have suggested that powers reclaimed from Brussels should not automatically revert to Whitehall but some should be delegated to local authorities.
Martin Durkin`s excellent film, Brexit the Movie, drew attention to the role played by Erhard`s bold deregulation post 1945 in helping Germany`s rapid economic recovery post WW2. No doubt you, with David Davis and Dr Liam Fox, will recall it from the film premiere. But I do not believe that Greg Clark, the new Secretary of State for Business, Energy and Industrial Strategy was there to see it. Perhaps he can be persuaded to watch it.
July 15, 2016
“UK-wide agreement before triggering Article 50” is what the media are reporting Mrs May is saying to Mrs Sturgeon and to the people of the UK. No, no, no. We already have UK-WIDE agreement. LEAVE. BREXIT MEANS BREXIT
July 15, 2016
It is simply amazing how rarely John recommended we let National Debt slither up to 100% of GDP before Breaks It . Equally astonishing that he should take the stampeded into bonds and gold as a sign of confidence or fail to mention that shares depended on the UK economy have been hammered
As it has now been announced that Brexiteers intend to dump £375bn from helicopters I wouldn’t be surprised if we got a bit of jolly news
Not so jolly for the young people who hated this whole ultra Nationalist nightmare and will have to pay it all back of course but who cares about them eh , anything to get this ugly misshapen warped boat to float even if only temporarily
Reply What nonsense. I want to spend our saved contributions. I argued for lower taxes before Brexit and do so now afterwards
July 15, 2016
Newmania
Anything to post that isn’t drivel? You know that actually contains some facts or even shows you have even a passing acquaintance with how markets, business the economy actually work. Or are you one of those Remainiacs who think your lies are more allowable than other peoples?
July 15, 2016
Newmania – The young people should have got out of bed on the 23rd June then; if they really wanted to avoid Brexit then they could have. Stop trying to set one generation against another.
July 15, 2016
“this whole ultra Nationalist nightmare”
How old is Newmania ? 16 ???
July 15, 2016
Mr. Redwood – as a former cabinet minister and a man of some seniority in the Tory Party – can you not prevail on whoever is ‘Culture Secretary’ this week to take the head of the BBC into a locked room with no microphones and tell him in no uncertain words that the endless doom and gloom on Brexit has to stop.
You have a golden opportunity now. In power for another 4 years – and probably for 5 after that – the recent renegotiation with the BBC was toothless and pathetic. I don’t want to see a public sector broadcaster that is not independent – but the absurd levels to which the BBC fee has risen has meant the BBC is now a mega corporation – with limitless resources. As such they dominate the national and local news agenda.
Please, PLEASE somebody stop them. We are going to end up in self-induced recession if this carries on. I am sure they are scouring the country looking for bad news … ‘go and ask some estate agents if the property market is slowing down … go and find someone whose house sale has fallen through … go and find a businessman who is delaying buying some new kit until Brexit is clear … go and find ANYONE with ANYTHING negative to say and we’ll broadcast it all day, every day.’
Someone has to stop this before we really do end up with the economy going down the pan.
July 16, 2016
Totally agree !
At least Soubre has been sent to the back benches but she’s since said she is going to continue to speak up for immigration and the EU.
Perhaps her constituency party will take her into a locked room and tell her not to spout of against what is now Goverment policy or face reselection.
July 15, 2016
Carney has to go so when is his contract up?
Scotland should wait until they are an independent State and then apply to join the EU IF they meet the criteria naturally! We will not be in position to help them because years down the line we will already have been successfully trading in world markets and with the EU Super State of course in one way or other and membership as we know it now will be ancient history. I wish the Scots ‘bon voyage’. Chaqun son tour!
July 15, 2016
How can we believe the treasury ‘forecasts’ or indeed the Bank of England when they essentially reflect the views of the Chancellor. Surly both should offer honest forecasts regardless of current Chancellor and his views.
As for ‘austerity’, I would prefer a campaign to ‘waste less’. Much of the so-called austerity was no more than any prudent individual would do with his/her own money if they were a bit hard up – cut back on any waste and non-essential spending.
July 16, 2016
Let’s go for steadily reducing the fiscal deficit and thereby capping state debt. We can’t guarentee that interest rates will remain benign. I dislike state debt exceeding 80% of GDP; so should you, Mr Redwood.