In May 2016 the Governor of the Bank of England warned of the dangers of a vote to leave the EU. He was quoted by both the BBC and Bloomberg as saying “that the risks of leaving “could possibly include a technical recession”. I have not seen any suggestion that was a false quote.
Today Deputy Governor Ben Broadbent tells us “the central projection in the August Inflation Report didn’t involve a recession, simply a slowing in the economy’s rate of growth. But that slowing looks so far to have been more m0derate than we feared.” Mr Broadbent is careful to define a single central forecast made at a later date.
It all seems to mean that the Bank got their various statements and forecasts wrong, and now are changing their tune about the outcomes for the UK economy this year. It is good news the Bank now agrees with those of us who have consistently said there will be no UK recession in 2016. The Bank has revised its Q3 2016 forecast up.
59 Comments
Comments are closed.
October 5, 2016
I admire corrections. There are few that do it. Some have abandoned referring to the short run without corrections, though they did a lot of it in July and August. They now concentrate on the long run.
October 5, 2016
Many people are saying that bankers should not be rewarded for incompetence. This obviously doesn’t include the Bank of England.
October 6, 2016
Or indeed most of the state sector in general.
The NHS with the worst cancer survival rates in Western Europe for example.
October 6, 2016
early deaths from easily treatable (with a stent for example) heart conditions are very high too in the NHS, but nobody seems accountable and the customers cannot take their business elsewhere… state rationing prevails
October 6, 2016
Indeed my father needed stents, he went privately at the Wellington near Lords as he has insurance though his old company, all sorted within a week form test, to scan, to op, to discharge. Not even that expensive really, lived for another 18 years without any problems at all.
Of course now you have to pay four times. One for the NHS (for others), once for your insurance premium, once for the tax you pay on salary to pay the insurance and once for the 10% IPT that the (dire IHT ratter) Osborne inflicted on everyone.
So most are stuck with the dire NHS
October 5, 2016
I found it amusing when CPI came in at 0.6% last month, especially when the BofE had forecast it to be 0.8% only three weeks earlier!
October 5, 2016
Off topic, but what struck me about Mrs May’s speech and press briefings is that what she’s proposing is more like a European Christian Democrat agenda than a mainstream U.K. Conservative agenda. It is not a perfect match of course but there are striking parallels.
October 5, 2016
It is a bonkers left wing, interventionist agenda but perhaps it is just so she can sound caring and go for a snap election.
If she really is going to do all this bonkers intervention, workers on boards, gender pay reporting, reporting of immigrant workers numbers, central pay controls …. then she is profoundly misguided. It just damages the economy and creates yet more parasitic jobs. It will hit productivity that Hammond wanted yesterday to improve.
She goes on about business owners taking out dividend and leaving the pension short. Well what on earth is the pension regulators doing! If the business owners can legally do it then many will or someone else will buy the company for more and then they will.
The fault as usual lies with government, poor accounting rules, the law and the pension regulator.
Better still let people manage their own pensions directly and do not separate them from their investments so. Again the result of poor government pension rules.
Reply There are serious worries about the conduct of some big businesses which do need addressing
October 5, 2016
She is surely going to go for an early election. Her speech and party political broadcast clearly made not sense otherwise.
October 6, 2016
Yes John there is “serious worries about the conduct of some big businesses which do need addressing” but I don’t think Ms May and you get how bad it is. Or what some of the obvious problems are. Having been inside a number of big businesses I know pretty much how they are abusing the system in many ways, I just don’t get the feeling people like me are listened to. Only if it gets in the lefty media (and fits their agenda) does it get noticed at all amongst the political class. And big business spends a lot of energy lobbying which spreads a false picture.
October 6, 2016
OK JR, I did say you never reply to LL; but, don’t feel obliged to do so from now on. LL is your resident right wing nutter on this site and should be ignored, if you expect your site to be taken seriously by persons of influence.
October 5, 2016
In the meantime Carney gave the Banks the opportunity to increase their margins by lowering the bank rate by a minor 0.25%, the Banks in turn rewarded their borrowers with less than this rate cut, and at the same time stuffed the savers/depositors by lowering their rates by many more times than this by drastically lowering their interest rates to depositors.
Was there really any need for such action so soon when few reliable figures were about.
October 5, 2016
I don’t know why Hammond is Chancellor either. Should be a Funeral Director.
It’s probably that old political thing of either being a mate or owing for a favour. Having aptitude seems to come a long way down in politics and the public pays the price for ineptitude time after time. We’ll see what happens this time, but the runes do not look great.
On the other hand, like Corbyn, she does not have an embarrassment of riches in the talent department , hence Rudd and a few others and for some reason JR iappears not to be flavour of the month.
October 6, 2016
It is much worse than that: JR has not been one of the favourite flavours since the 06/06/2005.
October 6, 2016
Sorry. 06/12/2005 according to JR’s wikipedia’s profile.
Reply That profile is full of errors
October 5, 2016
Alan
Bank Rate and the Banks lending/borrowing criteria parted company some years ago, when they found they could stuff borrowers and lenders at the same time and be allowed to get away with it and even get bonuses for being so clever.
QE ever since has provided the banks with money for nothing which makes it worse.
Not worth saving for your old age any more, pensions are the dodo, losing more than they make, notwithstanding the tax relief, annuities a waste of money unless you plan on living more than 40 years after retirement. This is what the government actually wants, as it is only consumption that keeps the economy afloat. If people all started saving (assuming they had any money left after mortgage or rent) the economy would be sunk. Previously up to 2007/8 the economy was founded on debt, again now it is spending (and debt is going up again) with no regard for the morrow, which will be someone else’s problem when people come to retire with nothing behind them. Short termism rules again in politics – just look good today and let someone else worry about it all when we’ve left the field with our millions seems to be minister’s/bankers view.
October 6, 2016
Your analysis is absolutely correct in my opinion.Hence also the desire,spoken or otherwise,for high levels of immigration-more consumers whose spending can be (at least partially) funded with freshly printed debt as money.
It’s a vast Ponzi scheme so advanced that there is no way out until it ultimately collapses.
October 5, 2016
The Uncertainty word is still in fashion at the Bank of England. Ensuring their salaries are paid in Pounds Sterling could provide a stout thrust to their aspirations.
October 5, 2016
While everything in the UK economy is rosy and German plus many other banks in the EU are in a very dodgy state, the Pound is at an all time low against the Euro. Please explain. Is it being manipulated to help UK exporters. It is certainly defying the logic of the otherwise positive financial position and future of the UK.
October 5, 2016
I too would like to know your thoughts John on why the pound has fallen so low against the euro when nothing is rosy in Europe financially at the moment. How come our currency is so low? Brief explanation for some of us is necessary. Sorry, I’m not very good at financial issues.
October 6, 2016
I thought, the pound is now low, because it was overvalued previously, and is now at a more correct level.
October 5, 2016
Didn`t you know , its the International consoiatrcy of Remainiacs ( duh huh) the revolution has enemeis on all sides
October 6, 2016
And one enemy on his backside.
October 5, 2016
The B of E should be made to put up a few web pages showing live news of exactly where their own staff pension schemes are invested, exactly what percentages where, and when it changes. I think a lot more effort goes into that.
October 5, 2016
The BoE runs monetary policy and even next door’s dog, since 2008, now knows, that monetary policy is about as useful as a fart in a spacesuit. BoE base interest rates rise to stop commercial banks lending, and fall to encourage commercial bank lending and that’s all.
Base Rate is a very very blunt, economy wide tool, to control inflation, and should be scrapped and the BoE, put back inside the Treasury, under a democratically elected Chancellor of the Exchequer.
The truth being that banks don’t make money, if they are not lending at 2% plus margins. But; Banks don’t make loans to clients they think (risk manage) can’t pay back such loans, regardless of the BoE base interest rate!
BTW. Commercial banks have a licence, from the BoE, to “create” their own money out of thin air, just like the government’s Treasury. The Treasury even allows the banks to convert their “money” (deposits in customer accounts as a result of loan agreements) into government “money”; cash notes and coins with a picture of the Queen on. One for one in Pounds Sterling.
The bottom line is that our government, has total control over everything that involves Pounds Sterling. Our government OWNS THE POUND STERLING. The only place you can get a Pound Sterling is from the UK Treasury.
Hence, it follows that the UK Treasury, never has to borrow its own currency from anybody. And; nobody can hold the UK Treasury to ransom in its own currency. Pound Sterling Bond traders, can only play trading games, to the extent that the UK Treasury, and its central bank, allow them to play.
October 5, 2016
If there has been any slowing in growth of the economy it is probably due to the Remain scare mongers who have been spreading tales of doom & gloom. It’s a self fulfilling prophecy, especially when the governor of the BoE, President of the USA and the president of the IMF join in the scare-mongering.
I must say that the new Chancellor Mr Hammond has not been very convincing in dispelling the negativity, almost as if he is still campaigning for Remain. It’s a mystery to me why Mrs May would have appointed him in place of our erudite host for such a crucial role.
October 5, 2016
‘If there has been any slowing in growth of the economy it is probably due to the Remain scare mongers who have been spreading tales of doom & gloom’
– That’s churlish considering if it hadn’t been for George Osborne the last few years, the UK wouldn’t be enjoying the growth it is today.
And unfair, considering the majority of economic experts both inside and outside the UK (including countries as Japan in no uncertain terms recently) warned of the cost of Brexit.
Plus, you’re only judging things short-term. Judgement must be reserved for the long-term. Whether being outside the single market helps or doesn’t help our companies export (in the long-run), and what affect leaving the single market will have on investors such as the Japanese, Chinese and Americans using the UK as a bridge into the EU which will they will no longer be able to do (and of course, we have to see what happens to the financial sector as well), and whether Brexit will affect the economy of the EU and the world overall which all impacts on the UK.
October 6, 2016
@Ed Mahony
By growth, I presume you are referring to population, the national debt and QE?
October 6, 2016
‘population’
– ‘Population’ is a problem I admit but don’t blame Osborne for that (are you?!).
‘the national debt’ – and what would you have done to divert the economic crisis that loomed in this country the last few years which Osborne played a key role in diverting. And what would you have done to reduce the national debt faster than Osborne? (And why not challenge Mr Hammond who is now going to increasing spending).
‘QE’ – That’s a fair point. But it’s a complicated debate about what to do instead of QE. What do you propose? And whatever you propose, you can’t take away what from George Osborne what he has achieved for this country the last few years.
October 6, 2016
@Ed Mahony
Osborne was second only to the PM, you don’t honestly believe he had no influence on immigration policy do you?
As for debt, the last thing I would have done would be to increase & ringfence the DfID budget. It should have slashed to near zero, and restricted to emergency aid. I would also have quit the EU at the first opportunity, rather than spending millions on campaigning to stay in and continue paying ÂŁ10 billion a year for the privilege of opening our welfare systems to 500 million people, while simultaneously using farm subsidies to impoverish African farmers.
What would I propose instead of QE?
I would propose no QE.
George Osborne himself said “QE is the last resort of desperate governments”.
October 6, 2016
Exactly.
October 6, 2016
Osborne is apparently writing a book on economics for a publishing agent known as the Jackel.I wonder how many little helpers he will have in that endeavour(and how many will be credited!)
October 6, 2016
Is it called “How not to run a sucessful Economy”?
October 5, 2016
Good afternoon.
Not many predicted the recession / depression of 2008 onwards. There were some warnings and some words of caution, but those people were dismissed. Today we seem to have much the same depending on who you listen to. Like the referendum, those at the so called top, are not paying attention to what is happening on the ground. Peoples real lives reflect far better than the nonsense peddled elsewhere.
Things do seem to be slowing; a little. When the cost of imported goods, due to the fall in the pound makes consumers less likely to spend, this will have an effect on the high street and confidence in general. A slight blip would probably be a good thing, a full on loss of confidence could end in a death spiral.
What is needed is calming words and no hastily moves.
Reply I did forecast the banking crash.
October 5, 2016
Recessions/depressions are cyclical. We are headed for one whatever happens, whether there had been a referendum or not.
October 5, 2016
I did not predict the the banking crash (but did the Brexit vote and the ERM fiasco. I was not that in touch with the absurd things the banks were getting up to. Largely misguided and misled by government in the US (using them for political reasons). Also with appalling UK regulation allowing them to gear up absurdly. Matt Ridley in his The Evolution of Everything book has an excellent section on this. Crash Bank Wallop The Memoirs of the HBOS Whistleblower by Paul Moore is interesting too.
If only more people were rational, honest, numerate and not suffering from daft religions and group think insanity.
October 6, 2016
I did also predict Cameron’s (tiny) majority too. No thanks to Cameron but to the dire alternative offered. An Ed Miliband dog wagged by Nicola Sturgeon and the Scots Nats. What sensible person would want that?
October 6, 2016
‘If only more people were rational, honest, numerate and not suffering from daft religions and group think insanity’
– It was the Quakers with their work ethic and numeracy that gave us Barclays and Lloyds and some highly successful businesses over the years. And religious people can do rationality and numeracy particularly well in the field of science, considering Sir Isaac Newton, Heisenberg, Planck, and Godel, to name a few, were devout believers.
The problem isn’t religion but, you’re right right, if only people were more honest and didn’t suffer from group think insanity which can affect anyone – both religious and non religious.
October 6, 2016
‘group think insanity’ – not forgetting, of course, that there is a close connection between Communism and atheism (Russian Revolution) and between violent Republicanism and atheism (French Revolution) and between Nazism and atheism (although Nazis pretended to be religiously tolerant to win over the support of ordinary soldiers in the army and others who were religious, they were ruthless towards people who took religion seriously, in particular, Hitler’s right hand-man, Martin Bormann who was an avowed atheist and made no qualms about his hatred for religion)
(and yes, religious people can act savagely too, my point is not to target religious people)
October 6, 2016
I suppose there is a certain rationality in paying people by promising them real reward in the after life and targeting the vulnerable dopes who might fall for this.
October 7, 2016
‘I suppose there is a certain rationality in paying people by promising them real reward in the after life and targeting the vulnerable dopes who might fall for this’
– If we are just materialistic beings enslaved to the laws and/or chaos of nature, then, firstly, how is it possible to have such a discussion?!
Unless we’re not just materialistic beings, but also spiritual as well, which makes some other kind of life beyond the here and now possible?
Also, where did all this material stuff come from (either it’s existed eternally ? Or emerged from absolute nothingness?).
– Lastly, I love being a ‘vulnerable dope’ (not all the time, and not completely vulnerable). In order to take risks in life, we have to make ourselves vulnerable, whether setting up a business, falling in love, and/or exploring whether all the beauty in existence (in animate nature for example) and goodness and love that people show each other reflects something of a higher order – the Divine, for example?
Regards
(P.S. I think a discussion that can run from politics to religion – and everything in between, is healthy ..).
October 5, 2016
Methinks it’s time to plan for a big rise in the rate of inflation. But what?
October 5, 2016
“A country that works for everyone” does that include British information technology workers displaced from the workforce, or having their pay undercut, by mass import of foreign labour on uncapped intra company transfer visas?
Do tell…
October 5, 2016
On a somewhat different subject…
What a great speech by our PM today.
Proper Conservatism.
Brexit and Teresa May.
Happy days
October 6, 2016
If it is to be believed then I agree.
October 6, 2016
Why don’t you wait until you see what she actually delivers before heaping praise?
October 6, 2016
I was simply talking about her first conference speech as PM mitchel.
We will both be able to see how the Govt performs in the future.
October 6, 2016
Hope fully she is not doing the lefty drivel she promises.
October 5, 2016
It is obvious that Osborne, willing to do anything, even including forcing the Treasury to make fools of themselves, to help Remain, and conceitedly assuming he would stay in position, and Carney, who similarly assumed he would still be working with or for said Osborne, were in cahoots, with Osborne of course suggesting to Carney that he should paint the bleakest picture of the consequences of a Remain vote, for which he would get nothing but smiles. Pity about the facts getting in the way. When is Nigel Farage going to be offered his Dukedom or at least knighthood? What he managed to do was truly very very impressive, the more so given what Carswell and even Hannan were doing to undermine him. Anyone know why Carswell joined UKIP? As Nigel says he was, I was truly astonished to hear some of what Carswell, and Hannan, had to say and at crucial times. This is not intended, Dear John, to derogate from your own enormously important positive input to the Brexit vote but Nigel was not just more alone than you but had alligators snapping at his bum.
October 5, 2016
And breathe…….
So the EU is working well for us then , well that and abandoning any attempt to normalise interest rates and blowing an Ed Milliband sized hole in our fiscal retrenchment . The economically invigor-ating effect of migration continues to deliver . On top of all this good news a great boon to exports that the pound continues to fall with each step towards the cliff. Woo hoo
Meanwhile we have given up on retaining passporting rights to the EU with no viable substitute (JRs suggestions have been noted with amusement ), we risk god knows how many jobs across the board and people who couldn`t sell water to a man dying of thirst wish us to try harder to sell things to the Congo. Great plan, try suggesting that to your employers if a single one of you Brexits is not retired ( which I doubt).
I recall , John Redwood suggesting that if I don`t like the choice between Corbyns Commies and UKIP in a blue frock I could “start my own Party”. Gee thanks , I think I may
I would like a Party that :
1 …recognises that without business a social conscience is posturing and protects business from
tariffs barriers and illiterate name calling and meddling – a Party that listens to business.
2…is a fiscally trustworthy Party not one that blows the budget to save its crazy schemes and not one that imperils services by hurting growth .
3 ….charts a moderate path not a high risk gamble with people`s lives cheered by the assorted fruitcakes who are its members and god forbid the loons who actually go to the conference . I want to be protected from obsessed extremists not governed by them.
4 …..puts the safety of the home and the family at its heart and does not subject millions to years of anxiety and unemployment for whatever crusade some silly rhetorician has dreamt up.
5 …recognises the value of institutions , the value of continuity the value of the better over the utopian , a Party that deplores change for its own sake
5… does not irresponsibly inflame ethnic tensions, scapegoat outsiders
6 ….. I can trust to support NATO the West ,Free Trade Liberal value and individual freedoms , not one that wishes to return to a tribal dingy hole in the corner sometime in the 1950s
7 ……. people attached words like “Reasonable “ “ sensible “ “ moderate “ “ compromising “ and not “passionate “..” nationalist “ “extremist” “irresponsible “ “stupid “ “Lying “ “ cynical”, “ trimphalist”
As the Conservative Party is now the Brexit Party I think I should call this new Party the Conserva-tive Party. Pity it isn`t real
October 5, 2016
Good post John
If ever you get tired of Westminster the rate the bankers are going on I am sure you could do a better job than Carney and in the short term just to get your eye in be elevated to No 11. That would give us out here more faith in who is fighting our and the country’s corner.
October 5, 2016
Off its Trolley: UKIP
The UKIPpers, when they can get their prising fingers out of one another’s mouths as they head for a one-member Party, are a joke beyond smiles.
Notables of their inner circle speak so importantly almost pompously on TV about UKIP’s party, its electoral chances. An investigative journalist with concealed camera needs to visit their branch meetings. Four or five people lecturing to an empty room awaiting one turned back of their devil’s quartet to stab.
October 6, 2016
And that’s about as far right as the British get… unlike the rest of the EU that likes to lecture us on open mindedness.
October 6, 2016
Given the behaviour of some UKIP MEP reported today, isn’t it far right enough?
October 5, 2016
In recent years I have come to question the decision to grant the BOE independence. The BOE can’t seem to get anything right and Mark Carney in particular repeatedly puts out doom and gloom statements, none of which ever come to fruition. It really is time for the government to rethink the BOE’s independence. Interest Rate policy is fast becoming a disaster for savers, our currency and will inevitably to lead to imported food inflation. Nobody has faith in the BOE or its wild predictions anymore. Mark Carney must go.
October 6, 2016
Indeed but they are not really independent at all anyway. They know what the government wants and the government hires and fires the Governor. What a duff choice Cameron and Osborne made.
My rule of thumb is that any body that feels the need to claim it is “independent” never actually is.
October 6, 2016
All good points ‘Lifelogic’ its been clear that Mark Carney and others have been fully onboard with certain ministers, that said there was a similar glove puppet relationship back in the days of New Labour too. So we need to look again at whether the BOE is truly operating as a check and balance. The new govt seems to want to distance itself from the Cameron/Osborne axis and what better way to do that than a shake up at the BOE.
Mark Carney certainly should go.
October 5, 2016
“..liberal metropolitan elite ” <<<It is said by TV political pundits as a product of inner-Tory-Party twitterings. People haven't a clue what they're talking about. Nor Corbyn's "-phobic" this and "-ist" that. Nor why UKIP persons are being interviewed at all on TV. It is said of UKIP that they have MEPs.. .so apparently they are important. Well they will not have a single MEP soon and in every UK national election from by-elections to local council elections the MEPs and other senior UKIP people barely get 10% of the vote. Didn't ex-chair of UKIP Ms Suzanne Evans fail to get her own local Councillor seat when she turncoated from being a Tory and stood under the Pirate flag of UKIP? Ended up in UKIP MP Douglas Carswell's Office without a ballot.
Great introspection is taking place in all political parties.Largely, even with the Tory Conference the membership is talking to themselves as the word "theirselves" is only known to their newly discovered , lost since the nineteenth century "workingclass" .As with Edwina Currie who advised the old to wear a woollen hat when freezing to death in winter I suppose we shall get a a resurgence of the Great British Hot Water Bottle from some newly appointed member of Mrs May's cabinet and an old recipe for blackberry cordial to stave off gout and Arthur Ryetis.
October 6, 2016
I can’t understand the need for the media, the BofE and some remain politicians to constantly run this country down. It’s not going to change the Brexit result. It’s as if they want to be proved right at all cost. The eyes of the world are looking at us. They must be bemused by the attitude of our own people to self-harm our economy. The BBC in particular needs a thorough overhaul. The bias broadcasting it has delivered this year needs investigating and stamping out. Why the people of this country should be forced to pay for an entity that promotes self-harm and constantly gives airtime to doomsayers is maddening.