Bank of England tightening continues

In February the  Bank of England’s Term Funding Scheme for commercial banks runs out. This may well curb credit further. The latest survey  shows Bank action to reduce consumer borrowing is having an impact with commercial banks beginning to rein in offers of new credit. There is also a fall in new buyer enquiries for homes as the Bank talks of higher interest rates and less credit.

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75 Comments

  1. Mark B
    Posted October 18, 2017 at 7:47 am | Permalink

    Good morning

    The fall in enquiries has its roots in many things. Stamp
    Duty for one and seasonal effects for the other. Also the fall in the pound over many years maybe driving foreign property speculators away, which is no bad thing.

    I have said for sometime now that things are slowing down and I think on the whole that that is a good thing. What we do not want is Japan situation where deflation goes on and on.

    The government may need to both cut taxes and raise interest rates to both stimulate and normalize the economy. It will also sure up Sterling and may bring back some investors. But not too much of either otherwise more harm than good will be done.

    • Caterpillar
      Posted October 18, 2017 at 3:38 pm | Permalink

      I think beginning to normalise interest rates is fundamentally important, the misallocation brought about by ZIRP and we is a productivity disaster, and has of course transferred wealth. Fiscal policy would need to respond, I think business rates and depreciation allowances (until we have a govt competent enough to move to cash flow and expenditure taxes), perhaps second but not more properties treated the same as first for stamp duty. In terms of uk debt held by BoE, if it can not be equated to social capital then it needs to be unwound, if like social capital bank does not need to unwind we at the moment. The country is looking pretty dirty and worn out in places, directing resources to this in fiscal policyay help, but it does mean productivity needs to increase I.e. policies for saving and investment up, hence capital up (popn growth slowing would help).

      • Caterpillar
        Posted October 18, 2017 at 3:40 pm | Permalink

        Sorry autocorrect changed qe to we twice

  2. Lifelogic
    Posted October 18, 2017 at 7:48 am | Permalink

    What is absurd about banking in the UK is the gap between what they pay to unsecured depositors and the margin they charge sound & secured borrowers. This shows clearly a huge lack of real competition in the market so why is the government allowing this to continue. They are also very slow in making decisions and are tied up in absurd slotting rules and red tape.

    I have been put off doing some perfectly sound and solid property deals just because the banks are so slow and so much hassle to deal with and are so irritating, expensive and annoying . HSBC I understate will not consider some commercial property loans under a few million as the red tape is not worth the candle for them.

    How much loss of business and productivity is this misguided red tape costing UK business? The government is essentially the problem yet again I suspect.

    • Leslie Singleton
      Posted October 18, 2017 at 12:28 pm | Permalink

      Dear Lifelogic–Must consider size of loan one is talking about and take account of the disproportionate cost of safely servicing small ones–Regular Interim, perhaps Monthly, Results, and for secured loans valuations and review of security if any, for a start. You should ask yourself whether there is any such thing as the ‘sound and secured’ loan you often wax on about, in sense that if it is so sound why the security (which you probably wouldn’t get anyway if the credit good)? Unsecured loans are deemed not to need security because they are good credits which is why they don’t need security! There’s more to banking than house mortgages, eg lending against receivables. Dare I say not quite so simple as you think?

      • Lifelogic
        Posted October 18, 2017 at 9:48 pm | Permalink

        Well they are are usually far more secure than some unsecured deposits to many of the UK banks!

        • Leslie Singleton
          Posted October 19, 2017 at 9:00 am | Permalink

          Dear Lifelogic–We used to say that many of our loans were better credits than some banks

  3. Anonymous
    Posted October 18, 2017 at 7:48 am | Permalink

    BBC keen to point out that old people will be doing well from this. Higher interest on savings (about time) and triple lock on pension.

    The anti Brexit propoganda is now coming thick and fast – clearly concerted.

    One I’d like to tackle from the LSE. Young people are angry with old people for voting Brexit. (There is an obvious ageist campaign going on.) The points they made are these:

    – Young people are angry that the old have determined a future for them that the old will not endure.

    Ans: It was ever thus. In any case, the average age of a Brexit voter was 45 and they are parents who care deeply about their offspring

    – More young voters have come to majority since the vote, many old voters have died.

    Ans: This still does not explain why more of them did not take part in the referendum despite an extension to the registration date. What does the LSE propose ? A lowering of voting age ? Double votes for young people ?

    —-

    I voted Brexit for my sons. I can see that they are competing for houses and wages with far more people than I ever was. Mass immigration is making them poor, not old people voting as they are entitled to.

  4. Anonymous
    Posted October 18, 2017 at 7:51 am | Permalink

    triple lock on pension.

    One of the lowest state pensions in the EU.

    The BBC are hate mongering.

    • a-tracy
      Posted October 18, 2017 at 11:17 am | Permalink

      http://news.bbc.co.uk/1/hi/world/europe/6937301.stm

      Most Countries in Europe have pension problems with ponzi schemes being the biggest culprit.

      • hefner
        Posted October 19, 2017 at 8:07 am | Permalink

        “Your” report is from Aug.’2007: things might have changed in ten years. Any more recent information?

        • a-tracy
          Posted October 19, 2017 at 11:50 am | Permalink

          There is a lot of current information hefner I don’t want to cause Mr Redwood lots of work checking out links but just google Europe’s pension timebomb.

          I think we should ask how Spain is NOT rich enough to pay a large share into EU funds but it can afford the best pension provision in the EU.

          • hefner
            Posted October 20, 2017 at 7:45 am | Permalink

            Thanks

    • Lifelogic
      Posted October 18, 2017 at 3:31 pm | Permalink

      BBC pensions are rather good though I understand.

    • John
      Posted October 18, 2017 at 7:36 pm | Permalink

      This gets complicated because of 2 reasons:

      1. Our State funded pension is largely in the private sector through very generous tax reliefs. Its spread between pay as you go state funded from tax revenues and granting tax reliefs to encourage private provision.

      2. Its deliverable unlike many on the continent. No doubt you have seen the OECD state pension list where Greece trounces us for pension provision. Many countries like Greece are moving down with the UK moving up because our pensions are deliverable.

      Which would you prefer, a promised fantastic pension that won’t be delivered in the future or a much mire moderate but deliverable one?

      • Anonymous
        Posted October 19, 2017 at 8:21 am | Permalink

        I have absolutely no confidence that my pension is going to be delivered.

        I’d prefer our pensions not to be classed as ‘welfare’ unless the person receiving it did not pay Nat Ins.

        And I most certainly don’t want our state pension called a ‘benefit’ when we’ve paid a lot of money for it.

  5. Anonymous
    Posted October 18, 2017 at 7:59 am | Permalink

    The Government has responded to the petition I signed – “Leave the EU immediately”.

    Government responded:

    The country voted to leave the EU, and this Government respects that. A smooth and orderly exit is in the interest of both the UK and the EU.

    The country voted to leave the EU, and the Government is clear that there must be no attempts to remain inside the EU, no attempts to rejoin it through the back door, and no second referendum.

    In leaving the EU the Government will seek the best deal for the UK maximising the benefits from leaving the EU – control over our borders, laws and money – while maintaining the greatest possible access to EU markets and continuing to work with our European neighbours on common problems. After withdrawal, the UK will bring an end to the direct jurisdiction of the Court of Justice of the European Union (CJEU) in the United Kingdom.

    The Prime Minister has been clear that the days of Britain making vast contributions to the European Union every year will end. The European Commission has set out the European Union’s position on the financial settlement, and the Government is undertaking a rigorous examination of the detail of this.

    The Government has already introduced legislation to ensure the UK exits the EU with certainty, continuity and control. A smooth and orderly exit is in the national interest and further legislation will be introduced to deliver that.

    Both the UK and the EU should want to achieve the best possible outcome and the strongest possible partnership for the future. The Government believes that a deep and special partnership between an independent UK and the EU is in the interests of both sides.

    Department for Exiting the European Union

    • rose
      Posted October 18, 2017 at 5:23 pm | Permalink

      The most weaselly bit is:

      “After withdrawal, the UK will bring an end to the direct jurisdiction of the Court of Justice of the European Union (CJEU) in the United Kingdom.”

      After withdrawal? When after withdrawal? And why direct jurisdiction rather than jurisdiction?
      and:

      “The Prime Minister has been clear that the days of Britain making vast contributions to the European Union every year will end. The European Commission has set out the European Union’s position on the financial settlement, and the Government is undertaking a rigorous examination of the detail of this.”

      “Will end”? Again, but when?
      And what about our fishing grounds?

  6. frank salmon
    Posted October 18, 2017 at 8:21 am | Permalink

    Carney reduced interest rates because of Brexit. This would have added to the fall in the £. Now he says Brexit has stalked inflation so interest rates must go up. He should be more honest and blame himself for this situation, and it would be better if he were positive about the rise. Any rise should be welcome as it shows the economy is on the road to a full recovery. The fear of overheating and inflation with full employment is the real reason for the rate rise.

  7. Ian Wragg
    Posted October 18, 2017 at 8:29 am | Permalink

    Perfect timing
    Carney with support from the Chancellor engineering a recession and blaming Brexit.
    You could mark the calender with the shenanigans of the so called elite.
    No doubt the Brussels Broadcasting Company will be leading every bulletin with the gloom and doom scenario.
    Never miss an opportunity to talk Britain down.

    • graham1946
      Posted October 18, 2017 at 11:07 am | Permalink

      I wouldn’t be surprised if we are not already in recession. I have noticed over the last few weeks that the roads round here are very quiet both cars and heavies. Went on a coach trip last week and it was quiet, even the M25 kept moving. On Monday we were in a big town at lunch time and went for a MacDonalds and there were spare tables and no-one using the drive through – most unusual.

      May not be scientific, but it does make you wonder.

      • ian wragg
        Posted October 18, 2017 at 5:45 pm | Permalink

        Not the impression we’re getting in wifes shop. Business is about 10% up on last year month by month.

        • Edward
          Posted October 18, 2017 at 10:26 pm | Permalink

          maybe, the wife is a very able businesswoman?

          🙂

      • Anonymous
        Posted October 18, 2017 at 7:00 pm | Permalink

        Restaurants still difficult to book around here.

    • Simon Coleman
      Posted October 19, 2017 at 1:22 pm | Permalink

      No, they talk Brexit down, not Britain. The two are not the same, believe it or not. But Brexit doesn’t need any talking down. Our politics are already in chaos because of it, and that will result in further economic uncertainty and decline. Anyone who hasn’t been brainwashed by the Leave campaign’s Project Lies can see the Brexit future: chaos, decline, weakening of influence in the world and internal political fragmentation.

      • John C.
        Posted October 19, 2017 at 4:53 pm | Permalink

        Really democracy would be much less complicated if everyone voted the same way, wouldn’t it?

  8. Iain Gill
    Posted October 18, 2017 at 8:44 am | Permalink

    Dido Harding to chair NHS Improvement?, the government is joking right?

    Another in a long line of (unsuitable? ed) people, Richard Grainger et al

    Really the political class have a lot to answer for

    • zorro
      Posted October 18, 2017 at 12:43 pm | Permalink

      They all have a Common Purpose…..

      zorro

      • Stred
        Posted October 19, 2017 at 4:44 pm | Permalink

        Just came back from GP after a month wait. He says the whole NHS has run out of pneumonia vaccine, but just before the pneumonia season. I see trusts are appointing gender alteration managers or something that sounds like it. Let’s hope the talk talk ex can make it all as good as their helpline.

    • Lifelogic
      Posted October 18, 2017 at 3:39 pm | Permalink

      Doubtless she will concentrate on silly distractions like the size of chocolate bars in NHS vending machines, propaganda to pretend the NHS actually works and is competent and making sure the NHS know the sexual preferences and diversity of all their patients – this while they wait up to three years to get an appointment with a specialist or 12 hours to be seen at A&E.

      Another Oxford PPE graduate it seems – so not exactly encouraging!

      What Hammond needs to ask himself for the budget is why the state can tax so very highly and yet deliver so little of any real value at all to people in return.

      • Lifelogic
        Posted October 18, 2017 at 3:52 pm | Permalink

        Also ask himself why so many in the private sector have what are essentially non jobs. Jobs producing little but needed due to deft red tape, absurdly complex tax laws, the numerous licencing & permit laws, the planning laws, the many litigation scams, the bonkers employment laws, the gender pay gap reporting laws, the energy certificate laws, the minimum wage laws, the compliance industry, the climate alarmism religion, the renewable drivel, the work place pension and all the endless other damaging red tape.

        Government is usually the reason why these people are often totally unproductive or worse positively harmful.

  9. agricola
    Posted October 18, 2017 at 8:51 am | Permalink

    The basic dilemma of banks. Screw the customers when they need support, but pour out unsustainable loans when the sun is shining. Both scenarios are detrimental to the economy and those active in it. At one time banks knew their customers large and small so they could make reasoned business decisions. Now they are detached and require the Bank of England to make their decisions for them. I see a looming disaster in the housing market. Prices falling everywhere but London and the South East. Potential buyers cannot because the banks won’t lend, but meanwhile the demand in terms of people requiring a decent roof over their heads continues to increase at around 300,000 per annum

  10. NickC
    Posted October 18, 2017 at 9:32 am | Permalink

    The TFS is long past its sell-by date. It is the reason why savers get such lousy rates – about 1% at best for instant access when inflation is 3%. And of course inflation is at 3% because Carney halved the Bank rate to 0.25% last August. And Carney halved Bank rate to save his sorry ass after pumping out fake Brexit doom before the Referendum, to aid his establishment Remain masters. And the Remains blame Brexit. So the circle of Remain fakery is completed.

  11. Tabulazero
    Posted October 18, 2017 at 9:40 am | Permalink

    Faced with an uncertain future, wouldn’t it be logical to postpone spending on big ticket items until the situation becomes clearer ?

    As for the BoE, its pretty much between a rock and a hard place. If it cuts, it risks stalling further the economy. If it doesn’t cut, it risks sinking the Pound which will stroke inflation further.

  12. acorn
    Posted October 18, 2017 at 9:51 am | Permalink

    As usual, Brexiteers continue to look through the wrong end of the telescope.

    “In recent discussions, some lenders also reported that they had slightly tightened their credit criteria for some products. Motivations for this included concerns about customer indebtedness and the squeeze in real incomes. The performance of consumer credit lending appears to have remained generally strong over recent months. However, some lenders reported a few signs of a marginal deterioration. According to the CCS , default rates on consumer credit increased slightly over the past six months.” http://www.bankofengland.co.uk/publications/Documents/creditconditionsreview/2017/ccrq317.pdf

    • libertarian
      Posted October 18, 2017 at 12:13 pm | Permalink

      acorn

      as usual myopic tree nuts continue to link Brexit to anything and everything…

      • Anonymous
        Posted October 18, 2017 at 7:02 pm | Permalink

        The rise in divorce rates today.

  13. stred
    Posted October 18, 2017 at 9:51 am | Permalink

    Boom to bust in the housing market happens quickly as valuers and buyers start to panic. It is like climbing up and balancing on a see-saw. A small move tips it down. Those Treasury number crunchers who were counting on juicy CGT takings when landlords are flushed out will be disappointed when gains are reduced, but initially, the numbers of loss- making landlords will have them salivating like hyenas around wounded prey.

    • acorn
      Posted October 18, 2017 at 6:11 pm | Permalink

      I see a move to quietly wipe out Buy-to-Let landlords, it does make economic and political sense. It is increasingly being seen as a “capitalist” image, that no political party will want to be associated with; not even Thatcherites. It does not endear younger family voters, paying private sector rents, to vote Conservative.

      Some number crunchers have recommended that BTL landlords, should only be able to sell-out to Housing Associations or Local Council Housing Departments, at a maximum multiple of 15 times gross annual rent, but less depending on local council’s metrics.

      • libertarian
        Posted October 19, 2017 at 8:13 am | Permalink

        acorn

        Wow acorn you win dumbest post ever with that one. You want to shut down the private home rental market at the very time that its hardest to buy a house….. ok…. No political party in UK wants free markets you’re right sadly socialism and state intervention has proved conclusively a failure but hey keep on doing it. You think young voters being homeless will make them vote tory? You think that the state should own all the homes…. Good luck with that

        Have a lie down

        • acorn
          Posted October 19, 2017 at 12:20 pm | Permalink

          Alas Libby, the plan is way above your level of understanding. The bottom line is youngsters can gradually move to paying a mean public sector rent of circa £100 per week, instead of a mean private sector rent of £180 per week, while saving for a deposit. Land Banking and “back-build” would be subject to heavy LVT / CGT taxation. The public sector dous not get its proper share of land capital gains, which are all created by public sector infrastructure investment in roads, schools, health etc.

          • libertarian
            Posted October 19, 2017 at 9:36 pm | Permalink

            Sadly tree nut you are talking dribble as usual. The fact you have no comprehension of markets speaks volumes

            The fact that you think that paying rent and saving ( at almost zero interest) is possible and will get you a house deposit is quite niave. And the public sector that has appropriated all this property has to also pay to maintain it, where is that money coming from genius?

            The second part of your socialist wet dream has nothing to do with private landlords

          • a-tracy
            Posted October 20, 2017 at 9:53 am | Permalink

            But the public sector home owning network doesn’t work at the moment acorn. Demonstrated by a lack of building insurance to cover fire risk. Being unable out of rents to cover satisfactory safety renewals and depending on private homeowners taxes to bail this problem out.

            So private home dwellers have to have buildings insurance, private high rise buildings have to have adequate fire prevention facilities. But the housing association don’t and all of the exposure of this is left to taxpayers to pick up.

        • Lifelogic
          Posted October 19, 2017 at 2:42 pm | Permalink

          Indeed it would ne a disaster we need landlords just as much as we need car hire firms, indwed we need them much more.

          • hefner
            Posted October 20, 2017 at 8:59 am | Permalink

            Hey, Libby genius,
            If not by renting and saving, how do you expect young people with reasonably-paying jobs to be able to put together a deposit?
            Do you expect all parents to be able to give their (on average two) children the 10 or better 20% (i.e., £30k to 60k) that will allow each of the children to get a mortgage with non-extortionate conditions.
            Or is it that in your world, all parents have that amount of money to distribute easily, as they also obviously have already secured a substantial pension pot to retire in comfort?
            Or is it that all contributors on this blog swim in money?

            For someone who pretends to have a deep comprehension of markets, your comment is rather poor.

          • hefner
            Posted October 21, 2017 at 10:18 am | Permalink

            21/10/2017 11:20 message posted on 20/10/2017 08:59 still “in the queue”.

  14. ian wragg
    Posted October 18, 2017 at 10:13 am | Permalink

    I don’t suppose the OECD mentioned the £85 million it has received from Brussels over the past few years before it advised us to cancel Brexit.
    Nah…….thought not.

    • Denis Cooper
      Posted October 18, 2017 at 11:51 am | Permalink

      And I don’t suppose the OECD gave any thought to the feasible timescale for what they were proposing … even if the Cabinet decided this very day that there should be a repeat referendum on the EU it could only be held next spring at the earliest, maybe in the summer or possibly as late as the autumn*, and even if the repeat referendum gave the opposite result to the last referendum there would then still be the uncertainty about how the other EU governments would react when the UK asked to revoke its Article 50 notice …

      *I well recall the confident North/Booker predictions in December 2015 that the various procedural requirements would rule out a referendum in 2016 and so it would have to be held some time in 2017:

      http://www.telegraph.co.uk/comment/12060012/David-Camerons-new-EU-relationship-is-not-what-were-being-told.html

      “… there is the unending speculation as to whether his promised “remain or leave” referendum could be as early as next June. However, the Electoral Commission, which is in charge of the referendum, repeatedly tries to explain that this is out of the question … ”

      Just as well Leave campaigners did not take that as gospel …

    • hefner
      Posted October 19, 2017 at 8:25 am | Permalink

      Ian, where did you get that information about the £85 m given by the EU to the OECD?

      • hefner
        Posted October 19, 2017 at 8:32 am | Permalink

        The point being that, if you had cared for ten seconds to look at how the OECD had been created, who its members are, how it is funded, for what purposes, you would have found that the EU contribution is part of its normal financing.
        So no need for a conspiracy theory, you can then come back to the surface.

        • Edward2
          Posted October 19, 2017 at 1:34 pm | Permalink

          They refer to themselves as an independent think tank yet get huge sums from the EU
          It is just a coincidence that their regular reports are pro EU

  15. bigneil
    Posted October 18, 2017 at 10:13 am | Permalink

    Off-topic
    Months ago the govt announced it was going to start charging all our “fly-in-and-have-it-all-for-free health tourists from all over the World. . . Any chance of an update how well that scheme is going? Or are the UK taxpayers still being used to fund anyone from anywhere? while seeing their ability to get an appointment for themselves going down the Swanee. There is actually a limit to people’s patience and also their pocket contents.

  16. Bert Young
    Posted October 18, 2017 at 10:23 am | Permalink

    It is no surprise that the B0E has acted to clamp down on consumer credit . Irresponsible borrowing has gone on for far too long and encouraged members of the public to disregard personal debt in relation to income . Auto traders are , probably , at the forefront of this practice so they must be among the first to rein back . Germany will no doubt suffer the result .

  17. Posted October 18, 2017 at 10:53 am | Permalink

    The whole UK growth strategy since 2010 has relied on ever-increasing private debt as government try to achieve fiscal surpluses.

    And ever increasing use of subsidised cheap imported labour to prop up out of date capital. Why invest when de-unionised labour is cheap and available? And those firms that want to invest can’t because their profit margins are being eroded by the cheap labour parasites.

    What little top line GDP growth there has been, has been down to more hours worked by new people. GDP per capita, unsurprisingly, is about the same shape as the productivity curve and the private debt curve.

    The legendary productivity of the French (which leaves us, and the Japanese, left for dead in the water) is almost certainly tied in with their labour laws. When firing is so difficult, and therefore hiring discouraged, companies naturally invest in the tools and the training to make the existing workforce highly productive. The French are also pretty keen to get on with a job, and then clock out on time. Very disciplined in that sense.

    We have almost the reverse in the UK; companies find it easier and cheaper to hire and fire mammals – machines are expensive, the return on investment can take years and a mistake in buying the wrong machine, or one ahead of need, is much more costly relative to another pair of hands. Also the low corporate tax rate does not encourage investment, and we have the famous Anglo Saxon disease of short-termism.

    We could learn from the French, and also the Japanese. Despite the latter’s low rate of average productivity, in those areas where companies compete globally they are very productive, and low productivity is largely confined to the domestic sector, such as local retail and other services. Which raises prices locally, but can be seen as an informal tax designed to protect and provide employment for the less qualified. Wondered about the legendary standard of service in Japan?

    Corporate tax rates are also very high (once national and local taxes are summed) but generous tax breaks for investment reflect this, encouraging investment (sometimes to excess, Japan is still suffering from that).

    Low corporate tax rates don’t on their own encourage investment. They are a sweet given away without anything in return.

    If Hammond and Co don’t start to understand this and what powers a sovereign currency issuer has. There is no point having brexit. it would be like breaking free with a striaght jacket on and we’ll just sink.

    • The Prangwizard
      Posted October 19, 2017 at 1:55 am | Permalink

      Spot on! My sentiments exactly.

  18. Richard1
    Posted October 18, 2017 at 12:11 pm | Permalink

    Interest rates should increase there was no need for the emergency Brexit cut. The only regulation we need for banks is 1) sensible total leverage ratios and 2) a clear understanding that banks won’t be bailed out. Then we need massive promotion of competition through new entrants and fintech. Still far too much quasi monopolistic smoke and mirrors in banking.

  19. libertarian
    Posted October 18, 2017 at 12:15 pm | Permalink

    It is that time of the month again when talking heads with agenda angst about inflation and wages. In the main they are not qualified to talk about these figures or if they are they fail to understand the bleeding obvious. Inflation is a backwards looking number that tells us what we already know. Wage growth, the clue is in the name, is a forward looking number that tells you how much more is going to be in peoples pockets for the rest of their working lives. By definition these figures are out of phase because one anticipates the other 9 to 15 months hence…

    52,000 more in employment this quarter , still more than 700,000 unfilled full time jobs.

  20. Jack
    Posted October 18, 2017 at 12:19 pm | Permalink

    Higher interest rates will only fuel inflation further, as they are essentially free money from the government and also raise prices via the cost structure of the economy.

    Keep rates at 0 forever, it will strengthen the currency over the long run and massively reduce inflationary pressures. If lending gets out of hand you just regulate it (i.e. capital requirements), though I’m sceptical that lower rates necessarily mean more borrowing, raising rates to 5% would probably result in more borrowing, not less.

    Right now however the problem is that the BoE is trying to strangle the economy by telling commercial banks to rein in credit, at the same time as the Treasury is trying to strangle the economy by reducing the private sector’s surplus (govt’s deficit).

    This is very dangerous and will almost guarantee China will become richer than the UK on a per capita basis sooner than otherwise.

  21. Sakara Gold
    Posted October 18, 2017 at 12:35 pm | Permalink

    Don’t you think that there is too much debt in the UK? This country runs on tick. It’s not just consumer credit (including property mortgages) that is at issue, its the colossal sums involved in paying for the twin deficits, too many government non-jobs that need funding for non-contributory index-linked final salary pension schemes, the unbelievable incompetence of the MoD & the Universal Credit benefits people, huge sums paid to run useless QUANGO’s….i could go on.

    Capitalism works like survival of the fittest in the natural world. Every once in a while there has to be a recession to cull businesses funded by mal-invested capital. Maybe we are overdue one.

  22. TedC
    Posted October 18, 2017 at 2:39 pm | Permalink

    The BoE is correct..there is too much debt out there..we should spend about twenty years reining it in.. we have to start learning to live within our means

  23. nigel seymour
    Posted October 18, 2017 at 4:45 pm | Permalink

    So, The inflation rate is 3% for September. This is wonderful news for me personally as my two private CPI pensions get uprated. The obvious downside is BOE will raise interest rates which will obviate this increase. Give with one hand and take with the other me thinks. I understand that people on benefits will suffer in that they will not receive any increase to their FREE money. I worked for 42 years and have never claimed a single penny in welfare. I paid as much as I could into my BT pension scheme to try and ensure that I wouldn’t have to rely on the state to prop me up. There are claimants out there that get £25k a year and don’t work. There are EU migrants who are claiming probably this amount.
    What I am expected to think!!!!!!!!

    • Anonymous
      Posted October 18, 2017 at 7:09 pm | Permalink

      25k – and the rest. Tax free.

  24. Land Mine
    Posted October 18, 2017 at 4:50 pm | Permalink

    Universal Credit
    Labour makes its case for “A Pause” in rolling it out. Their argument in all things is “A Pause”, “A Delay” . I think they are hoping and waiting for an EU onslaught coming to their aid from the East. Not until they have paid their bills!

  25. Instant Recall.
    Posted October 18, 2017 at 5:35 pm | Permalink

    One enjoys the performance from Labour Party benches in Parliament. The clan and tribal growls and shouts of “Non-compassionate Tories.” Yet as a young man and considerably to the left of Corbyn, yes it is possible, I starved under Labour rule.When you go days without food and nights become something to get through without heat, a private landlord who steals your benefits’ giro cheque ( not to cash it!!!) so that you will get the message to leave your flat..Because?? the late Gerald Kaufman in his Rent control measures who like all Labourites is “PROUD”left landlords with no option but to get a new tenant on a new increased rent by whatever means. Hunger, genuine, and needing to get out of your home, losing your home, bites deep, deep deep as the darkest pit. I wish to my soul the Labour Party would just disappear back into the 19th Century.They are of
    no use to man nor beast.

    • Beecee
      Posted October 18, 2017 at 9:17 pm | Permalink

      I recognise your experience!

      Respect

  26. acorn
    Posted October 18, 2017 at 6:17 pm | Permalink

    BTW. “British productivity slump – all down to George Osborne’s austerity obsession”.
    http://mikenormaneconomics.blogspot.co.uk/2017/10/bill-mitchell-british-productivity.html

  27. The Prangwizard
    Posted October 18, 2017 at 6:22 pm | Permalink

    Are you still wholly loyal to the PM and convinced of her competence, Mr Redwood?

  28. Owl
    Posted October 18, 2017 at 6:33 pm | Permalink

    How The Government lost the vote on Universal Credit will always from hereon in be coupled with How The Government lost the General Election. You have just fallen on your swords. You have let the nation down and we can expect, actually as we always have expected, an utter betrayal of Brexit to follow.

  29. Duncan
    Posted October 18, 2017 at 7:04 pm | Permalink

    PLEASE, PLEASE, PLEASE just get rid of May and Hammond before it’s too late

  30. John
    Posted October 18, 2017 at 7:17 pm | Permalink

    I saw on the BBC website that they have a wage calculator to say if you were better or worse off than last year based on inflation.

    Without taking a calculator to it, it did look like they omitted the rise in the Personal Allowance which would negate the interest rate rise and more.

    In financial services we would be finned massively for putting out misleading info like that yet the BBC can do it to millions.

    • John
      Posted October 18, 2017 at 7:19 pm | Permalink

      In there it should refer to the low paid having the interest rate negated by the rise in Personal Allowance.

    • a-tracy
      Posted October 20, 2017 at 10:03 am | Permalink

      Don’t forget people are 1-3% worse off net wage wise because of compulsory workplace pension schemes, their employer is also contributing more to their gross pay.

      I think when we talk about average pay going back over the past decade we should also have the average hours discussed alongside the average pay as the working time directive was brought in specifically to reduce hours, allow flexible working, amendments to the age discrimination legislation led to more part-time and later age working which reduced average hours and average pay. Statistics can be fudged to prove whatever suits without facts and figures being presented properly.

  31. Edward
    Posted October 18, 2017 at 10:35 pm | Permalink

    Good Lord, Mr Carney never misses an opportunity to use 40 words when only one would suffice, long winded doesn’t do it justice.

    It wouldn’t be so bad if, you could believe that he really is in command of what he speaks.
    And then, all of his for want of a more accurate phrase, his ‘banking and business accument’ seems to be premised on Keynesian-esque dollops of fiscal and monetary imprudence and which then he proceeds to verbosely defend – when you use so many words to justify the indefensible, it is rather telling……………More, we all know very well that Mr. Carney is very strictly directed as Frankfurt and BuBa/ECB decree.

  32. Ron Olden
    Posted October 18, 2017 at 11:27 pm | Permalink

    I agree that monetary policy doesn’t need to be tightened immediately. Inflation will be back to near 2% by the beginning of 2019. But, it’s a question of the balance of monetary policy.

    My concern about monetary policy, is that at some point, short term interest rates are going to have to normalise, and that by then the Housing Market will be so overheated it will produce a serious House Price Crash with all the political and banking consequences associated with it.

    This could easily happen in the run up to the next election and ruin the Tories chances even of remaining the biggest party.

    In my view the best thing to do is start raising interest rates now, but mitigate the effect by further quantitative easing. Given that the budget deficit is still so high there’s no problem buying in more gilts.

    In fact the appropriate balance for monetary policy might be to raise rates by a quarter % now, and hint heavily, at more in the next year, whilst, between now and April 2019, get the Bank of England to purchase all the Gilts required to fund the Budget deficit as required.

  33. Stephen Reay
    Posted October 19, 2017 at 6:16 am | Permalink

    The funding for lending scheme will be extended for at least another 12 months. It should be now stopped as this has helped to reduce saving rates.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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