What would a better Bank of England policy look like

The Bank and the FSA allowed far too large an expansion of credit and derivatives prior to 2007, as many pointed out at the time.

They then decided to crash the banking system by withdrawing liquidity and putting up rates, leading to the Great Recession.

Since then they have restricted banks in making new loans, and have sought to offset the negative effects of this on jobs and output by keeping interest rates near zero and creating money themselves which they inject by buying up state debt.

Savers suffer from the low rates, but benefit from the inflation of asset prices this causes. Credit is cheap from banks but rationed strictly. Alternative credit from shadow and non banking sources is quite expensive.

This is not a good model. Getting to a better one will take time and patience, but we need to sketch the direction of travel.

The first task is to wean us off QE, by setting out a programme to cancel the state debts the state  now owns and to cease reinvesting the income and capital proceeds from  the state owned  bond portfolio. We will then  see that UK state borrowing as defined by international standards is relatively modest at around 65% of GDP.

The second task is to allow the commercial banks to create a bit more credit to finance a bit higher rate of growth. This should be done by adjusting the macro prudential requirements now that the banks have much better capital and reserve ratios.

When better growth is restored then the Bank can gradually increase rates when the data justifies it.

The aim should be to end up with 2% inflation, growth at over 2% and a small real return for savers instead of a negative real return.

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  1. Lear's Fool
    Posted November 4, 2017 at 6:26 am | Permalink

    Nuncle, could we have your comment about the Tory country matters?

    • Hope
      Posted November 4, 2017 at 10:30 am | Permalink

      I was expecting proper adjustment in policy like JR points out. Also nothing mentioned of the fund to lending scheme where the govt is making so much money available to banks it does not need savers money. When is this going to be changed.

      Where is there no chorus of returning regulation back to the Bank of England. The FSO has been an utter disaster. Make CEOs and directors earn their money by making them personally responsible, better than any regulation! Furthermore separate ordinary high Street banks from investment banks, clear distinction before Glass and Staegle was abolished by Clinton and followed by Blaire! This was introduced after th crash of 1930 s and worked perfectly well until Clinton wanted the black south vote and wanted to use the banks to achieve it, in return Glass and steagle abolished, 14 years of whoppee by bankers and then the crash through subprime mortgages.

      I am sure there are many alternatives but keeping the same before the crash to enrich bankers is stupid. Has Fred Goodwin suffered any real financial detriment for the suffering he caused? Have any of the bankers? Time for real change.

  2. Dame Rita Webb
    Posted November 4, 2017 at 6:37 am | Permalink

    Yes and what about the banks’ exposure to derivatives in comparison to ten years ago? Didn’t Warren Buffett refer to them as being “weapons of mass financial destruction”? The next ones already baked in and there is nothing the central banks or governments of the West can do to stop it, its only a matter of time.

    • Hope
      Posted November 4, 2017 at 10:33 am | Permalink

      More remainers to posts in cabinet is noted. This is significant to JRs many blogs including this one. A chancellor or PM would have had a word in Carney’s ear or sacked him. The same with the chancellor hims of for not introducing proper change and preparing for leaving the EU.

      Project fear in full swing including quangos, civil service, BoE all promoted by the Europhile PM appointing more and more Europhile ministers.

      • getahead
        Posted November 4, 2017 at 5:13 pm | Permalink

        the chancellor himself

      • Anonymous
        Posted November 4, 2017 at 6:57 pm | Permalink

        Project Fear is so bloody obvious.

        The theme throughout has been an underestimation of Leavers.

        They’re going to have to enlist under 18s and minibus them to polling booths, chaperoned by leftie Humanities teachers.

        The same age group that have been denied potato peelers (soon to be denied drain cleaner) because they can’t be trusted with them.

  3. stred
    Posted November 4, 2017 at 6:51 am | Permalink

    OT. A Brexit supporting MP has apparently been suspended by a Remainer whip who has the EU flagon his website. The MP says he has not been told why and the press was tipped off first. A remainer whip has been put in charge of defence, which is being integrated into the EU. Do they think no-one notices these moves?

    • Dame Rita Webb
      Posted November 4, 2017 at 7:26 am | Permalink

      Just the chickens coming home to roost. Have a read of Bill Deedes’ article on why talented young people would rather become the manager of a rock group than go into politics. If you keep voting for nomarks like the ones that keep getting mentioned in dispatches recently what do you expect?

    • Duncan
      Posted November 4, 2017 at 7:40 am | Permalink

      Until decent Eurosceptic Tory MP’s come together and impose themselves upon ‘the two’ Europhile socialist idiots at the helm of the Conservative party then we shall see continued sclerosis in the party that is now nothing more than a sham, a scam and a farce

      Contemporary politics is now infected and dominated by people who care only for their pay, pensions and entitlements. Principles and duty are nothing more than relics of the past

      Get Labour into power, let them destroy the nation and then we can rebuild from scratch.

      • Posted November 4, 2017 at 6:08 pm | Permalink

        Yes, but it sickens me that I and those in my circle worked all our lives to build a good life for our families, and yet you suggest that we allow Labour to destroy it all just so we can begin again? (When those of us who are over the hill won’t be able to see the results.) How utterly depressing.
        I hope and pray that this wobbly Government will somehow make good all its promises and fulfil its responsibilities in the wake of the Referendum. They could become the people’s heroes at a stroke! Why Oh Why don’t they strike that blow?

        • Rogm
          Posted November 4, 2017 at 8:02 pm | Permalink

          Linda Jones..because everyone in the know including JR realizes full well by now that Brexit is a lost cause. We are leaving there is no doubt but there are no alternative prospects lined up..nor can we ever ignore the fact that there is a ready made consumer belt with huge spending power located just 20 miles from our shore..so alas it’s time to get real..we’re now going to waken up to being in a position where in order to trade with them we’ll have all the obligations of being a member of the EU but with no say, absolutely none, no say in the future development and progress of that trading bloc..that is where the tory extreme right wing and UKIP people have landed us.

          Reply Nonsense

        • Norman
          Posted November 4, 2017 at 8:41 pm | Permalink

          Hear, hear!

    • Ian Wragg
      Posted November 4, 2017 at 8:02 am | Permalink

      Mrs May is surrounded by similar minded remainiacs.
      We are gradually being sold out which won’t end well.
      This weeks talks are about talks as Brussels refuses to move on until we agree the outrageous divorce bill.
      Just watch May slowly capitulate to their demands.

      • Posted November 4, 2017 at 6:17 pm | Permalink

        I do wish that someone would question the payment of any money to a foreign power in the interests of trade advantage. Surely that is illegal. Isn’t it called ‘bribery’?

        • Hope
          Posted November 4, 2017 at 8:41 pm | Permalink

          She has already done so. Compare and contrast Lancaster speech from Florence speech which she allowed the EU to edit/write! Who in their right mind would allow the opposing body they are negotiating with to write how much hey should give them!

          Is was nothing to do with with breaking an alleged deadlock it wa about conditioning our minds, with a bit of scare from the Treasury, BoE and civil service. May actually believes we will be frightened to give the EU a vast chunk of our taxes to trade with it. She should not be giving away anything for nothing including security and intelligence, military, overseas aid- a sixth of which goes to the EU without a say from any UK politico. No ECJ over any citizen living in this country, we voted out. Our borders, our courts or money and our laws. Anyone who wishes to stay must accept it, or leave. The same applies to any British citizen living and working elsewhere int eh world. No free health care either inside or outside the EU. NHS cannot cope. If any person seeking to live here cannot provide true identity details do not expect asylum, refugee status or anything else.

          Rudd lost 56,000 immigrants this week. Where do they live, work and get health care? Two days before she told the police do not ask for any money as it will fall on deaf ears! Whatever share of the 56,000 belong to EU countries they can have back.

        • alan jutson
          Posted November 4, 2017 at 9:53 pm | Permalink



          Exactly right, clearly not “FREE” trade if you are going to pay for it is it.

        • NickC
          Posted November 4, 2017 at 11:24 pm | Permalink

          Linda, Yes it is.

    • Roy Grainger
      Posted November 4, 2017 at 8:39 am | Permalink

      And it is rumoured the list of Tory MPs was partly put together by a former Tory SPAD now working for Mandelson.

    • Bob
      Posted November 4, 2017 at 9:38 am | Permalink

      The MP concerned tweeted The party tipped off the press before telling me of my suspension. I am not aware of what the alleged claims are and deny any wrongdoing.

      Sinister goings on in the Tory Party.

    • a-tracy
      Posted November 4, 2017 at 10:19 am | Permalink

      I hadn’t noticed Shred and that is troubling.
      Fallon was a remain supporter but Eurosceptic IF you can believe anything you read in the press now with so much fake news and unchallenged reporting. Most of us are just shaking our heads at the moment and wondering what the heck is going on.
      Like why is Nick Clegg getting an audience with Barnier, he’s not an MP, he’s not an MEP he represents none of us, he was voted out why is he even being reported on. Anna Soubry was a supporter of DD when he ran for Tory leader and like a rat scuttled off to support DC when the wind blew in the other director her principles are as solid as that yet we’re meant to listen to her views EVERY DAY, enough already!

      • a-tracy
        Posted November 4, 2017 at 10:20 am | Permalink

        other direction

    • Denis Cooper
      Posted November 4, 2017 at 11:40 am | Permalink

      I notice, and something else I notice is the way that Remoaners are being allowed to conduct a systematic and intensive propaganda campaign to try to keep us in the EU without the government ever bothering to answer back.

      The government had plenty to say in support of its previous policy that we should stay in the EU; it spent millions on leaflets to be delivered to every household, and even during the so-called “purdah” period immediately before the referendum it carried on feeding out misinformation to the mass media to be printed in millions of copies of newspapers and broadcast direct into homes.

      But it is not making any comparable efforts to publicly defend and promote its new official policy of leaving the EU. Why not? What is the point of the point of the Department for Exiting the European Union having a website and a twitter feed if it only uses it to record David Davis’s foreign trips and never uses it to rebut the nonsense being spread around by unpatriotic deceitful Remoaners?

      It’s almost as if the government sees this is as just a game and secretly hopes that sooner or later the voters will tire of it enough to want a chance to correct the silly mistake that they made in June 2016.

      • Hope
        Posted November 4, 2017 at 8:50 pm | Permalink

        I think the govt will make the next election the second unofficial referendum. I appreciate your view about how it is legal to extend etc. I say No to any extension, speciously called transition. This is an excuse so a vote will take place. EU and leaders of countries within already stating the U.K. Could change its mind.

        May stated this week that a meaningful vote was necessary in parliament for it to be legal. I suspect her remaining cabinet, leavers will gradually be eased out other than Johnson, Davis and Fox, will start trotting out why we need associated membership of some kind because the economic propoects of leaving without a deal is apocalyptic for us.

        Deal or no deal by March 2019. We voted leave not any of the specious distinctions remainers claim, what sort of Brexit etc. We voted leave full stop.

    • Mitchel
      Posted November 4, 2017 at 12:18 pm | Permalink

      A remainer(Tugendhat) has replaced a leaver (Blunt)as Chairman of the Foreign Affairs Select Committee too.

      • rose
        Posted November 4, 2017 at 7:04 pm | Permalink

        And he was sticking the knife into Boris the other day. Gratuitously, as usual.

    • Prigger
      Posted November 4, 2017 at 12:37 pm | Permalink

      Imagine these kinds of moves in Business, in the lifeblood of our nation, they are happening now. They have been happening in Local Authorities too.
      It will not be too long given the bad leadership of government that workforces will be mixed gender, in total employed, but separated by walls. No business has time and money and managers to cope with this nonsense. It is essential the pc brigades vanish from Parliament. They are a direct threat to the well-being of all of us.

    • Ed Mahony
      Posted November 4, 2017 at 3:19 pm | Permalink

      Sorry, but i think this is conspiracy theory stemming from an unhealthy obsession with the EU.

      Let’s just balance things up. There’s good and bad things about the EU and being members of the EU.

      Just as the EU is far from perfect. So we know that our own Parliament and parliamentarians are far from perfect as well.

      If we lived in a perfect world, there would be no EU, no globalisation, no security threats to Europe of the UK. But we don’t live in a perfect world. And we need to be careful about being ideological and Utopian. Rather we need to be pragmatic as well as realise that most of the country want changes with the EU but nothing too dramatic, either, like Hard Brexit. Hard Brexit is something that only a small % of the country want. And so it doesn’t have the legs to run 20 years of economic decline, and everything else opposing it.

      We have to compromise. Go for something like EFTA with controlled borders (which we’ll have to pay for). And unite as a country to try and resolve all the other important national areas of concern: national debt, build up our economy, and everything else.


      • getahead
        Posted November 4, 2017 at 5:20 pm | Permalink

        Or simply leave the EU which we never knew we had joined in the first place and be a free country once more.

        • Ed Mahony
          Posted November 4, 2017 at 8:30 pm | Permalink

          The EU has become an unhealthy obsession.
          Yes, it’s an important issue but not that important.
          Many things are more important: love, beauty, sex, money, peace, beauty, friendship, health, death.

        • Ed Mahony
          Posted November 4, 2017 at 9:49 pm | Permalink

          ‘be a free country’

          – What do you mean by ‘freedom?’

          It sounds great. But from my reading of History, Philosophy, and English Lit at least, freedom in this life is extremely limited. Being out of the EU is hardly going to make much REAL difference to most people’s idea of freedom.

          Certainly most businesses don’t share your idea of freedom. Nor most young to middle-aged people. And for the older generation, REAL freedom, when you really think about it, is freedom from ill health, loneliness, family rows and break-ups, crime and all the bad stuff that happens in the world. And that’s only the very beginning of real freedom.

          I really think you’re hyping this ‘freedom’ stuff into something way beyond what is really real and important for most people in this country (which is one reason why only a small % of people support Hard Brexit as opposed to something like EFTA with controls on borders).

          Sorry if you find this boring or annoying. But the truth never hurt anyone in the long-run. And i think this is the truth (but happy and open to be corrected ..). And i don’t want to see my country suffer as Hard Brexit could sink this country into real stress and trauma, in so many ways, for 20+ years. In fact I don’t think Hard Brexit can work, long-term, as it hasn’t the legs to last 20 years of opposition which will great increase as the decline in the economy really begins to bite (we haven’t even left the EU left).


          • Edward2
            Posted November 5, 2017 at 9:58 am | Permalink

            You either are ruled by a foreign organisation and give its courts supremacy over your nation or you do it yourself.
            Like 160 other nations.
            Free and self governing.
            Democratically elected local representation.

          • Ed Mahony
            Posted November 5, 2017 at 3:32 pm | Permalink

            ‘You either are ruled by a foreign organisation and give its courts supremacy over your nation or you do it yourself’

            – Why does if it have to be black and white? This isn’t the laws of physics.

            – ‘Like 160 other nations.’ Why does being like 160 other nations make this a valid argument? Scratch under the service, and how many of these 160 countries would like full access to the largest single market in the world!

            So often the best solutions in life are compromises. And not being black and white about everything.

      • Anonymous
        Posted November 4, 2017 at 7:01 pm | Permalink

        The difference being we can sack British parliamentarians.

        • Ed Mahony
          Posted November 4, 2017 at 8:31 pm | Permalink

          Yes, it’s important but that not that important.
          Brexit has become an unhealthy obsession.

          • Edward2
            Posted November 5, 2017 at 9:59 am | Permalink

            It is not “ungealthy” to desire freedom.

          • Ed Mahony
            Posted November 5, 2017 at 3:35 pm | Permalink

            ‘It is not “ungealthy” to desire freedom’

            – Could have been said by someone such as Che Guevara.
            I never said it wasn’t unhealthy to desire freedom. I said it becomes unhealthy when it becomes an obsession and/or when the case for ‘freedom’ is exaggerated compared to say France seeking freedom from the Germans in WW2 or Nelson Mandela from apartheid in S Africa.

      • NickC
        Posted November 5, 2017 at 12:01 am | Permalink

        Ed, I don’t know of any good things exclusive to the EU.

        The vast majority of the world is not in the EU. You are going to have to stop considering most of the world as “obsessed” or extreme. It’s unhealthy.

        • Ed Mahony
          Posted November 5, 2017 at 3:42 pm | Permalink

          ‘Ed, I don’t know of any good things exclusive to the EU’

          – The worlds largest single market.
          – Helped to give peace to Europe.
          – By building up our neighbours’ wealth, we’re also building up trading partners for the future. Look at how Ireland is now an important importer from us. Look at how the EU has helped bring prosperity and hence peace to N Ireland.

          ‘The vast majority of the world is not in the EU. You are going to have to stop considering most of the world as “obsessed” or extreme. It’s unhealthy’

          – Sorry, Nick, but your argument is fallacious on at least three counts. Firstly, it doesn’t follow that because the vast majority of the world is not in the EU that they wouldn’t choose to be in the EU if they could! Secondly, I don’t know any countries outside the EU who want to remain outside the EU in any ‘obsessive’ manner. Thirdly, the EU is also about geopolitics which is about geography. Argentina, for example, isn’t so affected by civil war breaking out in N. Ireland or Spain or wherever or a dictator rising up in Italy, and so on. Where as, we are.

          • Margaret Robinson
            Posted November 10, 2017 at 6:06 pm | Permalink

            Having been born in NI and lived through the troubles I can assure you that prosperity had little to do with the conflict and the EU less than nothing. The breakup of Yugoslavia was influenced by the EU and during the war they proved to be totally impotent. The IMF has recently apologised for their part in the destruction of Greece and confirmed that the measures taken were primarily to bail out German banks hence the stance taken by ECB and EU . In greece they instigated a coup to remove an elected government. By whose authority other than their own did they take over Italian Banks. Last week they advised msm reporters that they would issued cards to journalists of their choice and advised them that cards would be removed from journalists that failed to adhere to their code. No criticism of eu or migrant policy and no ethnicity to be revealed when reporting crimes. They went further than this in explaining ways in which they should be ultra sensitive in reporting anything relating to islam. This week they explainecd that their army would be permitted to enter any member state even if not requested or refused by said member state. This is Totalitarian rule in a police state and this is only the beginning. They are now talking about direct taxation. This is just the tip: I have EU official documents Isesco and the Barcelona agreement aligning with Arab states to create not just a superpower but THE world superpower. Hence their love of Islam and their willingness to not just accept migrants but actively encourage them. etc ed They have no interest or empathy with the people of Europ. They are just the useful idiots necessary for the eu to achieve their goal Eurosceptism is rising significantly and their arrogant response more Europe says it all.

      • Prigger
        Posted November 5, 2017 at 2:10 am | Permalink

        Where do you get your information that “most of the country want changes with the EU but nothing too dramatic” Just Remoaner wishful thinking. It must be repeated because Remoaners will not accept democracy. People voted to LEAVE. When the nightclub Bouncer says LEAVE he does not wish some fool to ask, “What exactly do you mean by Leave? Do you mean soft leave or hard leave?” Must your face and bottom be impregnated in the tarmac on the outside of the club to impress upon you that leave means leave?

  4. mickc
    Posted November 4, 2017 at 6:57 am | Permalink

    All fine…..except credit is not cheap from banks. The banks are profiteering on a monumental scale.
    Also power to decide interest rates should be returned to the Chancellor; Brown’s catastrophic regulatory structure should be reversed.

  5. Lifelogic
    Posted November 4, 2017 at 7:05 am | Permalink

    Exactly right.

    The banks are currently absurd in their demands and still want large margins and fees. If my business is cash rich they pay me almost nothing on the deposit, then a few months later I want to borrow to buy something they demand perhaps 12 times what they paid me on my deposit. Yet they want this loan to be hugely well secured when mine was unsecured.

    They lend rather low loan to values too and have other silly restrictions. They take ages to decide, demand endless accounts and information and put other absurd obstacles in the way, they also seem to use valuers who are rather pessimistic and will not consider any “planning potential” value which is often why you are buying the unit. After all this hassle the property has probably gone already or they come back with poor rates that you are not interested in.

    HSBC would not even renew a small loan on a commercial property I have had with them for 10 years (and that is less than 40% LTV) as they say they are now are only interested loans of this type if they are over several £million. This due to government red tape making it not worth their while to bother.

    Deals I used to be able to do with say £200K of my money now might need £600K of my money – due to the banks restrictions. So I can only do 1/3 of the deals.

    I could easily expand my business and employ perhaps 20 -30 more people. What puts me off doing this is the the hassle of dealing with the banks, the absurdly risky employment laws for employers, the daft socialist (big government, high tax, high regulation, greencrap) agenda of May and Hammond.

    Above all that fact that the May agenda will surely lead to a confiscatory Corbyn government which will be an even bigger disaster than May/Hammond one. Anyway what is the point if the government is going to take 40% of your capital off you on death anyway.

    Having a chancellor who thinks IHT at 40% over £325K and stamp duty at up to 15% is surely proof that the man is economically illiterate. In the USA the IHT threshold is $5.5Million each and the tax rate is initially far lower than 40% too. Turnover taxes on houses vary but typically are under 1% of value.

    • Lifelogic
      Posted November 4, 2017 at 7:08 am | Permalink

      Brexit on the other hand hold no fears for me, or my various businesses. Not that I think we will now get a real Brexit from May & Hammond after she threw the election away with her vote for me and I will punish you manifesto.

  6. am
    Posted November 4, 2017 at 7:14 am | Permalink

    Targetted Keynesiansism is needed for brexit – not blind theoretical austrianism where the idea is to use brexit as an opportunity to impose an economic system not appropriate for the time or the place.

    • libertarian
      Posted November 4, 2017 at 4:49 pm | Permalink


      Dont know where you’ve been but we’ve had Keynesianism for the last 20 odd years, it hasn’t worked yet, won’t work soon and in fact will never work

  7. Javelin
    Posted November 4, 2017 at 7:20 am | Permalink

    I have scanned the newspaper comments and social media, as I do every Saturday morning, to pick up the political vibe. I can report that the Conservatives are not liked – because of their policy on immigration.

    Shockingly they are not liked by Conservative voters.

    It’s got to the point where hardly anybody has anything good to say about them. This is by far and away the worst state I have every seen. The Conservatives are so far out of touch with the ordinary voter is actually breath taking. I am expecting a huge loss of votes at the next election.

    If you can find a positive comment about May and her policies please post it.

    • Timaction
      Posted November 5, 2017 at 12:57 pm | Permalink

      Rudd and the Immigration Minister should be ordered to an independent panel of non politico’s every month to give a progress report on bringing immigration down from all sources. An action plan should be created that is time limited. Personal sanctions given to them and if they do not achieve within a reasonable time frame, sacked and the role given to others who will deal with this as the English people demand. Keep sacking until they deliver. Lets bring a bit of real world into our useless Westminster huddle.

  8. Peter Wood
    Posted November 4, 2017 at 7:37 am | Permalink

    Dr. Redwood,
    Yes, stop the QE and sort out the BOE’s ownership of government debt. BUT, are you suggesting we, the people, get into more debt? I hope not as it is already too high and rising. UK household debt as % of disposable income= 141.8%, compare to Germany 85.2% and USA 104%. Please review your own briefing documents: http://researchbriefings.files.parliament.uk/documents/CBP-7584/CBP-7584.pdf
    Clearly people are borrowing too much already, mainly to buy houses. (House prices do go down as well, as I recall from the 1980’s). When interest rates are ‘normalised’ there are going to be a lot of people crying over negative equity again and we’ll have a far worse recession, and this will be a direct result of too cheap money for too long.

    • Anonymous
      Posted November 4, 2017 at 7:08 pm | Permalink

      The over valuation of a house (borrowed money) is easily measured by the amount it could realistically achieve in rent (real money/wages.)

      Rent:value is well out of kilter in most areas.

  9. Lifelogic
    Posted November 4, 2017 at 7:44 am | Permalink

    BBC reporting (totally unquestioningly as usual) more climate alarmist “news” today from a US report. Claiming with 95%-100% certainty (rather suspiciously round numbers) that global warming is certainly man made, mainly from c02 that comes burning coal, oil & natural gas.

    The green crap industry really are getting very worried and becoming more and more absurd by the day.

    How do they explain the lack of any recent warming, or that 96% of CO2 emissions are from natural sources and only 4% is man-made? Anyways a little warmer, on balance, is a good thing. There is no runaways climate catastrophe round the corner and anyway the renewable “solutions” do not even save any significant c02, they just make energy very expensive freeze the poor & elderly and kill or export jobs.

    It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong. Richard P. Feynman

    • hefner
      Posted November 4, 2017 at 6:49 pm | Permalink

      Assume you have a bathtub almost full of water. You first decide to empty it because the water is getting cold then immediately change your mind and open the tap to keep the overall level the same. Fine, no problem. That’s your 96% percent of natural sources corresponding to 96% of natural sinks. Everything fine and dandy, balanced. Then you open a bitty more (4%), say, because you want to add more hot water to your bath getting cold. If the flow of water getting out of the bath does not change, don’t you think that after a while, these additional 4% of water will not make your bathtub to overflow?
      Sorry to use talk more adapted to primary school children than to grown-ups, but …

      • NickC
        Posted November 4, 2017 at 11:44 pm | Permalink

        Hefner, Except your analogy is fictional. CO2 is 0.04% of the atmosphere, is vital for life, and has sinks and sources hugely greater than the total amount in the atmosphere, never mind the tiny amount we add. We are no where near “full” of CO2, or anything like.

        The only outcome of that extra CO2 so far has been good (due to measurable CO2 greening of the planet), not bad, still less catastrophic. The “consensus” scientists are now saying that CAGW was an invention of “climate sceptics” to discredit AGW. So you’re a bit behind the curve.

        • hefner
          Posted November 5, 2017 at 4:10 pm | Permalink

          NickC, as I am a bit behind the curve, I am sure you will be, far better than I could, able to comment on the recently published (2017) potential link between enhanced tropical cyclone activity and Saharan greening, from a Swedish research group in Proc.Nat.Acad.Sci.
          Thanks in advance for your wisdom.

      • Lifelogic
        Posted November 5, 2017 at 7:55 am | Permalink

        But the atmosphere it is far from your simple bath analogy. Numerous other things and feedbacks change CO2 concentrations, the sea, plants, animals, volcanoes, water vapour and also affect the temperature – only a small minority of them are man made.

        The sensitivity of climate to CO2 has been hugely exaggerated for government political, fiscal and religious reasons. The feedback mechanisms are largely negative not positive and a bit warmer is, on balance, a good thing anyway.

    • Leslie Singleton
      Posted November 5, 2017 at 5:09 am | Permalink

      Dear Lifelogic–The 95% certainty is not a measured quantity–Did you expect decimal places of uncertainty? The relentless banging on about temperature, a lot of which I too do not buy, is certainly all-pervasive whereas the easily measured increased and increasing acidity of the oceans goes largely uncommented-upon, while coral reefs die and shells of my favourite seafoods ineluctably just dissolve away.

      • Lifelogic
        Posted November 5, 2017 at 9:25 am | Permalink

        The 95% – 100% “degree of certainly” is clearly just political drivel and absurd propaganda aimed at the “BBC think” population. Most of whom have no understanding of science or statistics. The BBC’s Environment Analyst, is a Catz English graduate for example.

        It is nothing whatever to do with rational, scientific analysis. It is clearly absurd (given the chaotic and hugely complex world’s climate systems and indeed the energy systems on the sun) to imagine such figures can be derived.

        You can derive such accurate figures in a very simple game a shaking a dice many times, but not with something as complex as climate. Claiming to do so shows quite clearly they are a fraudulent or at best idiots.

        • Leslie Singleton
          Posted November 5, 2017 at 10:34 am | Permalink

          Dear Lifelogic–I have forgotten more than I care to remember on this but I think we, or they, are or should be talking Confidence Intervals and, again, arriving at those is old hat mathematically based on Standard Deviations and all that good stuff and nothing to with “accurate figures” in way you imply. If they are saying that their 95% is just their opinion (I have not read the Report) that is a different story.

          • Lifelogic
            Posted November 5, 2017 at 6:30 pm | Permalink

            How can you separate, “man made” and “natural causes” and then give a 95%-100% certainty to it being man made – it is all complete b******* or rather politics & propaganda. No proper physicist would dream of making such absurd claims.

      • Edward2
        Posted November 5, 2017 at 10:01 am | Permalink

        The oceans are not acidic.
        They are very much alkaline.

        • Leslie Singleton
          Posted November 5, 2017 at 4:57 pm | Permalink

          Dear Edward2–Can hardly believe you said that–Of course they are alkaline BUT they are no longer as alkaline as they were, and should be, because they are becoming more acid (less alkaline) all the time by reason of the dreaded carbon dioxide dissolving and forming carbonic acid–There isn’t the slightest doubt about this–Ask any lobster–pH is easy enough to measure.

          • Lifelogic
            Posted November 5, 2017 at 6:33 pm | Permalink

            Should be? Who say what the alkalinity “should be”?

            Some sea life like it slightly less alkaline evolution will deal with it, as it has in the past.

  10. Nig l
    Posted November 4, 2017 at 7:57 am | Permalink

    Interesting. I am not seeing any evidence that the Banks are shutting down business lines. If you speak to Bankers their stock reply, as it always is that they are in the market for good proposals, in reality quantifiable profit, cash flow plus supporting security. Start up, Seed, ie Risk goes elsewhere. The issue remains demand not supply but politically it suits to blame third parties rather than the economic climate.

    Not so far back the Banks were accused of turning down good proposals so were bullied into allowing them to go to other parties. How many were picked up second time around very few. In terms of the cost it reflects the risk and as for a previous correspondent talking about profiteering, I guess he hasn’t managed a Lending book because it is not straight forward and is very time consuming. We have Challengers, on line funding groups, all pushed as the solution, but you are still say it is a demand problem. Maybe Hammond should create a fund where every application just gets the money, no appraisal and monitor the ROI.

    • Leslie Singleton
      Posted November 5, 2017 at 5:17 am | Permalink

      Dear Nig–Yes I would love to see the “previous correspondent” not so much handling a Lending Book but sitting behind a desk with a queue of strangers outside with their loan proposals. I once asked such a one how much Capital he was putting in to which the answer was, Er, I thought you were providing the Capital.

  11. Pete Else
    Posted November 4, 2017 at 7:58 am | Permalink

    The best Bank of England policy would be closure but, of course, that will not happen because it would end the gravy train for bankers, politicians, bureaucrats, arms manufacturers and all the other insiders that benefit from the fraud that passes for an economy.

  12. Alex Reeve
    Posted November 4, 2017 at 8:06 am | Permalink

    I failed to understand your first task as outlined in paragraph six. Have you a reference source or similar that could explain this?

    • getahead
      Posted November 4, 2017 at 7:01 pm | Permalink

      Yes, I was wondering how debt can be simply cancelled.

      • forthurst
        Posted November 5, 2017 at 12:55 am | Permalink

        The ‘debt’ consists of government bonds sitting in a subsidiary of the BoE collecting interest from the Treasury which own the BoE.

      • Leslie Singleton
        Posted November 5, 2017 at 5:21 am | Permalink

        Dear getahead–You owe it to yourself remember

  13. Al
    Posted November 4, 2017 at 8:12 am | Permalink

    Why isn’t the current model a good model? The rationing of cheap credit prevents a bubble. And if you can afford to save then you probably own your own home and are doing okay, if you want a better return try taking some risk with your money rather than putting it in the bank.

    • Caterpillar
      Posted November 4, 2017 at 4:48 pm | Permalink

      Al, Credit and risk are both mispriced due to BoE and Govt interventions.

  14. Richard1
    Posted November 4, 2017 at 8:19 am | Permalink

    So Michael Fallon, one of the more articulate cabinet ministers, has been brought down by Andrea Ledsom, surely one of the weakest. Crude as his alleged remark of six years ago was, it seems very unlikely anyone in another position would lose their job over it. Ledsom must be thinking of herself and how she can push her ridiculous ambition to be Prime Minister, rather than the best interests of the government or the Country. Let’s remember this next time Mrs Ledsom puts herself forward for a position for which she is patently not qualified.

    • rose
      Posted November 4, 2017 at 7:12 pm | Permalink

      What about the tales that Mrs Leadsom had told Mrs May in Cabinet that her Florentine speech was disastrous in parts? What about the tales of Sir Michael saying she was a dud and had to go because she was standing in the way of HMG capitulating to the EU? How can she be a dud on the one hand, and standing out against national disaster on the other? It doesn’t add up.

      • Hope
        Posted November 4, 2017 at 9:00 pm | Permalink

        Leadsome had and shoulders above the remainers in cabinet including May. Personality, drive, happy disposition and charisma. She appeals to voters where May never will. Some scullsuggery took place for her to withdraw her leadership candidature.

        Fallon was a patronising remainer who made the snide remark we are all Eurosceptic aren’t we? No he was not nor was Cameron as everyone now knows. Good riddance. Shame a leaver like JR was not put in cabinet, Duncan- Smith, Jenkins or Rees- Mogg, May scoffed at the prospect of the latter- why? He is more intellectual and appealing than her every day of the week and twice on Sunday.

        Why has May not sacked Odonis or removed the whip from Clarke? Serious issues that need addressing.

    • Norman
      Posted November 4, 2017 at 9:09 pm | Permalink

      I’m no so sure we should believe the vicious media attacks on Mrs Leadsom. I prefer to believe she is too nice a person to tough it out and fight back.

  15. agricola
    Posted November 4, 2017 at 8:29 am | Permalink

    What you say about a desirable financial situation is something the BoE should be aiming at, but I am not holding my breath.

    Much more significant this week is currently what is going on in Parliament. Able politicians being forced to end their careers through petty playground incidents of no great significance. Anything serious is a matter for the police and possible criminal charges. Putting your hand on the knee of a journalist who dealt with it robustly at the time, or telling a minister where she could warm her hands is pathetic as a means of ending a career or in the latter case of enhancing a career. The PC feminist movement has become insane and the PMs grovelling to it even worse. Yes there should be an effective means whereby victims can get redress without harming their career , but the current witch hunt is disgusting. Do not tell me that predatory female interns and journalists have never used their sex as a lever to enhance their career or to gain a story.

    England is currently suffering patients who cannot leave ambulances to get into A&E for hours at a time and at increasing levels. Knife and gun crime at alarming accelerating levels while police numbers have declined by a reported 20,000. Overseas Aid lunacy while NHS beds are blocked due to lack of after care. The only good news coming out of the UK at the moment is Strictly Come Dancing. It is said that those the gods would destroy, they first drive mad.

    • Fedupsoutherner
      Posted November 5, 2017 at 6:41 am | Permalink

      Agricola. I couldn’t agree more with your summary of the NHS at the moment. I had a hip replacement 2 weeks ago. I was discharged after 3 days. 4 days later I developed an infection at the site of the wound. I went to A&E only to be initially sent home without antibiotics. The following day I had a temperature and the infection had spread. I spent a week in hospital in a surgical ward where every person was over the age of 80. They did not need treatment but were there because there was no after care available for them. The nurses spent 90% of their time changing soiled sheets, washing patients, feeding them and answering unnecessary calls due to lack of patient awareness. My antibiotics given via a drip were often given late and vital blood tests were missed. I have been home for 2 days now and my rash seems to be getting worse. I dread to think of having to ho back in or if there will even be a bed for me as the hospital was already full and winter is not upon us yet. The NHS is falling over on its feet and yet we continue to give out foreign aid and EU money like we are playing monopoly.

      • miami.mode
        Posted November 5, 2017 at 5:41 pm | Permalink

        fus. This must be an extremely distressing time for you and I hope you soon recover your health and it all works out well in the end.

        I believe nurses are now required to have a degree or similar to gain employment and your experience would suggest that some sort of nursing assistants are needed and 3 could probably be employed for every highly paid under-worked manager disposed of.

        I also tend to disbelieve the figures quoted for foreign use of the NHS. Government reports that it is a few hundred millions but this seems to me reminiscent of Labour’s figure of 13,000 Poles arriving here that turned out to be nearer 1 million. I also wonder if Hillary Clinton was charged for her use of the NHS during her recent visit. This seems to me to be a suitable question in the HoC.

  16. Peter Martin
    Posted November 4, 2017 at 8:35 am | Permalink

    Agreed on the aims but how to get there? Firstly, there is a fundamental problem with how we view the economy to solve.

    The conventional wisdom is that having lower interest rates will increase economic activity and higher rates will slow it. That’s not quite right. It’s the process of lowering them that stimulates demand. So in mathematical terms it is the rate of change of interest rates, or the first derivative, which determines whether economic policy is reflationary or contraction.

    Consequently, lowering interest rates appears to produce a stimulation but the effect wears off and another reduction is then necessary. We end up with interest rates close to zero and wondering what to do next.

    Just like we are now!

  17. Jack
    Posted November 4, 2017 at 9:07 am | Permalink

    Government debt is our total net financial wealth. Countries with higher debt to GDP have a better economy, provided their governments don’t impose austerity.

    Countries with lower govt debt to GDP have worse economies as this means the citizens have less net wealth, and these countries either have higher private debt or a higher reliance on potentially volatile exports (and exports are a real cost to the economy, just as imports are a real benefit, i.e. national citizens are better off when they consume what they produce).

    • Jack
      Posted November 4, 2017 at 9:11 am | Permalink

      Ultimately though, govt debt to GDP doesn’t really mean that much. It’s just a measure of how big part of the money supply (govt created money) is to the size of the economy.

      With an ageing population this will only go up (all things being equal) as citizens decide to save more of their income as they age.

  18. NHSGP
    Posted November 4, 2017 at 9:35 am | Permalink

    And you voted for taxing their capital.

    Then they had to realize their losses

    Then you made it unattractive to invest in banks

    The combination of that with the change in the gearing on banks means you haven’t had lending when it’s needed.

    Sorry John but you’re trying to blame spread your own disaster.

  19. NHSGP
    Posted November 4, 2017 at 9:36 am | Permalink

    The first task is to wean us off QE,


    Look at QE. It’s called the APF {asset purchase facility} and its its a private company.

    They have lent the lot to the state and you’ve spent it.

    When you say wean “us” off, you mean wean MPs off

  20. Bert Young
    Posted November 4, 2017 at 9:37 am | Permalink

    Good recommendations – I fully support them . A different attitude towards Credit Cards and personal debt has also to be created ; the organisations that permit and encourage personal borrowing do not effectively examine the risks that an individual takes on and they make enormous profits . Like the Government , the BoE has to go back to grass roots and re-think its role in the management of this country . We have not had the steely approach characterised during the Thatcher period and we badly need it now ; her combination of strategy and philosophy took the country out of a mess and restored a level of dignity we need now .

    Leadership change has to come soon ; Theresa is far too nice a person to make the changes that are necessary .

  21. Mark Watson
    Posted November 4, 2017 at 9:37 am | Permalink

    This is all well as good, but I’m more concerned about the latest Conservative attack on small businesses and start ups with a proposed decrease in the vat threshold from 85k to 26k.
    Do this and lose my vote until the proper Conservative party decides to return.

    • Derek Vaughan
      Posted November 4, 2017 at 7:25 pm | Permalink

      Wait until they demand VAT monthly – in advance! – based on projected turnover.
      It’s coming.

      • Lifelogic
        Posted November 5, 2017 at 7:04 pm | Permalink

        It probably will. Businesses will be closing down or going cash in hand/black economy all over the place at this rate.

  22. NHSGP
    Posted November 4, 2017 at 9:40 am | Permalink

    The aim should be to end up with 2% inflation,


    Why not have zero price inflation?

    Or do you think you can inflate your way out of your inflation linked debts? 90% of the debts you have a accumulated are inflation linked.

    0.2 trillion of gilts
    10 trillion of pension debts
    0.3 trillion of PFI [Lenders have the right to convert]
    0.5 trillion of nuclear clean up [Work and materials]
    0.5 trillion of losses on guarantees – BT – Royal Mail – LGPS – all inflation linked liabilities.

    That leaves 1 trillion of Gilts. 0.1 trillion owed to the EU [apparantly], and 0.3 of unpaid wages and invoices.

    But not that you would know that, its hidden off the books

  23. henryS
    Posted November 4, 2017 at 9:58 am | Permalink

    Would DD please tell us how the brexit talks are going..only four short weeks now to the next summit.. all of this talk about what the BoE is doing, not doing? should be doing? is making me dizzy- would Liam Fox please step forward now and give us an update on our prospects for new global deals with countries far away? Would IDS kindly give us a breakdown as to how the german car workers are coming on board, to voice their opposition to Mrs Merkel re her EU brexit stance.. might as well be talking about bricks

  24. Mark B
    Posted November 4, 2017 at 10:00 am | Permalink

    Good morning.

    And the political class, of course, is innocent of any blame in creating recession after recession ? For what is the Chancellor of the Exchequer and the First Lord and Parliament for ?

    Blaming the BoE, the FSA (created by parliament) and the MPC got to do with all this. They do not have all the power to create that which we have experienced. This is not the full or true picture. Not fare !

    Normalising the economy is indeed going to take quite sometime. It should be the aim of the current government and the BoE. Of course, this will be made much harder as we keep borrowing more money to give away and to waste. And that is governments doing, not the BoE’s.

    The problem with interest rates is, that people have borrowed large amounts over long periods of time. the 0.25% rise was quite steep, I was expecting 0.1% every so often. The rate rise will make people sit up and take things a bit more seriously and look at their mid to long term spend. This in turn could have a detrimental effect on the economy. If the BoE raise rates by another sudden 0.25% next year, then I think the economy might well wobble.

  25. dave roderick
    Posted November 4, 2017 at 10:17 am | Permalink

    high street banks and the investment banks should be seperated and when was it ok,d that a bank witch has no money can lend money witch does not exist untill the lender signs the paperwork

  26. frankfrankly
    Posted November 4, 2017 at 10:24 am | Permalink

    Presumably the government doesn’t pay debt interest to itself.

    • acorn
      Posted November 4, 2017 at 6:56 pm | Permalink

      Yes it does as far as financial journalists understand it. Once the BoE buys in a Gilt, the Gilt ceases to exist and is replaced by the “reserves” (cash) that bought it originally.

      The cash is deposited by the BoE into the original owners high street bank account. The BoE also credits the identical sum into the original owners high street bank’s “reserve” account at the BoE, to balance that bank’s assets and liabilities on its balance sheet.

      There is no change in the net financial assets in the economy, except that the private sector owner of the Gilt no longer gets the interest payment. Hence, spending power in the economy drops a little.

      As the Gilt was a “savings” vehicle the owner of the new deposit will probably be looking for a new savings vehicle. QE intended such persons to buy company shares and force up the price of such. That would make it collateral easier for such companies to borrow money to expand production.

      Which was the whole point of Quantitative Easing (QE) in the first place.

      BTW. QE has not increased the net spending in the economy, which means it has failed. Debt to GDP goes down, but in reality nothing has changed and cash can burn a whole in your pocket and only taxation can stop that.

  27. Iain Gill
    Posted November 4, 2017 at 10:27 am | Permalink

    The role of a centralised command and control style economy represented by the manipulation of the bank of England needs running down, and much more neutral central policies. Hand power over to individual citizens.

  28. Caterpillar
    Posted November 4, 2017 at 10:39 am | Permalink

    “This is not a good model … time and patience”. Patience is a big ask, the Treasury and BoE have been on the current path since 2007 with no indication of any recognition of a bad choice of direction or a move of path. There should not be “time and patience”, how to change should already have been considered and actions taken, but what we have seen over this time is more not less power flow to the unelected BoE. More than a “sketch” should already exist, if the Treasury and BoE do not have this, and are not moving to implement, then institutional change needs to be the first step on any strong PM’s sketch.

    “Savers suffer … but benefit from …” This is not true at the individual level, certainly not everyone is intentionally or unintentionally hedged in this way. Previously there were savers who were asset poor and would try to responsibly save for asset purchases, this behaviour route has been taken away for a decade so far. Those who were 18 when the financial crisis started had the save first behaviour stripped away from them, with government policies of interference aimed at substituting for the (long run) economically sensible behaviour. Misbehaviours and misallocation of resource ought really not be seen as hedges.

    Cancelling the state owned debt needs to be done transparently (so that printing is not seen as a panacea by any future government). If debts are simply cancelled rather than the BoE reversing QE and selling, then a public explanation has to be given as to why the QE approach was taken (as intermediates made profit and follow on resource use was unclear) rather than a change in law for a social credit approach. Such an alternative should be more than sketched out, it needs to be fully developed including what the necessary controls would be.

  29. NickC
    Posted November 4, 2017 at 10:42 am | Permalink

    JR, It is very odd. The energy companies are supposedly “privatised”, yet energy policy and prices are dictated by government (Climate Change Act 2008, hysterical anti-“carbon” meme, strike price auctions, uneconomic load factors on Gas, etc).

    Similarly retail banks are supposedly privatised and the BoE supposedly “independent”, yet government controls the remit of the BoE, guides it, and controls QE. The bank rate is low because the Chancellor (and the government, and the Treasury civil servants) want it so.

    So we have a situation where the central bank and giant corporations dance to the tune of the government, but get the blame, rather than the real culprit – the government, or rather the government’s civil servants.

  30. Epikouros
    Posted November 4, 2017 at 10:50 am | Permalink

    One of the consequences of QE, bailouts and credit expansion was to reward bad businesses and encourage investment into non productive or low productivity or wasteful enterprises. In other words government propensity to pick losers at the expense of winners expanded crony capitalism, lame ducks and overpriced assets even more. It can be said that although government picks losers losers also pick it. The myriad of businesses and other vested interests who engage in seeking government subsidies or protection and receiving it attests to that. The EU being one institution only too happy to oblige to ensure it’s continuance although they tend to do it on a grander scale and play father Christmas to failing and favoured states.

    The situation the UK finds itself and it is far from being alone in this is that our society has many groups feeding parasitically off the largess of government. Devouring wealth not creating it and at the same time denying resources to those who actually can create wealth. Unless we cull those non productive elements that are not essential to our well being and that is most of them then we will find that all our wealth will have been gobbled up by them. Leaving all with very little.

  31. formula57
    Posted November 4, 2017 at 10:51 am | Permalink

    Surely ” the inflation of asset prices” was not just a consequence of policy but a main purpose since it facilitated the remaining in business of banks that would otherwise be shown to be insolvent if their assets were valued at the uninflated prices?

    As for the slight of hand in ending QE by conjuring away huge debts through book-keeping offset, are we supposed to ignore the debasement of the coinage that such dishonestly sanctions? If so, is Mr. Corbyn to place any monetary limit on his people’s QE programme or can he just print and spend without restraint?

  32. Chris
    Posted November 4, 2017 at 11:07 am | Permalink

    Bravo on Any Questions, Mr Redwood:

    We’ll protect our fish! Crowd ERUPTS as John Redwood promises UK will take back fisheries
    BREXIT will put an end to the “damaging” EU policies regulating access to British fish in British waters, Conservative MP John Redwood said…”

    • Anonymous
      Posted November 4, 2017 at 7:11 pm | Permalink

      You and whose navy !

      • Anonymous
        Posted November 4, 2017 at 7:12 pm | Permalink

        You and WHAT navy !

  33. Denis Cooper
    Posted November 4, 2017 at 11:08 am | Permalink

    I’m glad the FSA has got a mention in this article, albeit with the Bank still being blamed for catastrophic errors in the prudential supervision of banks which was no longer within the Bank’s purview but instead had been placed squarely within the remit of the new FSA by Gordon Brown’s Bank of England Act 1998, and that over public protests from the then Governor of the Bank Eddie George that this was a dangerous move.

    So why then was that done? Well, it’s twenty years ago now and naturally the internet references have thinned out a bit over that time, but at the top of the list here:


    we have the good old europhiliac Irish Times blowing the gaff on May 23rd 1997:


    “THE Bank of England is to lose its responsibility for banking supervision under a radical overhaul of financial services regulation launched this week.”

    “Mr Eddie George, Governor of the Bank of England, has repeatedly argued against removing supervision from the bank.”

    “If Britain was eventually to join the European economic and monetary union, the bank would be left with an even more restricted role, roughly equivalent to that of one of the regional federal reserve banks in the US.”

    Of course it would be wrong to say that our present economic and financial difficulties can be traced back to just one disastrous decision, namely John Major’s decision to allow the EEC/EC/EU project to proceed to the establishment of a single currency in the hope that eventually he or a successor could get us swept up into it, “willy-nilly”; the much more complicated truth is that there have been many other factors operating since then, and many genuinely did have nothing whatsoever to do with the EEC/EC/EU.

    Nevertheless whenever we hear John Major and his numerous ilk arguing that we should stay in the EU we should remember than if they had got their way we would have been in the euro, the Bank of England would then have been reduced to the status of a regional eurofederal reserve bank, a kind of subsidiary of the EU’s European Central Bank, and we would no longer have MPs discussing its operations and its future management because that would have been placed beyond their control.

    It’s a fascinating thought that if John Major had made some rude comment to a female colleague a quarter of a century ago then he would be eligible for media persecution and nobody would be willing to listen to anything he said on any subject and he could even be stripped of his knighthood, but as it is he has been able to get away scot free with much more serious political misdemeanours … etc ed

    • Hope
      Posted November 4, 2017 at 9:06 pm | Permalink

      We all remember Edwina Currie. His govt was guilt ridden with sleaze, etc ed

  34. Tad Davison
    Posted November 4, 2017 at 11:23 am | Permalink

    Given the B of E’s sorry record, they might like to take advice from Yogi Bear – ‘Never make predictions, especially about the future!’

    The trouble of course is that when the B of E does get it wrong, it has such serious ramifications for everyone else, so maybe a change in personnel is needed.

    If we want to take that analysis a little further, could it be their decisions are just a teeny weeny bit influenced by the corporate lobby who are seeking to pull the strings and who aren’t too enamoured by the UK’s democratic decision to the leave the EU?

    Tad Davison


  35. ChrisShalford
    Posted November 4, 2017 at 11:43 am | Permalink

    A big question is whether the increased credit should be directed towards individuals or towards business. Similarly, where should any tax cuts on 22nd November be made? I’d be very interested in your views John.

  36. Bob
    Posted November 4, 2017 at 12:03 pm | Permalink

    Listened to BBC Any Questions today.
    You were outnumbered by Remainers on the panel and in the audience.
    The BBC clearly using this program to push their anti-Brexit agenda.

    Remember Mon. Nov. 20th – the TV Licence Debate in Parliament (if it not cancelled because someone winked at the tea lady).

    • rose
      Posted November 4, 2017 at 10:27 pm | Permalink

      He may have been outnumbered in the studio but the audience in the country will have heard he had reason on his side while the other side had straw men.

  37. adams
    Posted November 4, 2017 at 12:43 pm | Permalink

    When the Banks do lend they favour morgage lending over investing in businesses because there is less risk . The Group Positive Money want to take money creation away from the banks and place it under some Government quango . They have a good point . The Banks are no longer competent to handle the money supply . Fractional reserve banking is no longer fit for purpose , Also take away interest rate decisions from the BoE . They have been a disaster ever since McDoom gave them control .

  38. Lifelogic
    Posted November 4, 2017 at 1:09 pm | Permalink

    I see that Corbyn’s “economic model” of Chavey’s Venezuela is going very well indeed – about to default on its obligations and with inflation heading for 1000%+ and its population struggling to find any food or medicine.

    Is this really what the youth of the UK want to see here?

  39. libertarian
    Posted November 4, 2017 at 1:16 pm | Permalink

    I’d much rather ask what a better government would look like.

    The commons is stuffed with party fodder, mostly ignorant and detached from reality and certainly not much talent. The whole place lurches from crisis to crisis and repeatedly gets caught out by the people. Expenses scandal, sex scandals both individual and now mass, bribery, corruption , drugs you name it its all there. An unelected second chamber of people who buy their places there at the moment trying desperately to overturn a democratic decision of the people. Taxes going through the roof while services continue to deteriorate , mass investment in outdated infrastructure and no investment in the future, a catastrophic energy policy. All of this fuelled by eye watering national debt

    The people won’t tolerate this much longer, yet there is not one single politician in the UK with the balls to stand up and offer some real leadership .

    Come the revolution , comrades, come the revolution.

    • Gwendoline Thubbles
      Posted November 4, 2017 at 5:01 pm | Permalink

      All countries are similar in corruption. The uniqueness about the UK is that no Party openly recognises the corruption, its extent, and determines however unrealistically measures dealing with it. Yet points sometimes with laughter at countries which are most obviously corrupt.If these countries had the Lie-Masters of the BBC and SkyNews they too would be hypocritically cocking a snook at other countries.

  40. Denis Cooper
    Posted November 4, 2017 at 1:19 pm | Permalink

    For crying out loud, JR, how much more of this do we have to take before our government starts hitting back, and hitting back hard?


    “Three separate EU sources in both Brussels and a leading EU capital have warned that British expectations of a “no deal, deal” had failed to understand the ramifications of the UK pulling out Europe without paying its bills.”

    As I recall off-hand during the 44 years since we joined the EEC there has been just one year when we got more out than we paid in, and that was around the time of the previous referendum in 1975, so how dare these people claim that we owe them money and imply that we are trying to sneak off without paying our bills?

    Well, the answer must be that they think our government is too feeble to hit back at them, and indeed they may have good reasons for thinking that when they see David Davis lazily permitting any such rubbish to go completely unchallenged day after day after day and unpatriotic and anti-democratic forces opposed to Brexit being allowed to regroup and organise themselves to overturn the referendum result.

    • Denis Cooper
      Posted November 4, 2017 at 3:37 pm | Permalink


      “The UK’s contribution to the EU budget”

      Table 2 on page 9.

      Net contributions in £ million, positive in all years apart from 1975:

      1973 102
      1974 31
      1975 – 56
      1976 169
      1978 369 etc.

      • Lifelogic
        Posted November 4, 2017 at 7:56 pm | Permalink

        £ billion

        • Denis Cooper
          Posted November 5, 2017 at 1:36 pm | Permalink

          No, it was only millions back then …

    • Johnny Englander
      Posted November 4, 2017 at 8:13 pm | Permalink

      Calm yourself, sir – I never believe anything I read in subversive revolutionary socialist publications like the Daily Telegraph.

  41. Richard1
    Posted November 4, 2017 at 2:17 pm | Permalink

    I enjoyed your performance on Any Questions. I am constantly astonished at how weak even the most articulate Remain advocates like Chukka Ummana are in argument. In this programme as you pointed out Mr Ummana simply came out with falsehoods to argue why Brexit is bad news – that it was said in the referendum that 3m EU citizens would have to leave, £350m would be spent on the NHS and arrangements would be exactly the same though both sides made clear we would leave both the single market and the customs union. It’s very odd they can’t do better than this -perhaps there is no good argument at all for Remain / soft Brexit after all?! This question (but not the rest of the programme which was dreary platitudes about sexpestgate) is worth listening to for those who missed it.

    • Richard1
      Posted November 4, 2017 at 4:24 pm | Permalink

      The collapse of Venezuela due to socialism deserves much more publicity, it is a case study in why Corbyn -McDonnell style policies are everywhere and always a disaster, usually ending in poverty and violence.

      • acorn
        Posted November 4, 2017 at 5:57 pm | Permalink

        Venezuela, stupidly started borrowing in US Dollars to develop its massive oil reserves. It got mugged by good old US capitalist oil banking sharks and got ripped off as they all do.

        They pegged the Venezuelan Bolivare to the US Dollar as they stupidly thought that would help with the US Dollar debt repayments. Just like the Eurozone members have effectively pegged their own Euro currency to the German Euro currency.

        • Edward2
          Posted November 5, 2017 at 10:05 am | Permalink

          Whilst continuing to spend way more than they could afford.

          • acorn
            Posted November 6, 2017 at 10:20 am | Permalink

            Gross government debt as % of GDP for 2017.

            Venezuela 36.7%
            United Kingdom 92.2%

    • Richard1
      Posted November 4, 2017 at 4:25 pm | Permalink

      Actually we have to concede the £350m on the NHS – that was, very foolishly, asserted inter alia by Boris Johnson.

      • zorro
        Posted November 4, 2017 at 6:16 pm | Permalink

        No he didn’t, please read his actual words and reply to the head of the UK Statistics Authority, Sir David Norgrove…..


      • Johnny Englander
        Posted November 4, 2017 at 6:55 pm | Permalink

        Yes, it probably was rather foolish of Boris to promote that little fantasy, wasn’t it – but then, I recall reading reports at the time to the effect that Boris didn’t actually expect the Referendum to go the way it did. He was expecting to lose gracefully after a heroic struggle, and then to present himself as David Cameron’s natural heir as the candidate most able to heal the wounds within the Conservative Party – after which he would have announced from the steps of No. 10 that since it was the will of the people to remain within the EU, he would as a true democrat respect their wishes. No change to government policy; Cameron replaced; mission accomplished.

        Except of course that it all went wrong.

      • Anonymous
        Posted November 4, 2017 at 7:19 pm | Permalink

        I have yet to hear a Remainer tell us which EU party he allies with and their policies. Or what future the EU promises.

        Without googling the politics of Juncker, Barnier, Dijsselbloem, Sholz…

        The only reasons for remaining being the FEAR of leaving it.

        By omission these are far bigger lies that the slogan on the side of a bus.

        • Rien Huizer
          Posted November 4, 2017 at 9:46 pm | Permalink

          Juncker is a Commission member and his party affiliation is irrelevant. Barnier is a EU?French civil servant and his party affiliation (he was once a minister in a Srkozy caninet, hence, comparable to a UK Conservative. Dijsselbloen is not a EU official. He is a former Dutch Finance Minister (similar to the Exchecquer) and a Social Democrat. Sholz (I guess Shultz you mean) was a German MEP Social Democrat and now a German MP. You should update your records. Not a single true politician on your list. You may know that the largest bloc in the EU Parliament consists of Christian Democrats and associates. Politically they are similar to the Conservative Party (more so than to any other UK Party) . You should be proud that UKIP is well represented in Brussels, especially compared to its home representation..

  42. Mr Ajax Cleanmouth
    Posted November 4, 2017 at 5:12 pm | Permalink

    More MPs one by one are falling under the iron fist of The Witchfinder General. One could analogise it with a classic novel, as people did in such circumstances, that of Agatha Christie’s, ” And Then There Were None” but……..

  43. Rien Huizer
    Posted November 4, 2017 at 5:40 pm | Permalink

    As an asset management expert, you should be familiar with event risk. Apparently there is no event risk in your outlook for the next 18 months. These are far from normal circumstances (of course, what is normal, but anyway) and they demand a conservative macroprudential stance. The average UK household is not (relative to current prices) too much indebted. However, more recent buyers are and their house prices are very high relative to several criteria. Forget about Brexit and there is no reason for macroprudential conservatism. Assume a “cliff edge” and there is plenty of need to take measures that minimize risk to the UK treasury of another banking crisis. If your crystal ball tells you (as I suspect) that Brexit will be uneventful and the UK will prosper even more than it does now, without any transition costs, of course then your suggestions would not be imprudent, subjectively. And there lies the problem. Your crystal ball is no better than anyone else’s, despite your privileged position as a well informed MP.

    • Anonymous
      Posted November 4, 2017 at 7:33 pm | Permalink


      My kids being unable to afford a house whilst being far better qualified than me assumes no cliff edge happened whilst in the EU.

      It most certainly did.

      The poverty gap between generations was created before the referendum.

      A very real cliff edge.

      That’s why we parents voted to leave the EU.

  44. hans chr iversen
    Posted November 4, 2017 at 6:46 pm | Permalink


    This time we really see that you do not understand how the debt markets work.

    Cancellation of the debt would have significant impact on the value of the pound and it would basically fall through the floor and foreigners would no longer believe in the value of the Pound.

    What you have totally forgotten is that we already service 30% less debt that we have by QE, as the gilts that have been bought by the BoE , the interest paid by the Treasure reverts to the Treasure through the profits from the BoE.

    So, not only do we already have the benefit of the 30% less debt but we do it without undermining the value of the Pound Sterling.

    So, John a really bad solution proposed this time with no real effect or validity, except a falling pound.

    Reply No reason why the pound woud fall if we roll back QE hokdings

    • hans chr iversen
      Posted November 5, 2017 at 8:51 am | Permalink

      This just shows that you have absolutely no understanding of economics, how very sad

  45. Norman
    Posted November 4, 2017 at 7:14 pm | Permalink

    Yes, Denis. Moreover, re ‘Purdah’, at the end of a 40 year career in the Civil Service, I and other seasoned colleagues were taken aback to receive instructions, to the effect that despite the country being granted a referendum, the Government’s official policy was to remain, and therefore we were not to provide information to parliamentarians on the ‘leave’ side. Of course, those of us who were in favour of Brexit were even more determined to stick to our cause. Sad to say, the whole things stinks!
    Today, whilst sorting out some papers, I came across the Dedication page from an old book, lent to me by one of the above colleagues, (related by marriage to the author – and more patriotic than most!) The book was called ‘War for the World’ by Israel Zangwill, and published in 1916. It read: “TO THE ENGLISHMAN: Too modest to be named, too unassuming to question his government’s wisdom or righteousness, who abandoning all worldly and with no other-worldly hopes, went to the front as simply as in the daily war for the world, and returned crippled and uncomplaining, save of his uselessness to his country, this book – of which he might not wholly approve – is – without permission but with admiring affection – DEDICATED.” How times have changed: I actually am just old enough to remember such a country! Still, as Edith Cavell, the nurse who was executed by firing squad during WW1 said: “Patriotism is not enough’. She found grace to face death, and peace in forgaving those who shot her.
    No bad thing to reflect on these things, given it’s the Guy Faulks, and Remembrance season.
    I will not be the first to weep over a beloved country, given the high things that it was once graced by.

  46. Well !!!!
    Posted November 4, 2017 at 7:16 pm | Permalink

    A ballistic missile was seen and intercepted over Saudi Arabia. Meanwhile Sky News reports the whole of Scotland is startled at finding it has a male politician.

  47. Prigger
    Posted November 4, 2017 at 10:04 pm | Permalink

    Emily Thornberry says she is “disgusted and ashamed” of her Party. The Tory Front Bench’s thumb -in-cheeks and wiggly finger tongue out gesticulations to Labour across the aisle have finally hit their mark.

  48. Alison
    Posted November 4, 2017 at 10:06 pm | Permalink

    Agree in particular with several posts bove (Stred, Roy, Bob, Mitchel, Denis) re the extremely disturbing and sinister goings on in and around Westminster, inside and outside government, and this week in particular. Drip by drip, manoeuvre by manoeuvre seemingly, Remainers are replacing Brexiteers in government. If those Remainers are appointed and act in the interests of the UK leaving the EU, promptly, fully, then fine. But where are the noises from them? Where is the champion of the UK in Brexit? The treatment of one articulate and effective Brexit Tory MP is extremely worrying (at the least, the treatment by the Tory whip). If one were sketching a novel, one could imagine a scenario whereby unfounded accusations were made against such an individual, to neutralize, from a non-government side … but then along comes a hero private detective ….
    Btw, didn’t hear Any Questions, but thank you (re fisheries).

    • S. Baldrick
      Posted November 5, 2017 at 9:01 pm | Permalink

      Curses – my cunning plan has failed!

  49. Yorkist
    Posted November 4, 2017 at 11:25 pm | Permalink

    Women aged around 29 years of age or below should avoid Yorkshire, Lancashire, Lincolnshire, Cumbria, Wales, Scotland, Teeside, Tyneside. There be men here!!!!

  50. Ken Moore
    Posted November 5, 2017 at 1:31 am | Permalink

    Dear Dr Redwood,

    Rising violent crime, tortuous Brexit negotiations, 1bn a week deficit , sky high debt figures changed to % of GDP because they are so scary … rising inflation and demands for an end to public sector pay restraint…a pensions crisis…public services overwhelmed.. a population crisis in the making…
    Almost every sector – construction, production and services – seems to be turning down. The sole previous driver of economic growth, which was debt-fuelled consumption, has hit the buffers because consumer credit is maxed out. Even car sales – perhaps the ultimate debt-financed component – have taken on an ominous downwards trajectory.
    Prosperity has been in relentless decline for years….

    I find it fascinating (in a morbid sort of way) that, with all of this coming down the tracks, the politicians and media are obsessing over sleaze, yet again. They were doing the same thing in 2008, I seem to recall just before the first financial crisis that apparently nobody saw coming….

    Have you a view on this ?
    atb Ken

  51. Rien Huizer
    Posted November 5, 2017 at 3:13 pm | Permalink

    A belated comment on your post re cancelling the UK gvt debt on the books of the BoE (via the asset purchase facility:

    “Purchases of assets are carried out by a subsidiary of the Bank – the Bank of England Asset Purchase Facility Fund. An indemnity is provided by HM Government to cover any losses arising from the facility.”

    I wonder what good it would do if actual debt were replaced by a no longer contingent liability for items in the asset purchase facility. And what about Italian state debt on the books of the ECB. Could Italy get off the hook by cancelling that?

    Reply The Italian debt is not owned by the Italian state so it is a very different problem.The Italian state will have to go on paying interest to the ECB which it does not get back, as the Italian state does not own the ECB

    • Rien Huizer
      Posted November 8, 2017 at 2:32 pm | Permalink

      Reply to mr Redwood’s reply (if permissible under the RT rules)

      Of course, Italy owns a only a minority interest in the ECB and all of the Banca d Italia. Functionally, the ECB and the BoE are comparable, that is what I meant. The assets in the English case are held in a subsidiary of the BoE, not by the BoE directly and in a structure that appears to have (again functionally) a fiduciary or “trust” nature.

      The distance between the CB and the government of the day is an important element of central bank credibility but of course the extent to which one agrees to a given distance is a matter of preference. I am merely representing a mainstream economics point of view.

  • 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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