The Bank of England tightens money further

Over a year ago the Bank of England decided to tighten money policy considerably. It removed all the special credit lines for commercial banks designed to encourage lending. It issued stricter guidance over car loans, mortgages and consumer credit. It went on to raise interest rates from 0.25% to 0.5%. It achieved its aim, with money growth halving to just 3.5% from the 7% level in 2016. The car market duly fell sharply, and the top end of the property market was damaged, primarily owing to tax rises, but assisted by the credit tightening. Money and credit still look too tight to provide the backdrop for decent expansion.

Yesterday they decided to go further, by increasing interest rates to 0.75% and introducing the concept of an Equilibrium rate of interest considerably higher than today’s rate to guide markets towards expecting more monetary tightening. It is difficult to see why from the  numbers being reported. Growth has slowed. There is no surge in inflationary pressures. Banks are better capitalised. On the Bank’s own forecasts the UK economy grows more slowly than it used to with no inflationary problems ahead. They themselves concede that if they kept interest rates at the new level of 0.75% instead of raising them further prior to 2020,  output would be higher, unemployment lower, and inflation only 0.2% higher than on their preferred course of slow growth and more tightening by that date.

The Equilibrium rate is an unhelpful abstraction or distraction from the day job of keeping inflation under control whilst promoting better growth. The Bank accepts that the so called Equilibrium rate “cannot be directly observed” – a polite way of saying it does not in any normal sense exist. They accept that “there is a wide degree of uncertainty around the estimated level” of the real equilibrium rate. By choosing a range of 0% to 1% real they are trying to get markets to accept more tightening, but then they back off a bit by leaving the timescale imprecise.

Inflation is being kept down by the open nature of the UK economy. A large inward migration is keeping wages down, whilst massive imports of goods and services are keeping general prices down. The Bank forecasts those features to continue. They are aided in this by internet competition, and by the emergence of big discounters in a range of markets. The Governor himself gave a good lecture some time ago which I commented on effectively debunking the main part of the MPC’s analysis. Their theory is  that they can measure capacity, and that we are  now close to capacity. They therefore expect inflation to rise as we hit capacity.  As the Governor pointed out, in an open global economy like the UK you can always import anything you need which domestic output cannot  provide. So why is the MPC still praying in aid the idea that we will soon have exceeded capacity, and therefore need to be reined in?  How do you measure capacity reliably these days, when the internet and changing consumer fashions and transforming what we need and the supply to meet demand? The Bank is doing us no favours by being too pessimistic about the outlook and then taking action to ensure a disappointing outcome.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.


  1. Nig l
    Posted August 3, 2018 at 5:15 am | Permalink

    I think it was already priced into the markets. Once again it highlights the b.s. spoken about the effects of Brexit. The important part is that forward guidance indicates no further anticipated increases.

    • Peter VAN LEEUWEN
      Posted August 3, 2018 at 6:23 am | Permalink

      @Nig l: Were you the person who told me to watch the women’s hockey last night? Well I did.
      Congratulations Ireland – an amazing team playing country don’t you think? And not just for their 9.1% Y-o-Y GDP growth.
      Commiserations for England, another Brexit, and that besides only a 1.2% Y-o-Y GDP growth.
      With a bit of luck, the Dutch will face the Irish. Whatever the outcome, they may teach us some nice songs (and together we’ll go whistle, after receiving our 39bn pounds 🙂 )

      • a-tracy
        Posted August 3, 2018 at 7:51 am | Permalink

        PVL – Ireland should pay back their loan not just the low rate of interest we provide as they’re doing so well now, we have regions in the UK in need of more support. Their 9.1% YoY GDP growth is indeed very impressive and its time they paid their 2% of that GDP into NATO as we do instead of expecting everyone else to protect them and pay their bills for them.

        • margaret howard
          Posted August 3, 2018 at 3:14 pm | Permalink

          Protect them from what?

          The main danger in the world today comes the UK following the US into yet more illegal wars starting with Iraq.

          This has destabilised the whole Middle East leading to the masssive refugee crisis now facing Europe and causing the rise of right wing parties. While the main protagonists, US/UK, stand back and do nothing.

          Stop interfering in other countries’ affairs

          • Edward2
            Posted August 3, 2018 at 11:36 pm | Permalink

            Like Kuwait and Bosnia?
            Would you have sat on your hands then as well Margaret?

          • Prigger
            Posted August 4, 2018 at 1:15 am | Permalink

            @margaret howard
            “causing the rise of right wing parties.”
            They should rise/be in existence, as should every hue.

            Every strand and mini-translucent box of thought, each form facets on the one diamond.
            In my opinionS, for I perhaps delude myself I can be many of thought, it is Absolute Free Speech which is one key that holds the diamond from fragmenting into even small facets or yet into carbon molecules.
            Free Speech has been under attack, is under attack, by…do excuse my flowery language…by The Destroyer of Worlds

        • Backoftheenvelope
          Posted August 3, 2018 at 4:25 pm | Permalink

          a – tracy..Ireland could pay back right now but is not permitted
          to do so under the terms of the loan agreement until 2020? as a certain interest period time will have to be endured..otherwise there will be penalties.

          Ireland is not part of NATO but plays a full part in the UN with peace keeping duties and has without break sent it’s army personnel overseas for sixty years now to enforce peacekeeping in various parts of the world.

        • Peter VAN LEEUWEN
          Posted August 3, 2018 at 7:00 pm | Permalink

          @a-tracy: some countries, e.g. Switzerland, Ireland and Finland are not NATO members. That is political, not economical.

      • Richard1
        Posted August 3, 2018 at 7:52 am | Permalink

        Irish GDP figures are often not relevant and throw up exceptional results like that due to corporate activity – transfer of high nominal asset values to Ireland for tax reasons. We saw this effect also in 2016.

        • David Ashton
          Posted August 3, 2018 at 6:26 pm | Permalink

          Absolutely, Ireland often has to negotiate with the EU to reduce its headline GDP figures to avoid large increases in its payments to the EU budget. This is because, as you state, lots of Irish apparent commercial activity has only modest benefit to the Irish economy.

      • Nig l
        Posted August 3, 2018 at 8:01 am | Permalink

        Indeed. Well we did beat Ireland in the group stage and as the Dutch women are currently the best in the world, you have to be good at something, it was no surprise. Incidentally didn’t see your team in the football World Cup?

        You really are being very silly with your comments about Brexit, we are just enjoying a wonderful tournament in a great post Olympic venue, I can’t recall Amsterdam having such, with sell out crowds.

        I Have a ticket for the finals, you can stew over having to pay vast more cash to be wasted in bureaucracy, corruption, Mutti’s immigrants, roads in the old Eastern bloc etc.

        We will be having one big party.

        • margaret howard
          Posted August 3, 2018 at 10:12 pm | Permalink

          Wasted bureaucracy?

          The total EU budget is about the same as that of the NHS. For 26 nations. Most is spent on development in poorer states, funding for research etc ….. compared to the NHS it is a model of efficiency

          EU admin is 5.8% of total!

          The total number of civil servants serving 500 million people is less than those of a mid-sized UK city

          Enjoy your party!

          • Edward2
            Posted August 4, 2018 at 7:17 am | Permalink

            When it was the Common Market it spent tiny amounts and achieved more.
            Soon the rapidly growing monster will be the United States of Europe.
            Comparing it’s huge cost to real nations that actually have to provide health, education, welfare, emergency services, social housing, prisons, courts, transport systems and so on is a ridiculous argument.
            28 member nations all with a vote yet only 9 of them pay in, the rest just take out money.
            No direct citizen’s vote for the real holders of power the Commission and the Council.

          • NickC
            Posted August 4, 2018 at 8:31 am | Permalink

            Margaret Howard, That is typical Remain fakery. The EU makes the rules, every country has to implement them. You don’t need a lot of people to make rules – witness our own HoC, only about 650 MPs.

            The cost comes in the implementation. The EU’s often ill thought out, complicated, over centralised, over rigid, and over numerous rules cost the Uk up to 11% of our GDP (Tim Congdon).

      • Ed Mahony
        Posted August 3, 2018 at 8:23 am | Permalink

        @Peter, sorry, but you’re living in dreamworld if you don’t accept there are serious problems with the EU.

        I’m no fan of Hard Brexit 2019, but I am a fan of Hard Brexit if the EU doesn’t seriously reform itself, and that we give ourselves the time to build up our economy and allow businesses to change their business models as well as prepare Europeans – a 10 year period say. I know we’d do well out of the EU – long-term, and the EU would probably be glad that we were no longer a member. But we need to be prepared and leave on good relations with the rest of Europe.

        But back to you, I seriously think you need to consider that the EU has some really serious problems – that could be dangerous to your country a few years down the line. The EU needs radical reform.

        • Peter VAN LEEUWEN
          Posted August 3, 2018 at 10:46 pm | Permalink

          @Ed Mahony: Of course the EU has serious problems, always has had, but not the kind of problems that I read about here. Moreover, the various predictions I’ve seen here over the years haven’t happened (like the “impending” breakup of the whole project or at least the eurozone). Radical reform, yes, but not the one the British tend to think about.
          I really believe that the British are knowledgeable about cricket and ignorant about the EU, both having to do with interest and the lack of it. Since the nineteen fifties, I’ve seen the British (empire) lose some 20 countries while the club we belong to has gained some 20 countries. If the UK were to do well outside the EU, we’ll only benefit, because with a less successful country we’d have less trade. You might have noticed that I never participate in the scaremongering. Trade there will always be. Rotterdam authorities have scheduled serious Brexit rehearsals for November 2018, on our side we will be prepared to minimize friction in as much as possible.

          • NickC
            Posted August 4, 2018 at 8:48 am | Permalink

            PvL, Just to set the record straight, I have never predicted that the Euro would breakup, nor that the EU would be reasonable when we left. In fact to the contrary, I argued strongly the reverse, here and elsewhere. I wasn’t alone either. Perhaps you don’t read British opinion as widely as you think.

            And I am unconvinced that empire building counts as “success”, but that may be because I value democracy and self-determination.

          • Ed Mahony
            Posted August 4, 2018 at 8:59 am | Permalink


            You didn’t answer my points! I was very nuanced because I think that’s what’s needed right now for the benefit of both the UK and the EU.

            Yes, great things about having close economic, cultural and security ties with the rest of Europe. But need to strip EU’s political power right back and more.
            Yes, great dangers to Hard Brexit. I said I only support Hard Brexit if 1. We first try and reform the EU 2. Give ourselves (both the UK / Europe) plenty of time to transition – A) building up our economy so it’s strong B) Allowing our businesses the time to redevelop their business models to trade a lot more out of Europe (and business is really hard, not easy to do that). Need years, perhaps 10 or so to do all this.

            Some Hard Brexiters talk about transition as if it’s a Remainer trick to keep us in the EU. This is nonsense. I wasn’t born with a gene that says ‘love the EU at any cost.’ But I was born with pragmatism. I honestly believe there is something a bit evil about the political side of the EU (in principle not just practise). However, I also believe in the lesser of two evils, and a Hard Brexit without transition, could collapse our economy, and ironically, and tragically, the dreams of escaping once and for all, the EU! (1. The Cobra Effect / Unintended Consequences, plus 2. we’ve last the power to try and reform the EU stripping of its political power 3. And we’ve retarded our economy and country for years when we should have been busy making hay when the sun was out ..).

          • Ed Mahony
            Posted August 4, 2018 at 9:10 am | Permalink

            ‘I only support Hard Brexit if ..’

            – However, I’m also giving Hard-Brexit-No-Dealers the chance to try things their way. I might be wrong, and they right (although I have serious misgivings). There’s nothing most of us can do right now except get behind Hard Brexit – although I do think we should put pressure on our politicians to make sure the country is as prepared as possible for Hard Brexit No Deal. There’s always something to be done / could be done better – which would greatly improve the success of Hard Brexit No Deal (and there’s something to be learned about the Iraq War – the war went relatively smoothly – although I was still against it as it’s made Iraq much bolder, and the war being responsible, to a degree, of unleashing really nasty terrorism and war in particular in Syria – but the real war was planning, or post planning, and this was abysmal – loads, loads more could have been done by the USA and Tony Blair’s government – or should have been done if we were going to go to war in the first place).

          • Ed Mahony
            Posted August 4, 2018 at 9:11 am | Permalink

            ‘Iraq’ – the Iraq War made Iran much bolder I meant.

      • Hope
        Posted August 3, 2018 at 8:42 am | Permalink

        Carney has been wrong on all his predictions and forecasts. He has already shown that he should not make decisions or be too political. Once more, we have the Govt producing scare stories to accept May’s betrayal of the nation, Electoral Commission acting as a govt arm to undermine leaving the EU despite £28 million spent by Remain to leaves £13 million!, BoE doing the same, Treasury fake reports, dishonest KitKat policy of civil service to hide costs and ties to EU and we are expected to believe this is a coincidence!

        These so called independent bodies are anything but. The same with the OBR and ONS. They are all in the realms of yesterday’s weather blog sensationalism not based on fact. Get rid of them and stop putting extreme left wing people in charge or in heavy numbers on the governing board. Same with judiciary and very quango. Let us have the bonfire Cameron promised.

        • Hope
          Posted August 3, 2018 at 8:59 am | Permalink

          Two days ago JR was trying to tell us of the EU project fear. Many of us told him that it was not the EU but the Tory govt past and present. This blog is another example how the Tory Govt is acting in a dispicable way to get us to change our minds to leave the EU. It is as outrageous as it disgusting.

      • L Jones
        Posted August 3, 2018 at 8:49 am | Permalink

        That you can speak so lightly about receiving other people’s hard-earned money just confirms what a bunch of grasping beggars your EU masters are. Isn’t one simply supposed to walk away from aggressive beggars without trying to engage them?

        It’s not ”your” £39 billion. It’s OURS. And if our Government is foolish enough to pay your greedy masters this sum as a bribe in the interests of trade, then accepting it so gleefully is nothing for you to be proud of – and to crow about.

        • Backoftheenvelope
          Posted August 3, 2018 at 4:39 pm | Permalink

          The EU Masters you speak of are largely away at this time of the year on their hols..only to be recalled back for mini meetings with UK ministers scouring the continent looking for a leg up- any leg up.
          It is a disgraceful exhibition of self abasement by our great Tory seniors..and right in the middle of summertime. All of this brexit thing is of the UK’s making, it’s what the people were badly advised to vote for..problem is we’ve had the referendum first followed by the debate..and now we are in this don’t go trying to lay it on the Europeans..they are only getting on with life as they know it..if we want to be obstinate and try to cherry pick free trade with them to our own agenda and with all of our Red Lines in place..then we can forget about it as far as the EU is concerned..we are on our own..that is the reality

          • Hope
            Posted August 5, 2018 at 10:20 am | Permalink

            No, not on our own we are a free independent nation electing or govt to select polices that we want in the best interests for our country. If they fail to deliver they get booted out.

            No one voted for a punishment extension, no one voted for a trade deal. Everyone did vot to come out of the single market and customs union, this was made clear by Cameron inside and outside parliament.

            I no longer want a trade deal before March next year. There is no need of a punishment extension for our country to be a vassal state of the EU without voice or veto. Leave and then negotiate a deal if not WTO terms it I suggest like the rest of the world. We are free!

        • Lifelogic
          Posted August 3, 2018 at 5:24 pm | Permalink

          It is tax payers money that is funding the hugely over paid, usually wrong and highly political Mark Carney too. What value are we getting? The man is an economic menace. Why on earth is Osborne recruit him. I can think of several people who would do a rather better job for perhaps 1/8 of his salary? Full of green crap too egged on by his wife it seems.

          Oddly his DPhil thesis was “The dynamic advantage of competition” not much real in UK retail banking!

          The accounts from the Bank of England reveal that Carney earned £879k last year, including a £480k salary and £252k in taxable benefits. While the Prime Minister get just £144k not that she is worth even that! She is costing the country £billions with her gross incompetence and broken compass. Let us hope she takes a liking to the VAT and stays in the south of France and retires there. I am sure she would he happier.

          • hefner
            Posted August 4, 2018 at 6:52 am | Permalink

            Please, remind me, what was your DPhil all about?

      • Edward2
        Posted August 3, 2018 at 9:02 am | Permalink

        Check the GDP growth in cash terms.
        Ireland is a tiny economy compared to the UK
        Ireland 295 billion v UK 2.6 trillion
        (Measured in US dollars)

      • Know-Dice
        Posted August 3, 2018 at 11:03 am | Permalink

        PvL when you start from a low base high percentage increases are easy…

        If there is £39 Billion it will not be going to the “low countries”, no matter how good your whistling is…

        • Peter VAN LEEUWEN
          Posted August 3, 2018 at 2:02 pm | Permalink

          Even the poor Dutch receive the odd penny from the EU, like this one this year: A new ‘floating park’ made out of recycled plastic waste has popped up in the Netherlands.The project is supported by the EU Cohesion Policy to the tune of €155m. If part of the 39bn is to continue contributing during the “implementation period”, who knows, some money may end up in Holland! 🙂

          • Mark B
            Posted August 3, 2018 at 4:48 pm | Permalink

            No. As a net contributor all you recieve is your own money back.

          • Know-Dice
            Posted August 3, 2018 at 5:34 pm | Permalink

            Ah, the good old bait and switch trick, making you think that the money from the EU is a gift from Brussels when in fact it was your own money in the first place!!!

            Remind me PvL isn’t the Netherlands one of the nine countries that pay in more than they get out from the EU?

        • NickC
          Posted August 3, 2018 at 3:09 pm | Permalink

          Know-Dice, The UK – read, England – is being used as a cash cow by the EU political establishment, just like the Norman Kings did. And people like PvL jeer at us over our leaders’ stupidity.

      • mancunius
        Posted August 3, 2018 at 11:50 am | Permalink

        More double-dutch.

        • Peter VAN LEEUWEN
          Posted August 3, 2018 at 2:05 pm | Permalink

          @mancunius: Yesterday’s score was indeed 2-0 🙂

          • Stephen Priest
            Posted August 3, 2018 at 4:24 pm | Permalink

            What’s Dutch for “clutching at straws?”

      • acorn
        Posted August 3, 2018 at 11:55 am | Permalink

        Ireland’s GDP is somewhat volatile. Large bits of its domestic economy are owned by foreigners, who send their profits home. Hence, Ireland’s GNI (what we used to call GNP), is only 80-85% of its GDP.

        • Backoftheenvelope
          Posted August 3, 2018 at 4:51 pm | Permalink

          Whatever you say..Ireland is doing it’s own thing and pushing ahead ok..with unemployment rates down to 4 percent..there’s a great buzz in the land and the emigrants are coming home..not bad considering the country was on it’s knees only ten years ago

    • Bob
      Posted August 3, 2018 at 7:08 am | Permalink

      Mr Carney’s forward guidance has been consistent at least.
      Consistently wrong.

      • Hope
        Posted August 3, 2018 at 8:44 am | Permalink

        May with Macron today seeking approval for another sell out no doubt. Last time she underhandedly sold out the country with her white paper she got Merkels permission first!

        May needs to be ousted.

    • NickC
      Posted August 3, 2018 at 2:57 pm | Permalink

      Nig 1, The UK economy is effectively in recession. We have had an average (official) immigration increase of about 3.8%/yr every year since 2004. The real figure is probably much higher (using NINos rather than IPS).

      So our economy should have averaged at least 3.8% growth just to stand still. Especially as, we are told, the immigrants are all productive working age people, except for a few 30 year old children. The actual average (inc the 2009 bust of -4.2%) is about 1.4% annual GDP growth (Statista). All whilst we were firmly in the EU.

  2. Mark B
    Posted August 3, 2018 at 5:27 am | Permalink

    Good morning

    For some this will come as unwelcome news. Increases in taxes plus interest rates is going to put severe strain on many already overstretched budgets. Expect luxury items to take a hit and people to start to shop more carefully.

    I seem to remember that the Govenor of the BoE has a history of seeing large increases in house prices followed by a sharp fall. Let us hope that this does not happen here as I am sure people will not forget this come the next GE like the last time the Tories screwed the economy up 😉

    Jeremy must be so pleased.

    • Den
      Posted August 3, 2018 at 12:45 pm | Permalink

      Well I am pleased because it means I shall be able to receive more interest on my meagre but necessary savings. Then I can contribute more to the GDP because I will buy more.
      I had to cope with interest rates at 15%. So around 2% is nothing in comparison. We survived, so will prudent others this time around.
      PS the rates were so high because of the disastrous economics of the 1970s Labour Government which turned us into the sick man of Europe..

    • Bob
      Posted August 3, 2018 at 12:51 pm | Permalink

      Carney should not comment on political decisions, he should stick to his job as bank manager. If he wants to be a politician, he should return to his home country and stand for election.

      • Bleak
        Posted August 3, 2018 at 4:56 pm | Permalink

        Wow! Is this what it is coming to..xenophobic feelings towards Canadians now..and our moderator has allowed it to be

        • den
          Posted August 4, 2018 at 10:52 am | Permalink

          Complaints about the outrageous behaviour of a supposedly non-political BoE Governor now morph into “xenophobia? Utterly ridiculous as well you should know.

        • Helen Smith
          Posted August 4, 2018 at 8:09 pm | Permalink

          Bob made a straight forward observation, that as the Governor of the BOE Carney’s job is banking, not to comment on and try to influence Brexit. It is not unreasonable to say that if the Canadian Carney wants to enter politics he should do so in his home country.

          That the comment was allowed to stand by our host shows that it was not xenophobic. It is just you spreading hate and contempt of those you blame for Brexit.

  3. Bob Dixon
    Posted August 3, 2018 at 5:28 am | Permalink

    They are all Remoners and Remainers.

    • Bob
      Posted August 3, 2018 at 11:01 am | Permalink

      Treason May, Spreadsheet Phil and Mr Carney are on a mission of deliberate sabotage to teach us all a lesson.

      Don’t mess with the establishment!

      (and you thought you lived in a democracy!)

      • NickC
        Posted August 3, 2018 at 3:11 pm | Permalink

        Bob, It does seem like that. There is no other plausible explanation.

  4. Denis Cooper
    Posted August 3, 2018 at 5:41 am | Permalink

    Is Theresa May meeting Emmanuel Macron to see whether Brexit can be stopped?

    “The intention is not solely to ease Britain’s EU withdrawal but also to see whether even at this late stage Brexit can be forestalled.”

    Will there be official minutes of this meeting which could be produced as evidence during any proceedings against Theresa May?

    • Anonymous
      Posted August 3, 2018 at 6:17 am | Permalink

      It’s certainly not what we want to see. Our PM guesting in Macron’s retreat.

      • Hope
        Posted August 3, 2018 at 8:45 am | Permalink

        The Frenchman who openly stated he wants to take jobs from London! She is a disgrace.

    • Stephen Priest
      Posted August 3, 2018 at 7:14 am | Permalink

      The nation watches on a the Greatest British Prime Minister since David Cameron grovels her way across Europe, “cutting short her holiday” to go to a Mediterranean island to make further concessions to Emanuel (my plan is to take all business from London) Macron.

      • fedupsoutherner
        Posted August 3, 2018 at 9:15 am | Permalink

        @Stephen. (my plan is to take all business from London) Macron.

        And we want to business with these people? They’re all a bunch of back stabbers.

        • alan jutson
          Posted August 3, 2018 at 4:02 pm | Permalink


          “They’er all a bunch of backstabbers”

          No, No, No, Mrs May say’s they are her friends, and we must try to not upset them.
          Deluded or what !!!

          She has even been in charge of us negotiating with ourselves to see what may be acceptable to the EU as a starting point.
          How daft is that. !!!

        • Jagman84
          Posted August 3, 2018 at 5:43 pm | Permalink

          As I have said before, they are not our ‘partners’, they are our
          economic competitors. It’s akin to playing poker and announcing what cards you are holding at each round. The woman is either clueless or wilfully deceitful. I now suspect that it is the latter. When will the 1922 committee finally act?

    • Bob
      Posted August 3, 2018 at 7:16 am | Permalink

      I would love to know the real reason that Andrea Leadsom handed the Tory leadership to Treason May. Putting remainers in charge of a what should have been a Brexit govt is utterly unfathomable.

      • a-tracy
        Posted August 3, 2018 at 7:54 am | Permalink

        Bob, id guess because she didn’t want to be the UK’s version of Trump, vilified by the press at every turn, every sentence taken out of context and twisted to put her in a bad fashion. The press intrusion on your family life is massive, they pick on items of clothing, who you’re children are dating, who they are partying with, it is no business of the general public and that’s why more family women and women with grown children don’t want to get into public life, it needs calming if not stopping.

      • JoolsB
        Posted August 3, 2018 at 8:00 am | Permalink

        Remainer May had the most support from Tory MPs, even surprisingly and stupidly the Brexit ones. Having said that, Leadsom is now enjoying her ministerial position and car so much that she is now a backer of May’s disastrous Chequers proposals.

        Not sure there is anyone we can trust to deliver a true Brexit. The majority of 650 self serving MPs will always put themselves above the country and a little matter like democracy.

        • Lifelogic
          Posted August 3, 2018 at 5:27 pm | Permalink

          Well certainly about 500 of them do.

      • Nicholas Murphy
        Posted August 3, 2018 at 8:06 am | Permalink

        1. The pro-Remain Conservative parliamentary party was always likely to put one of their own into No 10.
        2. Andrea Leadsom ran a car-crash of a campaign.
        But I agree with your closing sentiment. In commerce, managers who don’t enthusiastically deliver necessary change don’t last long before being sacked. May should have ensure a pro-Leave majority in the Cabinet.

        • NickC
          Posted August 3, 2018 at 3:13 pm | Permalink

          Nicholas Murphy, The only “car crash” by Leadsom was to state what everyone knows – if you have children it changes your perspective.

        • rose
          Posted August 3, 2018 at 6:03 pm | Permalink

          She didn’t run a car crash of a campaign. It was decided on high we couldn’t wait three months for a PM and that the PM would be Mrs May. Mrs Leadsom’s campaign was irrelevant up against that. Remember the unfavourable article on Mrs May being pulled from the DT, and the unfavourable article on Mrs Leadsom being planted on the front page of the Times? That was nothing compared with the bullying going on behind the scenes.

      • graham1946
        Posted August 3, 2018 at 9:52 am | Permalink

        Not when you realise the Tory Party is the party of the EU. They tried to enter under Macmillan. They eventually took us in on a lie, invented the Single Market, Major sold us out with no referendum on Maastricht, took us into the disastrous ERM. Most of their MP’s are Remainers. Is it really so unfathomable? It was a fix from the start, they spent millions of public money on anti Brexit propaganda and used the Civil Service to undermine the vote, then used the Electoral Commission to hammer the Leave side.

        Many of us here predicted most of this as soon as the referendum result went against their plans for a Remain vote.

        Rees-Mogg, Redwood, Bone and a few others are really the odd ones out in the party in wanting the best for the UK.

      • Lifelogic
        Posted August 3, 2018 at 11:10 am | Permalink

        “Putting remainers in charge of what should have been a Brexit government”
        Indeed especially a robotic, misguided dope like Appeaser May. a PC lefty, an interventionist, an appalling negotiator and someone who chose and retains the appalling liability Philip Hammond as Chancellor. Though I blame Gove rather than Leadsome who was falsely accused to attacking May for not having children. Not having a brain more like.

        May is wrong on almost every issue from gender pay, building on workers rights, elections with punishment manifestos, taxation levels, the NHS, failing to prepare for no deal, failing to debate on TV and sending Rudd …..

        She is also absurdly condescending. She actually said that Brexiteers voted with their hearts but she is being hard headed. She is actually being a bone headed fool and a huge electoral liability. One that might well lead to the appalling Corbyn/Mc Donnall/SNP prospect. She and Hammond really must go and go now. She, Hammond and the Tories will look a complete joke at the Party Conference.

      • Stephen Priest
        Posted August 3, 2018 at 11:51 am | Permalink

        Politics is at an all time low.

        If Corbyn and May are leading the two main parties how bad are the rest of their MPs (apart from Mr Redwood)?

        Corbyn is far to the left of the average Labour voter.

        May is far to the left of the average Conservative voter.

    • Ian wragg
      Posted August 3, 2018 at 7:24 am | Permalink

      We now have the final act where May capitulates completely to Brussels.
      They accept the Chequers paper with a few refinements. I.e. continued freedom of movement and providing we stay in the Customs Union.
      She will come back and announce that she has secured a good deal and maintained her red lines.
      She will hope we are all thick knuckle dragging morons and you will be destroyed by the voters.

      • Peter Wood
        Posted August 3, 2018 at 8:51 am | Permalink

        Fear not, if Facts4eu and others are correct, the nonsense Chequers plan is already toast.

        Dr. Redwood, upon Mrs. May’s return, can you kindly ask the 1922 to hand her her p45 and get on with planning on WTO trade with the EU.

        There are now more voices giving positive comments on a WTO Brexit, the Conservative Party needs to come together to help the nation to accept that its now THE BEST DEAL.

        • NickC
          Posted August 3, 2018 at 3:00 pm | Permalink

          Peter Wood, It’s not just Theresa May, Mark Carney is “uncomfortable” with the WTO system too.

          • Jagman84
            Posted August 3, 2018 at 5:50 pm | Permalink

            Uncomfortable with a system that we use on a daily basis? He is more concerned with keeping the enormous economic advantage for the EU, post-Brexit. Another viper in the nest, needing his P45, ASAP!

      • Stred
        Posted August 3, 2018 at 2:16 pm | Permalink

        The island that Treez is meeting Napoleon was originally developed by his forerunner. Perhaps she is counting on his penchant for older ladies in her efforts to gain support for her surrender terms. French TV seems to be saying that he will not agree. Ironic that she should go begging the him on an island. The original would have been pleased.

        • Mitchel
          Posted August 3, 2018 at 3:19 pm | Permalink

          One Love Island ends…another begins!!!

        • L Jones
          Posted August 3, 2018 at 4:12 pm | Permalink

          The idea of her ”begging” anything from the EU’s masters is very distasteful. It smacks of a desperate attempt at appeasement. Nothing new there, then.

          Though nice little Macron really does not seem ‘master’ material. Puppet material, maybe? And puppets have puppeteers – I wonder whose his would be then?

    • hefner
      Posted August 3, 2018 at 9:06 am | Permalink

      According to LeMonde, there will not be any official minutes as it is supposed to be some informal discussions, and as Macron has already pointed out that Barnier is the only one to represent the EU27 position.
      I just hope the Mediterranean breeze will help make bearable the 40C on the terrace.

  5. Fedupsoutherner
    Posted August 3, 2018 at 5:42 am | Permalink

    If inward migration and massive imports of goods and services are expected by the bank why all this scare mongering about Brexit? Hammond and the government are telling us that importing after Brexit will be difficult. Can they please make up their minds? Hammond’s fiscal policies are clearly meant to thwart Brexit and yo slow the economy so much for the public to think its the Brexit factor. He really is a piece of work.

    • graham1946
      Posted August 3, 2018 at 9:57 am | Permalink

      The economy is already slower than it should be and this is to drag it further. All designed to show Brexit is having a deleterious effect. All part of Project Fear. With low inflation this action is months ahead of its time, but just in time to try to de-rail Brexit.

    • NickC
      Posted August 3, 2018 at 2:28 pm | Permalink

      Just as Olly Robbins is the new Prime Minister, so Mark Carney is the new Chancellor of the Exchequer. The Remain farce gets more and more absurd.

      • Mitchel
        Posted August 3, 2018 at 3:22 pm | Permalink

        If Greece and Italy can have technocratic takeovers,why can’t we?!

  6. Ian wragg
    Posted August 3, 2018 at 5:44 am | Permalink

    Carney wants interest higher so he can reduce them and blame Brexit.
    Every move him and Hammond make is to slow the economy and blame Brexit uncertainty.

    • Lifelogic
      Posted August 3, 2018 at 6:15 am | Permalink

      This certainly seems to be their appalling agenda. I listened to Carney yesterday, he went on for ages but said virtually nothing of interest, meaning or value. Do they get special training in using lots of words to say nothing at all? Is it perhaps part of the Oxford PPE course.

      None of the journalist questioned why the UK banks can get away with charging such huge fees and margins over base and why they are so slow, restrictive and incompetent. This is hugely damaging to the economy.

      • graham1946
        Posted August 3, 2018 at 10:00 am | Permalink

        The interest rates immediately apply to mortgages etc but will not feed through into savings. The Banks are out of control but big money always rules the roost.

        • graham1946
          Posted August 3, 2018 at 10:06 am | Permalink

          PS. I am not against interest rate rises – I would like some return on my savings – it is the timing that is fishy. The other day I found the deeds for my house and the mortgage rate when I took it out in 1975 was 11 percent.

          • Lifelogic
            Posted August 3, 2018 at 4:33 pm | Permalink

            What really stinks is if you approach your bank with say £200K to deposit they offer you virtually nothing, perhaps under 1% or so but if you then want to borrow £200K for a business or property development or something they want anything from 3.5% to 20% or even as high as 68% if unsecured. Plus fees and very restrictive terms too.

            This when you are probably a better risk than the bank and are offering sound & solid security. They are rip off middle men who need to be cut out of the loop. I used to borrow from the main Banks at circa base+1% to 1.5% or so and that was when I was fairly impecunious. The main banks now rather a sick joke for small and medium businesses and most individuals.

    • eeyore
      Posted August 3, 2018 at 7:00 am | Permalink

      Ian – Si non e vero e ben trovato. Trust in so many of our institutions is collapsing. Is the Bank crushing the economy on purpose? Is the Civil Service impartial, or ruthlessly political? Is government conspiring with the enemy to sell us out (using our own money)? Are bodies like the Electoral Commission, supposed to hold the ring, in fact shamelessly parti pris?

      When government looks like traitors, Opposition like scoundrels, Parliament like clowns and the media like ( a propagandist’s ed) poodle, to whom can we turn to put things right?

      • fedupsoutherner
        Posted August 3, 2018 at 9:18 am | Permalink


        Agenda 21? We are all being taken for fools and all slaves to whatever government gets in. They are all in it for themselves and all as bad as each other. There are some very big banking families behind all this. Just as I am sure the vote in Zimbabwe has probably been rigged so the Brexit vote will be, just not during the actual election but afterwards by politicians deeds and policies which plebs like us can do nothing about. I am amazed Mrs May can show her face in church.

      • Tad Davison
        Posted August 3, 2018 at 10:44 am | Permalink

        Armed insurrection by the people, for the people. It may be the only option left after our democratic rights have been usurped in totality!

        Let’s put the Bilderburgers and the globalists back in their boxes and screw down the lids!


      • Dennis Zoff
        Posted August 3, 2018 at 11:48 am | Permalink


        The miniscule flaw in your excellent argument is the belief this current crop of atrocious Governing elites, give a damn what the so-called politically illiterate hoi polloi think? They are only important at election time; and why should the establishment care, they live in a very different and privileged world to the rest of the so-called common people – the upper-class fervently wish to continue their lording over the British populace and Brexit broke these hard and fast elitist rules…how dare they!

        The placid nature of Brits (unless stirred up from their somnolent slumber due to a great cause célèbre), their general ignorance of the inner workings of an archaic Government structure, means they can be taken to the cleaners each election, and are frankly, completely incognisant of their true people power, unlike the French………….or indeed as consumers!

      • NickC
        Posted August 3, 2018 at 2:37 pm | Permalink

        Eeyore, You are quite right. Immense damage is being done by Mrs May adhering to her Remain agenda. People’s distrust and contempt is palpable. Yet the Tory party, with its ludicrous MP’s May support letter, seems blind to the crisis.

      • Timaction
        Posted August 3, 2018 at 4:15 pm | Permalink

        Indeed. She has considerable form with her trips in the middle of the night to sign away Northern Ireland for £39 billion of nothing. Then the meeting with Merkel to gain permission for her secret and treacherous white paper that Mr Davis and his team had no knowledge. I’ve never seen such anger on the blogs from Tory voters! Conservative Home is one such website. I’m just glad I didn’t vote for her or her party as I knew she and her party would sell us out, as did Cameron, Major and arch traitor Heath before her!
        She simply has to go before any treaty signing and capitulation! NOT IN MY NAME

      • L Jones
        Posted August 3, 2018 at 4:27 pm | Permalink

        First paragraph – yes.
        Second paragraph – the Good Lord only knows.

        There’s the expression: ”cometh the hour, cometh the man”. Or woman. Where is he/she?

  7. Lifelogic
    Posted August 3, 2018 at 5:55 am | Permalink

    Indeed bank lending is hugely restricted by misguided and arbitrary regulations and their margins, fees and terms are excessive.

    (Named ed) bank even charges personal overdraft daily “fees” 1p per £7 these amount to about 68% interest (or 38 times even the new base rate) such is the lack of real competition in UK banking they even get away with it. Also without quoting the real % rate.

    Philip Hammond is an appallingly misguided chancellor his taxes on Pensions, Property, Landlords and Tenants, Non Doms and his increases in insurance tax, IHT ratting and now even a new probate tax are hugely damaging. Why on earth did T May appoint and retain this tax to death man? He is causing huge harm to the economy.

    Support among Tory members for Hammond as next PM is about 1% (May’s support would surely be even lower) compared to 28% for Boris, 18% Javid and 13% Mogg, Gove *% Davis 4%, Hunt 4%.

    I am not very keen on Javid or Hunt myself. But almost anyone (apart from Corbyn and Mc Donnall) is going to be better than May and Hammond. They are wrong on virtually every issue and would give us a vassal state “Brexit”. They are tax borrow and waste, greencrap and over regulate socialists.

    • Arthur Wrightiss
      Posted August 3, 2018 at 7:56 am | Permalink

      The never ending increases in taxation for both private and business in various forms is indeed counter productive, excluding Amazon obviously.

    • Iain Gill
      Posted August 3, 2018 at 8:18 am | Permalink

      Something radical would be better like Boris and John joining ukip, alongside Kate hoey etc

      If that doesn’t happen the next election will be interesting because there will simply be nobody worth voting for, no least worst option available : they will all be too bad to contemplate.

      We need a lot of new candidates who are closer to the mainstream majority public and not liberal elite.

    • Alison
      Posted August 3, 2018 at 10:11 am | Permalink

      The only alternatives to Mrs May I would trust are Boris, JRM, possibly David Davis. Javid or Hunt will not implement anything close to Brexit. They would probably also keep the current Olly Robbins framework.
      Mrs May usually does or decides on things in her walking holidays. Over the weekend I dreamt that, following the horrendous ratings she has been receiving in pools, she returned from hols and announced her resignation. Bliss.
      Over the next few days, however, came a slew of whispers, speculation, and the Macron meeting. So my nightmares came back. What Mrs May is dreaming of is coming back from her walking holiday with the key EU27 leaders signed up to a Deal, and everybody in the UK heralding her for being so wonderful all the time.

    • Lifelogic
      Posted August 3, 2018 at 11:13 am | Permalink

      Gove 7%

    Posted August 3, 2018 at 5:57 am | Permalink

    It appears that the Fed and indeed the BoE are taking monetary decisions based on political considerations with an intent to undermine and hinder rather than assist.

    • Lifelogic
      Posted August 3, 2018 at 6:16 am | Permalink

      Indeed that seems to be the agenda.

    • Nig l
      Posted August 3, 2018 at 6:47 am | Permalink

      Where is your evidence? Trump has released billions of dollars into the US economy through his tax cuts. This must have an inflationary effect and it is inevitable that the Fed will want to ensure it does not run away.

      • NickC
        Posted August 3, 2018 at 3:22 pm | Permalink

        Nig 1, Provided the USA government doesn’t borrow more, or print more, I see no reason to suppose that merely swapping money from state spending to citizen spending should be inflationary.

        • Caterpillar
          Posted August 3, 2018 at 10:29 pm | Permalink

          Nick C,

          No swap. Budget deficit is increasing as well.

    • Nicholas Murphy
      Posted August 3, 2018 at 8:09 am | Permalink

      Looks like it. I was struck my this, in Mr Redwood’s article:

      They themselves concede that if they kept interest rates at the new level of 0.75% instead of raising them further prior to 2020, output would be higher, unemployment lower, and inflation only 0.2% higher than on their preferred course of slow growth and more tightening by that date.

      I would happily take a 0.2% hit on the inflation measure.

  9. Steve Reay
    Posted August 3, 2018 at 5:58 am | Permalink

    Emergency measures are no longer needed, year on year our economy has improved. Stealing from savers has to stop sometime . The bank of England’s and this governments policy of low interest have caused people’s high level of indebtness.

  10. Jason Wells
    Posted August 3, 2018 at 6:07 am | Permalink

    I believe we have a good man at the helm in the BoE and given the amount of uncertainty about he is right to proceed with caution until we see how we go, which I presume we should know in a short while.

    Some years back I spent a little time in Panama and got to know some of the canal pilots there one of whom told me that they had a way of gauging how the world economy was faring-

    You see when the big container ships coming from China were passing the canal at that time, these ships were usually loaded down to the max loadline/ so therefore the pilots did not have too far to climb up the ship’s side to get on board- easy job- with all of this cargo bound for the US East Coast ports and Walmart no doubt.

    Whereas the ships going the other way from the US back to China were largely carrying only empty this case the pilots had a long long way to climb- a hard job

    Both types of ships looked the very same in their container numbers and ships profile but the cargo weights were terribly different and so trade balance between them had to be way out- and then with this measured over time- say months, years- we can see. Just a different way of looking at things

    • Caterpillar
      Posted August 3, 2018 at 8:08 am | Permalink

      Jason Wells,

      ‘proceed with caution’ !?!

      More than a decade of unconventional monetary policy that is not unwound should not be seen as cautious, the opposite is a more appropriate.description.

    • Hope
      Posted August 3, 2018 at 8:49 am | Permalink

      Utter tripe. He told us when unemployment reached xxx interest rates would be increased, never happened. He gave other predictors that did not materialise. JRM had the measure of him at the select committee. He is a puppet doing what the chancellor asks. It is not his job to be political. He crossed that line. Who trusts Hammond? No one.

      After the crash savers were told by the deputy BoE governor to spend our savings.

    • Mitchel
      Posted August 3, 2018 at 11:16 am | Permalink

      There was a very interesting article in The Guardian a couple of days ago( “Germany’s China City:how Duisburg became Xi Jinping’s gateway to Europe”by Philip Otterman),looking at what is happening in this Ruhr rust-belt city now that it is the central logistical hub for the European end of China’s Belt & Road Initiative(and the world’s largest inland port).

      Unsurprisingly,the freight trains coming from the east are full and those returning east mostly empty.

  11. Newmania
    Posted August 3, 2018 at 6:28 am | Permalink

    A large inward migration is keeping wages down,

    There us no evidence for this , and it would be rather surprising if increasing the size of the economy held wages down across the board. I disapprove of spreading irrational xenophobic fears ,otherwise I agree with much of what you say

    • Edward2
      Posted August 3, 2018 at 7:21 am | Permalink

      You need to check the govermment’s own figures for immigration.
      There you will find the evidence for “a large inward immigration”
      Witht several hundred thousand new arrivals moving into the job market each year, competition for jobs rises and employers are able to recruit easier without increasing wages.
      It is simple supply and demand.
      It has nothing to do with “xenophobic fears”

      • Iain Gill
        Posted August 3, 2018 at 8:21 am | Permalink

        Government own figures are massive underestimate. So many obvious gaps in their counting approach.

      • bigneil
        Posted August 3, 2018 at 8:47 am | Permalink

        ” several hundred thousand new arrivals moving into the job market each year, “. Yes, some come looking for jobs, others come with no intention of ever having one, deliberately arriving with very young children in tow ( in winter ) and heading for the local council’s housing dept. They then start on the housing dept staff, saying it is wrong that their young children will be out in the cold at night. They want a “foot in the door” of benefits, getting onto the NHS lists etc. Once here on the taxpayer, they have no intention of leaving or working. Why would they when our govt gives them a rise in living standards, just for arriving and doing nothing?

      • Hope
        Posted August 3, 2018 at 8:53 am | Permalink

        It is not just mass immigration it is also the hundreds of thousands that May lost as HS and Amber Rudd lost a further 56,000 this year. Where do they work? What impact on crime, modern slavery, sex trade, drugs etc.

        Incredulously Javid now advocating after the terrible Home Office record to lose illegal immigrants to let more people stay in the community while applications and status are resolved! Is he effing mad?

      • L Jones
        Posted August 3, 2018 at 8:57 am | Permalink

        It seems that Newmania discovered that word ”xenophobic” some time ago, and likes to use it at every oblique opportunity against Brexiteers, even those of us who originally came from foreign parts.
        Remainders also enjoy words such as ”swivel-eyed” and ”cliff-edge” – it’s what comes of clicking ”like” on Facebook and thinking you are in accord with the whole world and that you know it all.

      • Newmania
        Posted August 3, 2018 at 9:14 am | Permalink

        There is not a finite number of jobs we have virtually full employment, active economic participants increase employment opportunity .
        It is simple , but not quite as simple as that .There is a lot of work to be read on this; read some .

        • Caterpillar
          Posted August 3, 2018 at 3:46 pm | Permalink


          1) Pay is different to job creation.
          2) Overall effect depends on who immigrants are (in terms of human capital, investment brought, etc.) and what they do (e.g. replace capital vs entrepreneurial activity) – so creating jobs can be associated with rapidly growing start ups and increase in productivity, or can substitute capital and decrease productivity (i.e. more low paid jobs). (Are USA and UK seeing different behaviour here?)

        • Edward2
          Posted August 3, 2018 at 4:22 pm | Permalink

          If you think several million new arrivals into the UK labour market have not had a deflationary effect on wage levels in our economy then it is you that needs to do some reading.
          I’ve never said nor do I believe there is a finite number of jobs so don’t accuse me of that.

        • NickC
          Posted August 3, 2018 at 8:34 pm | Permalink

          Newmania, It’s called supply and demand. You may have heard of it.

          • Dennis Zoff
            Posted August 4, 2018 at 2:51 pm | Permalink


            The fear in some quarters “what happens when demand stalls. What is to do with the surplus supply – does it naturally become reliant on Government handouts, called benefits. In this case, with such demise, big businesses will not care!”

            Without a full Brexit, with its Global trading approach, the “decrease in demand and subsequent oversupply with its negative resultant” could very easily become a real possibility! In this case, Brussels will not care.

      • Anonymous
        Posted August 3, 2018 at 12:20 pm | Permalink

        And without selective immigration it is those in the unskilled jobs who are hit hardest.

        “and it would be rather surprising if increasing the size of the economy held wages down across the board.”

        By that rationale there should be no cuts in public services then. Alas, here we are.

    • Caterpillar
      Posted August 3, 2018 at 8:16 am | Permalink


      There is evidence that medium and high wage workers have gained, low wage workers continue to lose.

      (This causes societal pressures, moreover it is a contributory force to the direction of economic developmemt).

    • fedupsoutherner
      Posted August 3, 2018 at 9:21 am | Permalink


      Just when was it Xenophobic to talk about immigration? Are you people for real? We have a high level of immigration. Nobody is talking about colour or race so how is it Xenophobic?

    • mancunius
      Posted August 3, 2018 at 1:02 pm | Permalink

      ONS report July 2018
      Latest estimates of Long-Term International Migration UK, 2017, figures given are:
      Immigration: 630,000
      Emigration: 349,000
      Net migration into UK: 282,000.

      Though insufficient attention is ever given to the facts behind the headline figure: that’s 630,000 new arrivals per year – many of whom may have a limited previous experience or understanding of our language and laws – all seeking accommodation, public services, jobs, benefits, credit, etc.
      A considerable strain on services, unbalanced by those now rather more experienced ones who are leaving.

      • Hope
        Posted August 3, 2018 at 5:33 pm | Permalink

        NI numbers to foreign workers three times higher than the govt estimates!

  12. Sir Joe Soap
    Posted August 3, 2018 at 6:32 am | Permalink

    Not really.
    If we can’t live with interest rates at around the lowest rate in 300 years, something is very wrong.
    Asset prices need adjustment albeit slow but sure back to sensible levels. Savers need a real return again.

    • Caterpillar
      Posted August 3, 2018 at 8:34 am | Permalink

      Sir Joe Soap,

      Agreed. The country is in the situation of net capital formation not keeping up with population growth whilst the economy remains unbalanced. Monetary policy seems to continue to be aimed at banks’ liquidity, profitability and solvency (with no link between small individual savers and any returns to investment that do exist).

      (The nature of current monetary policy, a tax system past its sell by date, and the failure to attain a clean Brexit are sadly building towards a perfect storm… Plenty of space in which John McDonnell can operate.)

    • Mitchel
      Posted August 3, 2018 at 10:23 am | Permalink

      Something IS very wrong.With semi-permanent deficit financing and an economy biased to consumption (of imported goods),you get poorer not richer.Most of our supposed growth for a long time has been nothing more substantial than the simple spending of borrowed money.Adjusting for the borrowing effect,our ‘clean’ GDP per capita has decreased by 5.1% since 2003 according to Tim Morgan at SEEDS(#131;20/7/18).

      And after 11 years of recovery/growth we must be far closer to the next downturn than away from the last.The government should be preparing for it but,as someone once said, “you can’t taper a Ponzi scheme.”

      The “end of history” was supposed to result in a benign,globalised version of the Soviet Union(not that they told you that);instead the west is facing the problems the old Soviet Union faced in it’s final decades.

  13. Narrow Shoulders
    Posted August 3, 2018 at 6:45 am | Permalink

    There is nothing wrong with normalising interest rates while the economy is growing. A quarter percent rise is overdue given the rates should not have been reduced in 2016.

    If you want a subject for your ire over tightening of credit aim at financial institutions’ margins when lending money. Most of these institutions could afford to absorb the increased costs (the rate rise) as other retailers do when their supply costs increase. But it is more likely these costs will be passed on and increased for unsecured loans and other borrowings. What chance the increase is passed on in full to savers?

    The banks have their part to play in our costs of living.

    • Bob
      Posted August 3, 2018 at 7:27 am | Permalink

      When does Mr Carney’s employment contract expire?
      I’m sure that Justin Trudeau can find him a cushy sinecure back in Ottawa.

      • billR
        Posted August 3, 2018 at 6:16 pm | Permalink

        Mr Carney is my hero..I think some time mid 2019 his contract is up..could be he will get a knighthood from HM before returning well done Mark..sorry.. Sir Mark

  14. Peter Martin
    Posted August 3, 2018 at 6:53 am | Permalink

    It’s simply a measure to slow the economy, with a very real danger of crashing it, and heap the blame on Brexit.

    This is a political decision not an economic one. The BoE should stay out of politics.

    • Tad Davison
      Posted August 3, 2018 at 10:57 am | Permalink

      They’re all in it together Peter.

      Maybe that’s what Cameron meant when he said ‘we’re all in this together’. ‘We’ being the corporate globalist shysters who will do anything to stop the people taking back control through a democratic process eight-hundred years in the making, which we had stolen from us by subterfuge.


      • fedupsoutherner
        Posted August 3, 2018 at 5:02 pm | Permalink

        Well said Tad. It’s just unfortunate that there aren’t enough honest and moral politicians in the Tory party any more to overturn those that wish to withhold democracy.

    • mancunius
      Posted August 3, 2018 at 1:05 pm | Permalink

      But Osborne hired Carney for his usefulness as a political weapon… Already well before the referendum (and of course during it) Carney did his best to act as one.

  15. alan jutson
    Posted August 3, 2018 at 7:16 am | Permalink

    I am somewhat confused.

    Are wages rising out of control, is inflation getting too high, have the terms of Brexit been finalised, are we entering a non sustainable boom period ?

    If the answer to all of the above was yes, I could understand an upward movement, but we keep on being told we are just about managing all of the above.

    Whilst I have to agree I think interest rates have been too low for too long, surely now is not the time to adjust them just as we are about to leave the EU, or does Mr Carney already know something, which we have yet to find out ?

    Something does not smell right here !

    • Tad Davison
      Posted August 3, 2018 at 11:00 am | Permalink

      It suits their purpose Alan. They have to make Brexit look bad somehow. Things were going too well, and the remainers couldn’t let that go.


  16. Prigger
    Posted August 3, 2018 at 7:28 am | Permalink

    A raising of interest rates by 0.25% was seen in the recent past by American and Canadian pundits for their own economies as neither here nor there. They could hardly be bothered using airtime to discuss the possibilities.
    Our media, especially paper variety, are fighting for their lives. Even more than usual everything is shock-horror times two.
    My guess, that in effect, remoaner circles have gone running to Mark Carney repeatedly shouting “We’ll fall off a cliff edge, do something! do something!’
    He didn’t take take them in haste to the white cliffs of Dover. He’s not British you know

  17. Iain Gill
    Posted August 3, 2018 at 7:37 am | Permalink

    Thanks for admitting a large inward migration is keeping wages down, only politician in either of the main two parties to admit this simple truth.

    • Roy Grainger
      Posted August 3, 2018 at 10:07 am | Permalink

      In UK wage growth at the lowest paid level (eg in building and hospitality) is among the lowest in the EU. However in Poland it is among the highest in the EU. Supply and demand. Simple.

      • Iain Gill
        Posted August 3, 2018 at 7:36 pm | Permalink

        its not just at the low end of the pay spectrum either

  18. Andy
    Posted August 3, 2018 at 7:41 am | Permalink

    The economy is clearly in bad shape – and Brexit will clearly make it worse.

    We do not know how much worse because we do not know what Brexit means.

    Are the patriotic pro-EU Tories going to so their duty?

    Or will the raging hard-right pensioners get their way?

    It will be for my generation to pick up the pieces either way.

    • Ed Mahony
      Posted August 3, 2018 at 8:01 am | Permalink


      Until you begin to admit there are serious problems with the EU (1. Not right that a foreign body should have so much power 2. Greece and so on 3. The EU could collapse), then I don’t think Brexiters are going to take you seriously.

      • Ed Mahony
        Posted August 3, 2018 at 8:05 am | Permalink

        (I’m not saying you don’t have some good points, either, but you’re not engaging in debate – personally, I think the EU should be seriously reformed – stripped of ALL political power – and I think now the time is rife compared to 5 or 10 or 20 years ago – and if that doesn’t work, go for complete Hard Brexit but only when we’ve built up our economy sufficiently / allowed our companies and Europe to re-adjust – can take some years because business is tough, but possible I believe).

        • forthurst
          Posted August 3, 2018 at 3:41 pm | Permalink

          If you strip the EU of all political power, you are left with the Customs Union and why would we want to belong to an exclusive economic zone when most of our trade and the growth of our trade is outside? That’s what we were told we were joining by Heath, by the way. The EU is and always has been dependent on lies and the liars that have propagated them. Look no further than a list of Tory PMs (apart from Mrs Thatcher.)

    • Arthur Wrightiss
      Posted August 3, 2018 at 8:06 am | Permalink

      I’m not raging, or hard right, but I am a pensioner with children and grandchildren .
      Look at the bigger picture and the longer term.
      It’s never been more true that “ short term pain for long term gain “ will more than justify leaving the EU.

      • Andy
        Posted August 3, 2018 at 4:04 pm | Permalink

        Yeah – but the pain won’t be short term. It won’t be medium term either.

        And, most importantly, as a pensioner most of it won’t affect you.

        It will affect your children and grandchildren.

        And, as the child of a Brexit voter, I can assure you they won’t forgive you. As I will never forgive my mum.

        • Fedupsoutherner
          Posted August 3, 2018 at 9:20 pm | Permalink

          Andy. Your mother has my sympathy.

        • graham1946
          Posted August 3, 2018 at 9:54 pm | Permalink

          Never forgive your mum? What kind of a creature are you? Politics is more important than the woman who brought you into the world, fed clothed and nurtured you. Thank God you are not one of mine. I’d be so ashamed.

    • Richard1
      Posted August 3, 2018 at 8:11 am | Permalink

      The economy is clearly in much better shape than Remain had projected during the referendum, and other than constant hysterical assertions, we hear no tangible reason from Continuity Remain as to why Brexit should make it worse. It is interesting that all the coherent criticisms of the chequers / white paper plan are that it keeps the U.K. too tied into rule by the EU. The opportunities of Brexit are such things as saving £12bn pa, cutting tariffs, freeing up the U.K. economy for choice and competition in goods and services currently excluded by EU protectionism and opening up new markets for U.K. goods and services. Assuming there is a decent agreement (questionable at the moment) our children are fortunate to have such a bright future before them.

      • Andy
        Posted August 3, 2018 at 4:05 pm | Permalink

        And yet the economy is clearly in worse shape than Mr Redwood promised.

    • zorro
      Posted August 3, 2018 at 8:25 am | Permalink

      The economy is in bad shape eh?…. So the BOE decides to raise interest rates?? Seriously, what are you on?


    • Know-Dice
      Posted August 3, 2018 at 9:03 am | Permalink

      That’s not what the BBC are saying this morning, exports to the rest of the world are up…

    • Edward2
      Posted August 3, 2018 at 9:09 am | Permalink

      Economy in a “bad shape” you say Andy.
      Why does the Bank of England need to apply downward pressure to the economy again ?
      And the hard right slur again.
      Very poor.

    • fedupsoutherner
      Posted August 3, 2018 at 9:25 am | Permalink

      Andy, Brexit will be worse because we won’t have truly left it. We will be subservient to the EU, not be able to trade in the way we want to which could really boost our economy, ruled by the ECJ and still in the customs union. All because of remainiacs such as yourself. I would love to get a real Brexit and when the economy booms see what you say then. When are you moving to one of the EU countries? Hurry up please.

      • billR
        Posted August 3, 2018 at 6:28 pm | Permalink

        fedupsoutherener.. Am afraid Andy was correct all is Fox, Gove, Boris, IDS and DD that have all let us down, and let us down badly..if there were new international trade deals out there waiting for us as was promised we could be talking at a different level..but No..there is nothing worthwhile out there for us outside of the EU..I repeat the word ‘worthwhile’..and so some kind of a half in half out deal is going to have to be cobbled together to get us through this is called realpolitiks- the way of the world

        • Fedupsoutherner
          Posted August 3, 2018 at 9:18 pm | Permalink

          Billr. Rubbish!

    • Ian wragg
      Posted August 3, 2018 at 9:36 am | Permalink

      I think you are the one in bad shape
      Are you taking the medications. I think a lie down with the curtains closed may help you
      Have you thought of going private

    • Roy Grainger
      Posted August 3, 2018 at 10:04 am | Permalink

      I assume Carney is putting up interest rates based on a detailed analysis by Bristol Council ,eh Andy ?

    • graham1946
      Posted August 3, 2018 at 10:11 am | Permalink

      You do not know what Brexit means, but you do know the economy will ‘clearly’ be worse.

      Got any basis for that, other than bigotry against your elders?

      • Andy
        Posted August 3, 2018 at 4:12 pm | Permalink

        You are right. I don’t know what Brexit means.

        But then I didn’t vote for it.

        Amusingly you don’t know what it means either.

        And you don’t know because the hard right Tory pensioner MPs haven’t figured it out yet.

        But let me make a small wager. Whatever they decide Brexit is, you will like it even less than I do.

        And you are dead right. I don’t respect anyone on the basis of age. Some of the smartest and nicest people I know are old. As are some of the dimmest and most unpleasant. Ditto young people. Respect is earned not awarded on the basis of the fact that you were born earlier.

        • NickC
          Posted August 4, 2018 at 9:15 am | Permalink

          Andy, The Remain voters I spoke to had varied reasons, too. People don’t have to have identical reasons for voting the way they do, in either referendums or elections. And there’s nothing wrong with that, unless you have OCD.

          There is no need for you to respect someone simply because of their age, the issue is your evident hatred simply because of age.

          Leave means no longer having any treaty ties with the EU (my preference) but at the minimum having only those ties where the EU cannot impose new law on us. In other words we must regain control of our laws (making and courts), our trade policy, our borders, and our money. As VoteLeave made amply clear during the campaign.

    • Quibbler
      Posted August 3, 2018 at 10:36 am | Permalink

      Soft or hard pieces?

    • Tad Davison
      Posted August 3, 2018 at 11:16 am | Permalink

      You really can’t say anything without making a disparaging ageist remark about the elderly can you! It’s a wonder you don’t advocate compulsory euthanasia upon reaching retirement age, thus saving the country money.

      My three kids are about your age I suspect. The eldest two have had to pay way over the odds for their houses – many tens of thousands of pounds – because of immigration and the huge pressure on house prices that has caused. The youngest can’t even get on the housing ladder at all despite being a university graduate. Unsurprisingly, they’re all leavers, which rather dispels the myth that ‘liberal progressives’ would have us believe that all young people voted remain.

      As for the economy being in a bad shape, you’re clearly not qualified to pontificate on that one! You haven’t lived pal!

      • Andy
        Posted August 3, 2018 at 4:19 pm | Permalink

        Yeah – but actual facts disprove your claim. Immigration is not responsible for rising house prices. A failure to build sufficient homes to cope with increasing life expectancy is. As study after study shows.

        A key part of university of respecting different cultures, peoples, nationalities. Everything Brexiteers do not do. If your children failed to learn this basic lesson at university then they deserve a refund. Perhaps they had the bad attitude towards foreigners drummed into them from an early age?

        • Tad Davison
          Posted August 3, 2018 at 10:26 pm | Permalink

          Every time you say something, we get another clue as to what you truly think, and the lack of anything credible to back it up.

          It seems you don’t even understand the simple truth of supply and demand. If substantial numbers of immigrants to the United Kingdom do not increase the demand for housing and thereby push up house prices, where do they all live, in tents?

          How many houses must we build to cater for the influx alone?

          Conservative (small C) estimates put it at around one house every seven minutes. And why should we concrete over large swathes of countryside and diminish the quality of life for British people, let alone lose valuable agricultural land in the process?

          The free movement of people is clearly an expensive nonsense as far as my kids, and many other kids who want to settle down and have families are concerned.

          And when you talk about the ethos (my word, not yours) of universities, again, your arguments are founded upon a false premise. You accuse Brexiteers of not respecting different cultures, peoples, and nationalities, and suggest my own kids may have had a bad attitude drummed into them in that regard, and that is why they are all leavers. What planet do you come from?

          If anything, the exact opposite is true, so what gives you the certainty that you know my family circumstances better than I do?

          I think this is just bitterness and sour grapes because your side lost and you can’t get over it. Stop clutching at straws and come up with proper arguments we can debate.

        • Edward2
          Posted August 3, 2018 at 11:41 pm | Permalink

          5 million extra people need somewhere to live.

      • fedupsoutherner
        Posted August 3, 2018 at 5:06 pm | Permalink

        @Tad. Yes, I wonder if Andy has given his children permission to put him out of his misery when he reaches pensionable age?

        • Prigger
          Posted August 4, 2018 at 12:24 am | Permalink

          Andy isn’t in misery. That will come with experience

    • Anonymous
      Posted August 3, 2018 at 12:43 pm | Permalink

      I’m astounded that 5% of UKIP voters were for Remain !

    • Anonymous
      Posted August 3, 2018 at 3:12 pm | Permalink

      Statistics show that your generation were split almost 50/50 in the referendum, Andy.

      The one thing that you cannot deny is that disgruntlement with the EU is somewhere around that figure – beyond mainstream even if you deny the majority.

      This yougov poll divides the age groups up rather conveniently. The artificial distinctions between ages are used divisively to pedal hatred.

      Why not 25 to 35 ? Why not 35 to 55 ?

      Any arbitary measure of this sort will produce whichever conclusion the author wants. It is false and undemocratic to do so.

      • Jagman84
        Posted August 4, 2018 at 7:59 am | Permalink

        The 25 to 35 demo graph is the Socialist’s target group. The ones that were previously indoctrinated by the teaching establishment and need to be kept on-message. Once reality hits, they normally move out of reach forever.

    • Anonymous
      Posted August 3, 2018 at 4:51 pm | Permalink

      “… because we do not know what Brexit means.”

      The answer to the referendum question really was a Yes or No answer.

      • Andy
        Posted August 3, 2018 at 10:40 pm | Permalink

        You confuse question and answer.

        The referendum gave a black or white choice of answer.

        The trouble is that, in reality, the question can only be answered in a shade of grey.

        And that is why Brexiteers are in such an unholy pickle.

        • Edward2
          Posted August 4, 2018 at 7:25 am | Permalink

          Leaving is simple.
          It is trying to stay half in that is “shades of grey”.
          It is Remainers who are creating the “unholy pickle”.

          • Anonymous
            Posted August 4, 2018 at 8:42 am | Permalink

            Grey = Remain in the EU

  19. Kevin
    Posted August 3, 2018 at 7:54 am | Permalink

    According to the financial Web site, ThisisMoney, the base rate was at 4.5% in October 2008.

    Ten years later, it is at 0.75%.

  20. Richard1
    Posted August 3, 2018 at 7:57 am | Permalink

    Although the US Fed is increasing rates quite aggressively and reversing QE yet seeing strong growth. There is an argument that normalising interest rates boosts the investment climate as investors are not so worried asset prices and projected returns are distorted by exceptional monetary policy. Perhaps there’s something of this in the US. Obviously Trump is also cutting taxes, bearing down on excessive regulation and promoting cheap energy, none of which out Govt is even thinking about. That is probably the real difference.

    • Richard1
      Posted August 3, 2018 at 8:01 am | Permalink

      Another major difference is the US response to the financial crisis was much more rational and banks in the US now have lower leverage than in the U.K. and Europe. The EU-Brown approach was an error.

  21. ChrisS
    Posted August 3, 2018 at 8:06 am | Permalink

    Any reduction in net migration after March 2019 will take the pressure off demand for housing and thus ease price rises.

    The Government predicts that we are building 120,000 fewer homes than we need. Take off 240,000 additional arrivals and, based on a figure of two or three people to a housing unit, the shortfall either disappears altogether or the gap goes down to an easily bridgeable maximum of 40,000 units pa.

    The fact that various groups want us to build 300,000 more units a year is an attempt by those on the left wedded to maintaining immigration and driving down house prices. The latter would have a devastating effect on the wider economy.

    On the wider point, I can see no purpose in increasing interest rates at present. Families are reported to be struggling. Increasing their mortgage costs is just going to create more misery for those without fixed rate loans.

  22. Geoff not Hoon
    Posted August 3, 2018 at 8:08 am | Permalink

    You may recall the Cyprus government taking peoples savings in one swipe. At least with near to zero saving rates Mr Carney is letting us watch them disappear a little more slowly.

  23. acorn
    Posted August 3, 2018 at 8:09 am | Permalink

    The dumb bit about “monetary” policy (central bank interest rates), is it counteracts “fiscal” policy (tax and spending) by politicians. And, it does it with an economy wide sledgehammer! I say cut out the monetary policy; put the BoE back into the Treasury and do everything with real time fiscal policy, including sector by sector real time inflation control.

    Trump is injecting new money into the US economy like crazy; heading for a $1,000 bn budget deficit by 2020. Federal Treasury spending increases and tax cuts; PLUS, large private sector credit expansion, has boosted GDP by 4%+.

    The UK is doing exactly the opposite, keeping nominal GDP rising slightly so you don’t notice the squeeze. Modern Money Theory 101: GDP = Federal Spending [G]+ Non-Federal spending [P] + Net Exports [X].

  24. margaret
    Posted August 3, 2018 at 8:11 am | Permalink

    I am not sure that you can measure capacity, but perhaps it is a better incentive for savers and better bank capitalisation. In Nursing when we talk about capacity it is something entirely different.

  25. A.Sedgwick
    Posted August 3, 2018 at 8:19 am | Permalink

    Is this increase a sign that no deal is accepted as the most likely outcome – a small price to pay if so.

  26. Sakara Gold
    Posted August 3, 2018 at 8:24 am | Permalink

    Having listened to Mark Carney’s justification for raising rates on BBC Radio 4 just now – and reading between the lines – it seems that interest rates have to go up because the foreigners that buy our debt are demanding higher interest to compensate them for the perceived additional risk of holding UK gilts as we approach Brexit. As you say, there is no threat from inflation and there is still slack in the economy. So there has to be another reason for the BoE to raise rates

    Clearly, Carney is worried about turbulence in the sterling FX markets going forward and the MPC voted unanimously for the rise. Curiously (and worryingly) the pound dropped sharply after the announcement instead of improving, which suggests the markets think that a 0.25% rise to 0.75% is insufficient.

    The concept of an “equilibrium” bank rate as you discuss above is an attempt by the BoE MPC to provide forward guidance to the debt markets that if a run on sterling actually materialises, they will indeed raise rates rapidly.

    I smell another round of bank failures, mortgage repossessions, rampaging bailiffs and food riots on the streets. The government is clearly worried about this as they have announced that they are stockpiling food, medicine, fuel etc. Maybe we should be doing the same.

    The last thing we need in these interesting times is a run on sterling – which would force the BoE to raise rates rapidly – with all the risks to house prices, credit card spending and the economy generally. Under these circumstances, holding some gold and silver in a vault overseas would seem to be a good precaution; gold (priced in US$) is currently cheap.

  27. Adam
    Posted August 3, 2018 at 8:29 am | Permalink

    A better Governer than Mark Carney would control the inflation of his waffle.

  28. formula57
    Posted August 3, 2018 at 8:43 am | Permalink

    The new Equilibrium Rate (that “cannot be directly observed” !) will surely add an extra dimension of the absurd to the Bank’s oft ridiculed so-called “forward guidance”.

  29. Denis Cooper
    Posted August 3, 2018 at 8:54 am | Permalink

    The BBC made one of its occasional token efforts at impartiality this morning by pointing out that last year, and for the ninth year running, the UK exported more in total outside of the EU than to the rest of the EU.

    The 2017 numbers quoted here:

    were £342 billion exports outside the EU against £274 billion to the EU, which would be a 56:44 split; however that will be before taking into account various distortions which tend to lead to overstatement of the volume of exports to the EU as end destination.

    The BBC reporter also went along to a convenient West London factory which exports cycles all around the world, where the boss was not at all worried that we may end up leaving the EU without any special trade deal.

    However I am not keen on these particular examples selected by the media, whether they are picked to show that it would be a disaster if we traded with the EU on WTO terms or they are picked to show the opposite.

    What matters is the overall and longer term picture, and to get some idea of that we – that is to say, UK ministers and negotiators – could simply start by reminding Michel Barnier of his 2012 report on the economic impact of the EU Single Market, and ask him to repeat what he had said then:

    “EU27 GDP in 2008 was 2.13% or €233 billion higher than it would have been if the Single Market had not been launched in 1992.”

    And then mention the German study agreeing with that kind of number for the EU as a whole but with the UK getting less than the average gain, more like 1% of GDP.

    And then remind Michel Barnier of what another EU Commissioner, Günter Verheugen, had said about the cost of EU regulations, those EU regulations which Theresa May wants to keep but which Parliament could abandon, but only with “consequences” …

  30. agricola
    Posted August 3, 2018 at 8:55 am | Permalink

    Is it I wonder part of the remain scheme to make things look bad on Brexit. Sorry I just do not trust these large institutions.

  31. Robert
    Posted August 3, 2018 at 9:42 am | Permalink

    Per BBC , Mr Carney said the possibility of a no-deal Brexit is “uncomfortably high” and highly undesirable, the prospect of the UK leaving the EU without a deal was “a relatively unlikely possibility, but it is a possibility and that if a no-deal Brexit were to happen, it would mean a disruption to trade and a disruption to economic activity, as well as higher prices for a period of time.

    This suggests that according to the Bank there is a less than 50 per cent chance of a No Deal Brexit and that there will a temporary increase in prices.

    Surely, if the increase in prices is only expected to be temporary the Bank should be waiting before acting to increase interest rates. In fact, the Bank should be supportive during such a phase considering a reduction in interest rate to ensure that demand is not choked off.

    Further, if some sort of deal is cobbled together which to the delight of CBI members and the Remain cohorts Sterling and markets may be boosted at which time a small upward move in interest rates would be appropriate

    The Bank therefore seems to chosen the wrong move at the wrong time.

  32. forthurst
    Posted August 3, 2018 at 11:27 am | Permalink

    Whose function is it to measure whether our country has reached or overreached capacity to accommodate more people? That is rather more important than gauging whether theoretically the economy can expand further without inflation, surely?

  33. a-tracy
    Posted August 3, 2018 at 11:36 am | Permalink

    Mark Carney Bank of England Predictions

    1) House prices going down by more than a third

    Could he be specific, anywhere in London?

    2) real interest rates going up by almost four percentage points

    Is this on savings too, or just on loans?

    3) unemployment going to nine percent?

    Is this prediction throughout the UK and over what period?

    4) the economy going into a four percent recession.

    What does this mean, GDP down 4% throughout the UK or in particular industries?

    How has Gross pay stagnated when the NMW and NLW have gone up so much?

    People are feeling they have less in their pocket because they have an extra 3% national insurance tax now in the form of Workplace pensions and Employers are also paying their extra 2% national insurance tax in workplace pensions. Surely this money now in compulsory savings schemes for investments should be having some impact on the economy and investment in the UK?

    • Denis Cooper
      Posted August 3, 2018 at 5:16 pm | Permalink

      That is the clever bit; while giving the impression that they are predictions of what will happen if we leave the EU without a deal he can say that, no, in fact they just describe a very bad scenario which he has examined for the purposes of his stress tests. The good news is that the financial system is now sufficiently robust that it would not collapse even under those terrible conditions.

  34. DUNCAN
    Posted August 3, 2018 at 11:54 am | Permalink

    Carney’s now beginning to step outside his remit. He needs a muzzle and quick

    He’s offence to impartiality

    When are Eurosceptic Tories going to get their act together, ditch the vile May and purge these people who continue to peddle this trash?

    Remain is an offence to democracy and represents an unbridled, unashamed transfer of political power to the unaccountable elite

  35. Rien Huizer
    Posted August 3, 2018 at 12:17 pm | Permalink

    Mr Redwood,

    Your lack opf understanding of what modern monetary policy is about is baffling for someone who spent quite some time in or near government. This especially given a unanimous MPC for a change. Canney is quite right that the exceptional circumstances that justified an extremely low level of real interest rates have long gone and that further monetary stimulus is no longer justified. There is clearly no cyclical problem (high employment), house prices are among the highest in the world and must come down to achieve reasonable affordability levels (otherwise wages must go up) and the pound is close to an equilibrium level.

    Of course that picture does not include per capita GDP growth of 2.5% or more but I disagree with your implication that monetary policy can boost growth. Growth is a long term phenomenon, what you want is the sort of cyclical boost that helps politicians and must be “paid back” later. Central bank independence is exactly to kee

    p politicians’ hands out of the cookie jar. BoE is demonstrating its independence and that is a good thing for the long term. Maybe not for the government of the day right now, but who cares about that.

    Reply You do not understand my critique. At issue is their idea of capacity. They had no need to raise rates

  36. Denis Cooper
    Posted August 3, 2018 at 12:33 pm | Permalink

    This will be yet more music in the ears of the unreformed and unrepentant Remainers in the government, from Theresa May down.

    “Mark Carney’s Project Fear 2.0”

    Oh, but he is not saying that any of these things would happen if we left the EU without any special trade deal, so that we would have to trade with the EU as we already do with the US*, only that he has done the stress tests just in case they do happen.

    * Labour’s Emily Thornberry on the BBC Andrew Marr show of January 14th 2018:

    “… we have been trading perfectly successfully with the United States for a very long time, they are our biggest trading partner outside the EU without a trading deal anyway.”

    • acorn
      Posted August 3, 2018 at 5:55 pm | Permalink

      She didn’t mention the train load of Mutual Recognition Agreements (MRA) that exist between the US and the EU. Or, the fact that a third of the trade between the US and the EU are operating transfers between divisions of transnational corporations. Or, that between 55 and 65% of UK global exports, are facilitated by EU trade agreements with “third countries”.

      • Denis Cooper
        Posted August 4, 2018 at 8:12 am | Permalink

        The fact remains that the US is our biggest single national export market and we consistently run a healthy surplus and we do that without the benefit of any preferential trade deal – it was the purpose of TTIP to create such a deal – so there is no reason why we should not trade with the EU on the same kind of basis rather than through the EU’s politically-driven Single Market. Of course if the EU chooses to imperil its massive trade surplus with us by reinstating entirely unnecessary barriers to trade then we cannot prevent them being that stupid and malicious, but we should make sure that the rest of the world knows who is being stupid and malicious.

      • NickC
        Posted August 4, 2018 at 9:29 am | Permalink

        Acorn, That’s a Remain fallacy used as a lifeline. The whole WTO system is a comprehensive set of global trading rules (inc GATT and GATS) in its own right. The MRAs and RTAs are not necessary to make the system function, and are in fact only minor modifiers. Moreover the MRAs that even the EU uses, show that the centralised one-rule-suits-all model adopted by the EU for its own (less than) single market is entirely unnecessary.

  37. Den
    Posted August 3, 2018 at 12:37 pm | Permalink

    The BoE Governor cannot be taken seriously as he made a fool of himself with his outlandish fear factor statements in the run up to the Referendum.
    As an appointee and dedicated follower of Chancellor Osborne, why Mrs May kept him on remains a mystery. Unless it was because he was a Remainer.

    • Chris
      Posted August 3, 2018 at 2:30 pm | Permalink

      It’s no mystery, Den. Carney serves her purpose beautifully, I fear.

  38. GilesB
    Posted August 3, 2018 at 2:24 pm | Permalink

    At least we still control our own currency.

    The eurozone will collapse soon. The European Central Bank only gets a good credit rating because ‘on average the Member states have a good credit rating’: the Member States, except Germany, Netherlands, and Luxembourg, only have a good rating because they are backed by the ECB. It’s a house of cards.

  39. Stred
    Posted August 3, 2018 at 2:35 pm | Permalink

    The removal of tax allowances for BTL is kicking in fully. Landlords who have high gearing will be forced to sell, creating a glut of property for sale. This will lower prices and encourage more to sell,as prices fall. The treasury will be able to grab more CGT. The BoE is the Treasury’s puppet.

  40. lojolondon
    Posted August 3, 2018 at 2:53 pm | Permalink

    You ask ‘why’, John, but I suspect you are far more polite than the rest of us. It goes without saying that the only reason is to pretend that Brexit is damaging the Economy. Of course, this charade would not last a second without the active collusion of the media, just one simple question would blow the whole game sky-high, so the Elite are counting on the BBC to close ranks and lie to the public.

    Very sad to see how they are willing to damage Britain to try protect the interests of the EU.

    One more reason to make sure we Brexit – fast and hard as possible.

  41. mancunius
    Posted August 3, 2018 at 3:53 pm | Permalink

    We shall get nowhere fast, until Carney, Hammond and May are dumped. All three are putting a brake on growth.
    Merkel and Barnier are still demanding free EU immigration in return for an agreement. I’ve heard that May is planning to attempt to give way and allow free movement, calling it by a different name and giving it a virtue-signalling ‘let’s all be nice’ spin.
    If she does try to make this U-turn on top of all her other inept U-turns, the Tories really are toast.

    • Iain Gill
      Posted August 4, 2018 at 11:56 am | Permalink

      They are already toast, unless there is a big change of heart and borris takes over.

      Who on earth they expect to vote for them is beyond me.

      There are not enough liberal elite virtue signallers in the real world.

  42. Prigger
    Posted August 3, 2018 at 4:34 pm | Permalink

    Mrs May according to Fake News is trying to get a compromise with Macron. The fact she thinks of a compromise on a sellout is worthy, shows she will return to the UK like a Cameron.

    Will she have the honour to resign at last? Get out of the kitchen with her 150 cookbooks?
    Unless you can control the number, weight and quality of the ingredients and know how they are likely to affect one another leads to a dinner not fit for a dog.
    We are not hungry anyway, stop cooking about!

    • mancunius
      Posted August 3, 2018 at 9:30 pm | Permalink

      It will of course be ‘a success’ yet also ‘a compromise on a compromise’ – the two phrases Cameron used when he returned from Brussels in February 2016.

      We shall know May’s talks with Macron were ‘a success’, because she will tell us so herself, and her word is to be implicitly believed.

      Interestingly, looking at the Telegraph report on 20 Feb 2016:
      “The French president, Francois Hollande, refused to agree to Mr Cameron’s demands for protections for Britain from rules made by countries in the Eurozone. His intransigence shocked Mr Cameron and his team. The French had given no indication that he would be so obstructive during the previous talks.”

      Honestly, you’d need a heart of stone not to laugh.

  43. Bleak
    Posted August 3, 2018 at 5:03 pm | Permalink

    Mark Carney says the possibility of leaving without a deal is uncomfortably high..yes..but what does Rees-mogg say? what does IDS say?😂

    • mancunius
      Posted August 3, 2018 at 10:26 pm | Permalink

      Hi there GregH – say hello to cryingoutloud, meAgain, PrezleB, the rest of your string of IDs.
      If you can find a mirror that won’t crack… ;-))

  44. Denis Cooper
    Posted August 3, 2018 at 5:59 pm | Permalink

    “Mrs May’s visit has been described in the French press as a “cry for help”.”

    Well, the French press has got that exactly right: she is appealing to foreigners to help her against her own people. There is a name for that …

    • mancunius
      Posted August 3, 2018 at 10:31 pm | Permalink

      Maybe we can persuade the French to shut her up in the medieval Fort de Brégançon, and hold her for ransom.
      We could charge them a lot for agreeing to take her back.

    • Andy
      Posted August 3, 2018 at 10:44 pm | Permalink

      27% of her own people.

      • Denis Cooper
        Posted August 4, 2018 at 7:27 am | Permalink

        27% is about the fraction of people in the UK who think her Chequers plan would be a good thing, according to one opinion poll, while according to another poll it is only 12%. Yet she is humiliating herself and the rest of us crawling to continental leaders to try to wheedle them into helping her.

      • Edward2
        Posted August 4, 2018 at 7:27 am | Permalink

        And 24% of your people andy

      • Anonymous
        Posted August 4, 2018 at 8:44 am | Permalink

        As asked previously. Does anyone get to see the minutes of this meeting ?

  45. Lindsay McDougall
    Posted August 5, 2018 at 2:10 am | Permalink

    It’s reasonable enough that base rate is steadily increased until it matches the inflation rate, however defined. What is not reasonable is the BoE issuing guidance to commercial banks as to which markets they may or may not lend to. Why should there be ANY such guidance?

    There is an parallel in trade relations. Tariffs negotiated and agreed are OK. Non-tariff barriers are not transparent and are not agreed. The one thing on Brexit that could really harm the UK’s economy are bureaucratic non-tariff barriers on our exports to EU-27. So why has the Government not stated that, in the event of ANY non-tariff barriers being imposed, the EC can ‘go whistle’ for its £39 billion exit fee.

    Since Mrs May isn’t maximising our bargaining position, why don’t you bring her down? At the next General Election, I won’t vote for a Conservative Party led by Mrs May. I did something similar in February 1974 and 1997, and the Conservative temple duly came crashing down because I wasn’t the only one.

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page