Easy money but not in the UK

On Wednesday the Fed chairman Jerome Powell signalled that US interest rates are likely to fall at the next Fed meeting. Whilst he was able to report continuing good growth in jobs and wages, he pointed to trade uncertainties and a slowdown in the rest of the world as a reason the Fed might want to ease a bit more.

Meanwhile the Germans have just issued a government bond with no coupon, to the delight of their fans in the market who dutifully bought it. You might have thought the only reason you would want to own a government bond is to enjoy a secure income on it, yet here we have one which guarantees you no income whatsoever. Presumably the people who bought it expect a further fall in interest rates and more buyers willing to pay more for it in due course. They will need to sell it again before maturity. If you think buying a bond with a guarantee of no income return is foolish, then the only justification is to find someone more foolish to sell it on to at a profit before the reality of the no return bond is confirmed by repayment at par. There is speculation in markets that the arrival of Christine Lagarde as President of the European Central Bank will herald looser money and rates going negative.

Why have interest rates stayed so low for so long? How much longer will this apparent madness continue? The great banking crash on both sides of the Atlantic impaired the ability of commercial banks to generate cash and provide enough loans to propel good rates of economic growth. Intense global competition, large reserves of unemployed and underemployed labour and the advent of digital commerce all reinforced the trend to keep prices down. Many people responded to the ultra low rates by saving more. Japan shows this situation can persist for several decades, where a worse banking crash ushered in a long period of zero rates and no inflation. The position in the west should not last as long, given the less intense crash and the higher propensity to price rises in some places. Indeed, the USA did get its interest rates up to 2.25-2.5%, high levels for an advanced country in current conditions.

The Bank of England looks increasingly isolated and cut off from central banking trends elsewhere. The tight UK money squeeze has slowed the UK economic markedly, yet still the Bank presses on with it. If the Fed thinks the US needs more stimulus after a first quarter growing at 3.1%, surely the UK economy now scarcely growing at all needs a boost?


  1. Ian Wragg
    July 12, 2019

    It’s down to Brexit Guv.
    Can’t have high growth in the UK it doesn’t fit the narrative.

    1. Andy
      July 12, 2019

      You confuse can’t with won’t. And it is is exactly the narrative you were told and refused to believe.

      1. libertarian
        July 12, 2019


        Trouble with your posts Andy is they are continually running face first into facts and reality

        Yesterday the UK Iceland and Norway signed continuity trade deals bringing the number of such deals to 15 now.

        Your prediction about finance moving to Frankfurt – Proved Wrong

        Your prediction about flights to EU – proved wrong

        Your prediction about medicine supply – proved wrong

        Your assertion that we couldn’t name regulations that need scrapping – prove wrong

        Your predictions about the car industry – proved wrong

        Your predictions about airbus – proved wrong

        In fact Andy you haven’t got a thing right yet. You truly are an inspirational leader of the remain movement. Keep up the good work

        1. Newmania
          July 12, 2019

          Norway and Iceland are both members of the EEA which we will not be a member of any more , this means there will still be an overwhelming discontinuity, with regard to services
          The Fish processing industry will be relieved to have their viability retained no doubt
          So its a question of things being not quite as dire as they could have been although much worse than we had in the first place.
          Where do we hang the bunting brains ?

          Financial Services are moving right now , Lloyds has a new Lloyds fronting office in Brussels , Banks are shifting functions to European offices and so on. Takes twice as many people to do the same thing and much more money
          I recall you offered to turn up and solve the question of pass-porting for us .
          You clearly have no idea what it is

          1. libertarian
            July 12, 2019


            Do try to keep up

            WE HAVE SIGNED A CONTINUITY AGREEMENT with Norway, Iceland and THIRTEEN other countries

            Yup still available. Just so you know I actually have experience of opening financial service operations in Europe .

            The question of passporting has just about been agreed anyway with the EU and UK agreeing on equivalence ( get someone knowledgeable to explain it to you )

            Here https://www.businessinsider.com/city-of-london-eu-uk-brexit-negotiators-agree-financial-services-deal-2018-11?r=US&IR=T

            You obviously dont know much about the industry you work in opening a foreign office IS NOT THE SAME AS MOVING

            You were the man who gloated about deutsche bank moving staff from London back to Frankfurt … That worked out well didn’t it

            Meanwhile vacancies in City of London are UP 13%

        2. Hope
          July 12, 2019

          JR, Your govt has hit savers, strivers and the prudent for too long. Nine years of fake promises your govt delivered Alistair Darling’s economic plan for nine years! We were promised all sorts of things by Carney when interest rates would rise like employment figures etc. Osborne and Hammond must go down with Brown as the worst chancellors ever.

          Freddie Goodwin still receives his £3-400,000 pension for the last ten years! Anyone in banking or at Lloyds, HSBOS or Gordon Brown censured, punished for causing punishment to the taxpayer? Brown’s PM pension altered for his incompetence?

          Instead we have highest taxation under Tories than the previous two Labour govt.’s. Promised 80 percent cuts 20 percent tax rises, promised to balance the deficit by 2015, no longer even trying! promised to cut immigration for nine years while achieving historic record high numbers.

          Overseas aid £15.1 billion+European overseas aid £3.7 billion=£18.8 billion and they are frantic to find things to wasteour money on while telling us cuts are necessary and we have to sale our homes to pay for care! Bonfire of Quangos promised, more were created under Cameron than he got rid of and now May creates another one today to replicate the ONS!

          Osborne raised house prices at the bottom of the market to stop ownership of more than one house by his stamp duty on second homes.
          We could all go on and on. It would be far better if you just apologised for your awful govt. Society damaged, public services wrecked, economic promises never kept. virtual signalling give aways. Your govt has been a disgrace from start to finish. No wonder your party cannot beat Brown or Corbyn!

          1. Narrow Shoulders
            July 12, 2019

            Hear hear. All prior to the referendum so nothing to do with leaving the EU

        3. margaret howard
          July 12, 2019


          What a strange ‘reality’ you labour under.

          Tell me, why is the pound still dropping like a stone? According to your all singing all dancing scenario it should merrily rise to dizzying heights.

          But no, the markets decide otherwise.

          Strange that! And we haven’t even left yet.

          1. Jiminyjim
            July 12, 2019

            MH, you really do need to do more research. The pound is very close to the same value it was 9 years ago against the Euro.

          2. John Hatfield
            July 12, 2019

            “Why is the pound still dropping like a stone?”
            Because market traders are selling it you say. There you go Margaret, you answered your own question.

          3. Edward2
            July 12, 2019

            Come off it margaret.
            You have been saying the pound is dropping like a stone for years.
            Whilst in the EU our currency has risen and fallen greatly over the years.
            What caused those movements?

          4. libertarian
            July 12, 2019


            Oh is that how FX works…. Give one reason why the pound should be over valued

            As you display such ignorance let me explain.

            ONE OF THE MAIN REASONS our exports are booming is because of the LOWER value of the pound

            MEANWHILE back here in the real world

            FT headline

            Euro TUMBLES against pound as Mario Draghi issues fresh ECB policy warning

            THE euro fell against the pound today after European Central Bank President Mario Draghi said the lender was prepared to ease policy if the inflation outlook fails to improve.

            Euro is falling against the dollar too.

            Personally I wouldn’t use the FX markets as any kind of indicator of medium to long term prosperity

            Now any chance of you actually answering the post I wrote rather than making up your own ?

          5. margaret howard
            July 12, 2019


            The pound was worth 1.62 euro in 2002 and now it is worth 1.11 so what do you call that if not dropping like a stone?

            I’m sure our retired pensioners in France, Spain etc share my opinion now they have to start counting their pennies.

            And don’t let’s forget that it’s pensioners who are carrying the burden of the world financial collapse (caused by banks in London and America) . Many counted on supplementing their pension incomes through interest on their savings which has now nearly disappeared forcing them to live on capital.

            Reply The pound was near parity with the dollar in the early 1989s so has risen since then

          6. Jiminyjim
            July 13, 2019

            I find this difficult to believe, but yes, it’s true, Magaret H thinks we’ve been engaged in Brexit for the last 17 years!

      2. zorro
        July 12, 2019

        You are spouting your usual nonsense, the economy has been growing (far more than the EU) despite the hopeless policies of this useless government because it is fundamentally strong at creating employment…..

        Ah yes, Andy, what did HMT/BOE and all the other goons say?…. If we voted Leave there would be an emergency budget, recession, hundreds of thousands of job losses, business closures overall…. All nonsense as even you must be able to see. There is a special place in Hell for all those doomsayers who wanted and still want to bring down our country. They will get their just deserts….


        1. zorro
          July 12, 2019

          desserts even, but that sounds too good – cast out into some endless desert would probably be better!


      3. Denis Cooper
        July 12, 2019

        Nope, we were officially told before the referendum that just voting to leave the EU would be enough to plunge us into a deep recession, with no need to wait until we had actually left. And you have been reminded of this before, but you always choose to repeat the same Remoaner lies as if by rote.

      4. Richard1
        July 12, 2019

        Wrong actually. We were told there would be an immediate recession and 800k increase in unemployment. Millions of us voted Remain as a result.

        1. Andy
          July 12, 2019

          I didn’t tell you that. George Osborne – a Conservative told you that.

          I told you that Brexit would be a long, steady and permanent decline. It is.

          I told you banking jobs would move to Frankfurt. They have.

          I told you the car industry would suffer. It has.

          I told you that you and your children would be poorer with a Brexit vote than you would be without one. You are.

          I told you Brexit would destroy not only our economy but our society, our democracy, our constitution, and that it would be a diplomatic disaster. It is.

          I’ve called this right all along. And the more obvious this becomes the shriller and angrier you all become. Funny, isn’t it?

          1. Jiminyjim
            July 12, 2019

            Just the same old bunch of silly factless assertions, Andy! Actually correcting you has become so predictable that it’s not any fun any more. Live on in your own ignorant little bubble, maybe your room needs cleaning again?

          2. Nicky Roberts
            July 12, 2019

            Yes what a stampede of people off to Frankfurt. I’m surprised the airlines can cope.

          3. Fred H
            July 12, 2019

            so what is the answer for you, Andy? if you are of the mindset that comes across – call Samaritans. They are better equipped to help you than most of us are.
            If you resent the way you believe UK is headed, take steps to take your family to a EU country that will stay the course and not have a worse outlook than you portray for UK. That of course will eliminate Spain, Portugal,Greece, Ireland, Italy. I doubt your prospects will be any better in Poland, Romania, Bulgaria,Czech, Croatia,Malta. You could try the Baltic states which are threatened by Russia. That leave a few I grant you.

          4. libertarian
            July 12, 2019


            Every post is wrong and you dont have a shred of evidence for any of it

            Youre a fantasist

            The only shrill angry person on here is in fact …… you

          5. Richard1
            July 12, 2019

            Minimal movement of banking jobs to frankfurt. The car industry facing challenges everywhere. Growth in the UK the same or higher than other EU countries so we’re all getting richer – even with a useless quasi-soc dem govt. You cannot dissociate yourself from the absurdities of project fear which have been proven so wrong.

            I think it’s likely Mrs May has holed brexit below the water line & we’ll end up with another referendum. But if we don’t I’m now confident things will be fine – and the likes of you will look very silly.

            The shrill and angry one – If you don’t mind reviewing a few of our respective posts – is clearly you.

  2. Mark B
    July 12, 2019

    Good morning

    By lowering interest rates and creating an artificial bubble we have in effect created a situation where their is no where to run when things go bad. Interest rates should have been raised very slowly over a long period. This would have had less of an effect and would have strengthened Sterling. Instead we created more money (QE) and hoped that the increase in population could absorb it.

    In short, and to remind ourselves, we ha privatised the profits and socialised the losses.

    1. Lifelogic
      July 12, 2019

      There is always somewhere to go when we have the highest taxes for 50 years, endless government waste, expensive energy by absurd renewables government decree and absurd red tape and planning restrictions everywhere you look. You just cut all this lunacy out and cut the size of government in half.

      Release the private sector to grow the economy (and indeed grow the tax base too).

      1. Mitchel
        July 12, 2019

        Off topic but LL will love this one,from today’s Telegraph:

        “NI civil servant paid £10,000,claiming offence for walking past Queen’s portrait.”


        1. Lifelogic
          July 13, 2019

          Yes I just noticed that too. Good old human rights act can be twisted to mean almost anything the greedy lawyers want it to. Is that per year or per trip past the picture. Surely they will all want £10k now for their hurt feelings.

      2. Hope
        July 12, 2019

        Lifelogic, Hammond sneaked in another death tax as a administrative process rather than have it debated in parliament! More anymore stealth taxes- for what? The public service are dire, the give aways under Mayhab out of control. This is our money not the govt’s.

        The lunatic jMayhab just passed a trillion pound unplanned, not costed or debated Climate change give away where there is no serious evidence to support the disaster they keep on claiming!

        1. Lifelogic
          July 13, 2019

          Indeed. Not their money, so what do they care about about spending it wisely or getting value for money.

          That seems to be the governments insane approach.

    2. acorn
      July 12, 2019

      Central Bank interest rates are low because they have no competition. Investors see high risk of capital loss in anything offering higher interest rates in the private sector. Government “paper” is risk free and for commercial organisations, holding cash can cost you more than holding a zero coupon bond.

      When private investors start to gain confidence (see lower risk in the private sector) in higher coupon corporate bonds, then the enthusiasm for government bonds will drop. Primary dealers will bid low for government paper to get the higher interest that fits with the private sector debt offerings.

      PS. Zero Coupon Bonds are historically sold in the primary market at large discounts. The price reflects the fact that are held to maturity. At which time, you get the face value of the bond back; the discount you got when you bought it, effectively becomes the one off terminal interest payment. Great for building up a college fund for your newborn grandchild; if you can avoid yearly imputed taxation (on the interest you are not getting) in a trust fund.

  3. agricola
    July 12, 2019

    All the work of clever economists. Why do people go to universty for three years and learn nothing of use in this discipline.

    To see a return on your money buy assets in short or limited supply such as property, selected vintage vehicles and aircraft. Do not under any circumstances give it to banks and building societies who will give you zilch in return.

  4. Lifelogic
    July 12, 2019

    Indeed bank over regulation, lending restrictions, high margins and fees and restrictive terms are restricting lending in the UK. Killing perfectly sensible investments and developments and damaging the economy.

    Is Halfwit Hammond (and pusher of project fear so running down the economy) going to do anything about his daft pension rules that are doing so much harm particularly in the NHS. With endless cancellations and delays for patients. Or his insane stamp duty rates, insane landlord interest rules, absurdly high and complex tax system, daft bank lending restrictions …. Or is he just going to leave the mess for the next person in a couple of weeks time? He is surpassing even John Major for gross incompetence as Chancellor.

    1. Al
      July 12, 2019

      “Indeed bank over regulation, lending restrictions, high margins and fees and restrictive terms are restricting lending in the UK. Killing perfectly sensible investments and developments and damaging the economy. ”

      Indeed, it was irritating to find out last year that most banks functioning in the UK have silo’d their UK banking arm despite the government’s advice. There are swathes of functions available through the same banks, even in Ireland, that UK citizens cannot access. Like many SMEs, we’re running a second account in Ireland to handle overseas trade because of this. It’s perfectly legal, all declared, and all tax paid on it, but we simply can’t access the same services from banks in this country because the UK banks won’t talk to each other.

      Setting up a US-based bank account (Citibank is often suggested) would open even more options, but that requires a lot more paperwork and the charges are higher.

    2. Lifelogic
      July 12, 2019

      I do not suppose Hammond will apologise for his appalling tax to death mess either. Major failed to after all. Also Hammond does not have the excuse of total vacuity unlike John Major. His only excuse perhaps might be that he was somehow brainwashed on his Oxford PPE course?

      Did anyone listen to the absurd Johnathan Powell on This Week last night, attacking Farage in totally absurd terms? What a compete plonker.

      1. Lifelogic
        July 12, 2019

        Or even apologise for blatantly ratting on the £1 million (each) IHT threshold that Osborne and the Conservatives promised many, many years ago.

    3. Fred H
      July 12, 2019

      Lifelogic….you hit a few nails on the head there!

      Gordon Brown’s ‘safe pair of hands’ has been taken taken to an extreme where caution does damage!

  5. margaret
    July 12, 2019

    There isn’t enough incentive to buy , sell and move money about at present for the’little’ person who would probably all stand up to play the market ,if it was worth the trouble.

    1. margaret
      July 12, 2019

      listening to the news and the pound taking a dive against the dollar and the euro…….. why do all economist always assume that when prices fall , rise, take different turns ( money put elsewhere) that the public won’t respond similarly. We spend less/ more , get better deals , prioritise , so eventually it hurts those trying to take monetary control.

    2. Lifelogic
      July 12, 2019

      The bank are paying virtually nothing 0% to perhaps 0.75% or so yet lending at 3% to 100% +. One of the big five banks charges a daily “fee” (for virtually all personal overdrafts) that is about 78% APR. Charges as a fee one assumes so they do not have to tell the customers the rip off APR.

      To put this in perspective borrow £100 for ten years and you will owe the bank circa £32,000. Lend them £100 for ten years and you might get £102 back (less perhaps some tax on the £2 interest). But it seem the bank regulators and competition authorities think this is just fine! Clearly showing the level of “fair competition” in the banking sector!

      1. Man of Kent
        July 12, 2019

        Just received notice that my Lloyds ISA interest rate is going down from 0.35% to 0.20% on 13 Sep but thankfully they tell me I still have a ‘preferential ‘ rate !

        The only place to get a return nowadays is on shares .

        1. Lifelogic
          July 13, 2019

          Yet they charge an OD fee of 1p per £7 per day I understand authorised or unauthorised. So you pay 260 times what they pay you!

    3. Prigger
      July 12, 2019

      I agree.

  6. oldtimer
    July 12, 2019

    My impressions are that the world is experiencing a slowing global economy, supply chain disruptions caused by tariff wars, and central banks running on the near empty tank of historically low (even negative) interest rates. I can understand why the BoE is cautious as it waits on the arrival of a new PM, Chancellor of the Exchequer, the possibility of an early GE and the resolution of Brexit.

    My hope is that we do indeed leave on 31 October and that a refreshed government produces some sensible tax, trading and industrial policies. BofE action would surely make more sense in such a context than in the current uncertainty?

    1. Mitchel
      July 12, 2019

      The politicization of the BoE looks like it might be having other side effects-remember when Carney refused to repatriate Venezuela’s gold when asked-even before the US de-legitimized (what remains) the UN recognized government of that country.I see this week that Poland and Hungary,who over the past year have enthusiastically followed the Sino-Russian bloc’s gold hoarding trend, have asked for their gold to be repatriated from the BoE’s vaults.

  7. Dominic
    July 12, 2019

    I wouldn’t call an interest rate of 0.75% ‘tight money’. Indeed, the UK hasn’t seen these levels for an extended period of time. They are anomalous

    If the investment community (financial and commerce) can’t generate returns with relative rates so low then they may as well pack up and go home

    What does drive economic growth (expansion in output) is the creation of a culture that encourages entrepreneurial zeal and action. The US has this in abundance, the UK less so.

    The rise of Marxism and its encouragement by the incumbent PM has imposed great harm on that mission. A hatred of the business community and its portrayal by May and Corbyn as something that is inherently bad has caused considerable damage

    The next PM needs to deregulate business and halt these pernicious legislative attacks on the one sector that delivers our prosperity. Corbyn and May have proven to be nasty in their attacks on our business community.

    Reform and deregulation need to be widespread across all sectors both private and public.

    Monetary expansion without the necessary supply side reforms simply generate inflation

    1. Lifelogic
      July 12, 2019

      “A hatred of the business community and its portrayal by May and Corbyn as something that is inherently bad has caused considerable damage”


      Two cheeks of the same arse as George Galloway might have put it. Why did May join the Conservative party when she clearly is a tax and regulate to death socialist at heart who want to be ruled by the anti-democratic EU? Still – only ten days left is it now?

      1. Simeon
        July 12, 2019

        May joined the Conservative Party because there she found people of the same mind.

  8. Alan Jutson
    July 12, 2019

    And then we have the Labour Party offering Corbyn and McDonald economics as an alternative.

    What a choice !!!

  9. James
    July 12, 2019

    If price fixing by central planners is understood by virtually all economists to be a bad idea. Why do we think fixing the price of money is a good idea?

    1. Lifelogic
      July 12, 2019

      The reason governments think it is a good idea is that it is in effect another tax on people. They can also use red tape and investment rules to ensure that (pension funds for example) have to lend very cheaply to them. Rather than investing more sensibly. They they devalue the currency to cheat them further still.

  10. Bryan Harris
    July 12, 2019

    A deliberate suppression of the UK economy is the main theme of this chancellor – partly this is due to him wanting to make Brexit look bad… but also he is positioning us for what he seems to hope will be generations of austerity, squeezing everything out of the economy that works well until nothing does.
    He has his motives, but since he has shown himself to be anything but a real Conservative, we can guarantee his efforts will not be good for the rest of us…

    1. Fred H
      July 12, 2019

      Bryan…. this deliberate suppression ought to have the yoke thrown off once Boris gets into No 10, and an entrepreneurial spirit in No 11.
      We can once again boost both optimism and trading success. Forward!

  11. Mike Wilson
    July 12, 2019

    Is that all you’ve got? Debt, debt and more debt? Your constant call for cheap money means even more house price inflation. Surely we should be able to run an economy without everyone having to be up to their ears in debt.

    In an economy where there is a target rate of inflation of 2%, base rate should be 2%. Otherwise no-one will save and we we all be in debt forever.

    1. acorn
      July 12, 2019

      Mike, you are forgetting that the prime directive of our current neoliberal Conservative government, is to transfer as much public sector debt and assets to the private sector, as it can.

      One way it does this is by privatising any (possibly all) public sector assets, at discount prices, that guarantee supernormal profits for their cohorts in the private sector.

      It enables this by nationalizing the debts of these public sector assets, such as heavily underfunded employee pension schemes; that private sector equity and vulture funds could not handle.

      1. Edward2
        July 12, 2019

        You describe crony capitalism hefner, not neo liberalism

        1. acorn
          July 13, 2019

          They are the same paradigm. Have a read of
          Crony Capitalism and Neoliberal Paradigm (Part II) by Alonso at LSE Blogs.

          1. Edward2
            July 13, 2019

            I don’t agree with that theory.acorn.
            That is why I said that what Hefner posted did not define neo liberalism.

          2. hefner
            July 17, 2019

            Whoah Ed2, brilliant, I don’t even have to post anything for you to get your socks twisted (by what I didn’t write). Splendid.

  12. Javelin
    July 12, 2019

    Paper published 2nd July 2019



    Abstract. In this paper we will prove that GCM-models used in IPCC report AR5 fail to calculate the influences of the low cloud cover changes on the global temperature. That is why those models give a very small natural temperature change leaving a very large change for the contribution of the green house gases in the observed temperature. This is the reason why IPCC has to use a very large sensitivity to compensate a too small natural component. Further they have to leave out the strong negative feedback due to the clouds in order to magnify the sensitivity. In addition, this paper proves that the changes in the low cloud cover fraction practically control the global temperature.

    During the last hundred years the temperature increased about 0.1°C because of carbon dioxide. The human contribution was about 0.01°C

    1. Javelin
      July 12, 2019

      Paper published 3rd July 2019


      New evidence suggests that high-energy particles from space known as galactic cosmic rays affect the Earth’s climate by increasing cloud cover, causing an “umbrella effect.”

      The Svensmark Effect is a hypothesis that galactic cosmic rays induce low cloud formation and influence the Earth’s climate. Tests based on recent meteorological observation data only show minute changes in the amounts of galactic cosmic rays and cloud cover, making it hard to prove this theory. However, during the last geomagnetic reversal transition, when the amount of galactic cosmic rays increased dramatically, there was also a large increase in cloud cover,

      for about 5000 years during the geomagnetic reversal 780,000 years ago, they discovered evidence of stronger winter monsoons: particles became coarser, and accumulation speeds were up to > 3 times faster. These strong winter monsoons coincide with the period during the geomagnetic reversal when the Earth’s magnetic strength fell to less than ¼, and galactic cosmic rays increased by over 50%. This suggests that the increase in cosmic rays was accompanied by an increase in low-cloud cover, the umbrella effect of the clouds cooled the continent,

  13. Lifelogic
    July 12, 2019

    Nearly 50 years since Apollo 11 put a man on the moon. Had this money been invested sensibly instead then it would have grown to now be in the region of $3,000 billion. Still we got a bit of moon rock and I suppose they did leave a plaque saying “We came in peace for all mankind” (for the moon’s aliens to laugh at).

    About £10,000 per person in the US. It makes even HS2 look relatively sensible.

    1. mickc
      July 12, 2019

      A J P Taylor described it as “the biggest non-event in history”, and so it was.

    2. Caterpillar
      July 12, 2019

      It is true that most (maybe all) of the spill over, technologically driven economic benefits to date would have been achieved without an actual landing. That said average spillover returns for public supported space R&D have, to date, been greater than other areas of research (of course that doesn’t mean it will continue). Proof of concept for sample and return, and humans in space is still still playing out – the know-how spill over to private sector is now playing out, as the infrastructure is put in place (the Bezos model) small entrepreneurs can enter into space ventures.

    3. Gareth Warren
      July 12, 2019

      Around 12,800 years ago there is significant evidence the earth was hit by a comet, it caused mile high tidalwaves in America wiping out all large scale life there and plunged the world into a 1200 year long ice age.

      There are also some ruins in Turkey and Egypt that make no sense for the time and the technology needed would be in some ways greater then what we have today.

      I believe those people would have better invested research into space travel, if so humanity today would certainly possess better technology, instead humanity was lucky to merely survive as they were helpless to comet/meteorite impacts.

      Yes we could have saved money, but we would have instead spent resources on carfs driving around in circles or men kicking bags of wind.

  14. Richard1
    July 12, 2019

    Is the UK really going to follow the silly and almost certainly useless digital tax introduced by France? I’m not surprised the US is looking at this as a trade tariff. the new PM should reverse it. We need a govt which gets out of the mentality of thinking up new taxes at every turn, and welcomes the improvement in living standards and business opportunities which the development of digital technologies and e-commerce has brought. if we need moves to revive the high street, then the best place to start is to cut a swathe through the planning regs. (should be possible to save a bit of money by re-deploying all the busy bodies living off these regs also.)

    1. Peter Parsons
      July 12, 2019

      The French are using this as a lever to get an international agreement on updating antiquated tax rules which currently allow companies to basically shift and eliminate profits made in a country through placing whatever value they like on ephemeral concepts such as brand and intellectual property licensing.

      They have said that they will drop this tax if an agreement is made on updating those rules.

      1. mickc
        July 12, 2019

        Brand and IP may not be tangible but they are certainly not ephemeral. They are probably more important than actual solid assets; but they are easily destroyed if the actual product delivered continually declines in quality, as M&S are discovering.

  15. Dominic
    July 12, 2019

    Apple, Amazon and Microsoft. A combined market value of over $3 trillion. Starting capital of all three companies combined was around $20m. That is the power of individual creativity when allowed to flourish in a pro-business environment. Thanks to the creators of these companies we have all royally benefited. Embrace entrepreneurial culture and reject state lethargy. That is the route to economic growth not monetary expansionism and Keynesian ignorance

    1. forthurst
      July 12, 2019

      The only beneficiaries have been shareholders. The Intel 80386 32bit microprocessor was introduced in 1985. M$ did not introduce a 32bit operating system until 1993; meanwhile Linus Torvolds created Linux from UNIX in 1991. Today, Microsoft dominates the market for PCs which are exclusively sold with Windows pre-installed; elsewhere: servers, mainframes, supercomputers, smartphones, Apple, embedded systems (e.g routers, TVs), Linux variants dominate; Linux is open-source and works well on PCs.

    2. libertarian
      July 12, 2019


      Spot on , agree entirely

  16. Everhopeful
    July 12, 2019

    I don’t really see why it is that we ordinary people should be made to suffer from all this.
    It wasn’t our reckless stupidity that led the economy here.
    The banks should have been made to pay for their dereliction of duty.
    Instead things have been made worse and worse for us.
    Not even any physical banks to go to.
    (And I would love to tell you a recent bank related story that would make your hair stand on end…but I can’t.).
    And what pray are they going to do on the day that Sweden is now dreading? When all the “systems” go down and no one has any cash??

  17. Lifelogic
    July 12, 2019

    From the interview with Theresa May in the Daily Mail today.

    “Over the course of a conversation lasting nearly an hour, Mrs May insists that, despite failing on Brexit, she has a legacy to be proud of.”

    What exactly would that be dear? The highest and most absurd and complex taxes for 50+ years? A failure to even try to deliver a real Brexit? Endless more red tape, the gender pay gap reporting, increasing government debt hugely, government waste everywhere you care to look, appointing Hammond with his project fear and economic lunacies, a stabbing, shooting or murder nearly every day in London, Police who have largely given up, endless expensive green crap, the absurd promise to make the UK Carbon Neutral, an NHS that kills thousands every year, anything I have missed out?

    I approved of “opt out” organ donation but even that has not been delivered by her!

    Only a few more days to suffer the dire May & Hammond thank goodness.

    1. Lifelogic
      July 12, 2019

      Oh I missed out throwing away your Commons majority with a botched election and idiotic punishment manifesto and taking Conservative support down to 9% and in fifth place.

      1. mickc
        July 12, 2019

        You must understand that the Conservative party is basically just another Blairite party and has no intention of representing its own supporters.
        That has probably always been the case, but it is more obvious now….or its supporters have become more aware. The reason is probably that Thatcher, a Radical not a Conservative, allowed ordinary people to achieve success, not just the select few.
        Naturally the real Conservatives took their revenge when possible…

        1. Mark B
          July 12, 2019


    2. Everhopeful
      July 12, 2019

      Agree 100%
      I reckon she was precisely chosen ( that ludicrous leadership election) for the errr “qualities” displayed in HO that meant she would NEVER deliver Brexit.
      And still the pantomime continues……
      Legacy…some sort of Oscar ??

      1. Fred H
        July 12, 2019

        Asked if she could have done more to persuade MPs to back her Brexit deal with the EU – which they rejected three times – she replied: “One could always look back and say, ‘If I’d sat down and talked to people more often’.”

        Mrs May said she had wrongly assumed MPs would be “eager to get Brexit over the line”.

        “I actually think there’s quite a difference between Parliament and the public,” she said. “I think the public have got a very simple view. A decision was taken – just get on with it – and they are not in that same polarised way that Parliament has been about this issue.”

        It had been, she said, “incredibly frustrating” that MPs on either side of the Leave-Remain divide had “got so sort of entrenched that they just were not willing to make that compromise that would enable us to get the majority to get this through”.

        There you have it …’Not my fault, gov – its them wot are the problem’.

        1. Lifelogic
          July 13, 2019

          She still seems to think her rancid deal is Brexit! It is nothing like Brexit it is even worse than remain.

  18. Everhopeful
    July 12, 2019

    Anyway..not certain of this..but wasn’t the official story that all that QE ( funny money) was meant to oil the wheels of commerce but was actually used to recapitalise the banks?
    No doubt that banks are now up to their old tricks again.
    Another Black Swan on horizon?

  19. Nigl
    July 12, 2019

    With a new Chancellor and Carney moving on, or will he, hopefully things will change quite quickly.

    However I can imagine the Chancellors first morning. Good morning Minister this is how things are done in the Treasury!

    Ps both PM candidates are throwing money everywhere. Have they forgotten we still have a current account deficit?

  20. A.Sedgwick
    July 12, 2019

    With UK 10 year bond rate at 2.1% would the market be there at anything like 0%. The reality is the UK has too large and growing national debt, as big if not bigger public sector pension liability and an economic misconception that we have had austerity since 2008. I don’t see it every day in the flesh with gross obesity abounding and smart phones omnipresent on the high street..

    Our EU exit is only one fiscal drain that needs addressing.

  21. Stephen Reay
    July 12, 2019

    The problem with ultra low interest rates are well know, like Sir John has said savers will save more but it can also be a poor incentive to save.
    Ultra low rates have other effects like the following-

    Reduced bank deposits.
    Poor annuity rates which effect people who are about to retire.
    Poor returns on savings.
    Savers buy homes to rent out because saving returns are poor therefore reducing available housing stock to buyers and therefore increases house prices.
    Less flexiblity for the B.O.E to react to other financial crashes.

    If the government wants to stimulate the country then it can look to other ways before reducing rates such as-

    Reducing or eliminating VAT
    Reduce taxes starting with the lowest earners.
    People’s QE putting more money into people’s pockets rather than QE which lacks evidence to show that it worked.

  22. Alex
    July 12, 2019

    In reality there is no job growth in the US and hasn’t been for many years. Simply look at the “labor force participation rate” for confirmation. The middle class has been impoverished and is worse off than in the 1970’s (like here but even worse). The USD is losing it’s status and the only thing keeping the economy afloat is massive war spending and negative interest rates. 5% interest rates would kill just about every western economy. Washington and their poodle Jeremy Hunt are doing their best to start a war in the gulf which would push oil prices through the roof killing the world’s economy. Meanwhile Trump is attempting to sanction or trade war everybody that stands still long enough. The only thing that prevents precious metals soaring is massive manipulation and fraud. In my view government bonds are as safe as a bamboo house in a tornado.

  23. Newmania
    July 12, 2019

    The reason the Bank of England is independent, is that Politicians serially abused its powers ,creating a costly boom / bust Britain, in which harmful demand spikes were created as when it suited a political goal ( like disguising the recessionary effect of Brexit)
    Mr Carney is fully aware of the International situation .
    Leaving Mr Redwood in charge of interest rates would be to leave a slavering hound in charge of sausages .
    Please god let it never never happen , things are bad enough.

    Reply My forecasts of the UK economy across the ERM, banking crash and Brexit have been more accurate than the Bank’s

    1. Denis Cooper
      July 12, 2019

      Complete twaddle. The worst recession in recent times occurred after the Bank had been given operational independence, not before, and there is no evidence that the vote to leave the EU has had a significant recessionary effect. Thanks to Theresa May’s treachery and obstinacy we are now being kept in a kind of limbo, and that must certainly be a pain in the backside for some businesses; but up to the end of this chart of UK GDP growth from 2000 to 2018:


      there is no evidence that it has had a significant economic impact overall.

    2. L Jones
      July 12, 2019

      Remoaner/insult. See the connection, Newmania?
      A rather tiresome and well-worn pattern.

    3. libertarian
      July 12, 2019


      The fact that you believe the BoE is “independent” explains a lot about how gullible you are

  24. Caterpillar
    July 12, 2019

    Savings ratio in UK continues to fall and is now under 5% and approaching 4%.
    Firms have maintained dividends even though profits have fallen.
    Growth of net capital stock has fallen to 1%.

    These are the responses to a decade of easy money in the UK.

    The above, the rapid increase of income Gini coefficient between 1979 and mid-1990s, the (at best) stagnant social mobility point to the massive changes needed once out of the EU – the elite institutional understanding of macro is wrong (or self-serving), tax structures are wrong, London/SE focus is wrong.

  25. rick hamilton
    July 12, 2019

    The elephant in the room that most politicians really don’t want to mention is the national debt, not just in this country but massive in the USA, Japan, Italy and so on. Interest rates have to be kept low to keep government debt servicing costs down. Savers suffer and borrowers are encouraged. The exact opposite of what our careful grandparents advised.

  26. Denis Cooper
    July 12, 2019

    Off-topic, I have my letter in this week’s Maidenhead Advertiser as a useful reminder of what Brexit is really all about – not marginal economic effects, or largely invented problems on the Irish land border, or the diabetic in Downing Street issuing orders to UK customs officers to unnecessarily delay imports of the insulin upon which she herself is dependent:

    “United States of Europe not supported by Brits”

    “Obviously it was just a coincidence that Hugh Lansley’s opinion piece, entitled ‘Price of leaving EU is too high’ was published on July 4, the day when Americans celebrate their Declaration of Independence.

    There were colonialists who objected to separation from the mother country, or who thought the price of independence would be too high; but many were prepared to fight and die for it, in a way that we are not being expected to fight and die to leave the EU.

    Supporters of the EU tend to rehearse the same old half-baked arguments against withdrawal, without bothering to tell us what they would expect to happen if instead we decided to stay in.

    The EEC/EC/EU project has always been directed towards establishing a pan-European federation, as pointed out in a letter entitled ‘Explicit goal of EU is an ever closer union’
    published in the Advertiser on December 20, 2018.

    And that is very clearly still the case now, with the politician nominated to become the new President of the EU Commission, Ursula von der Leyen, having stated in 2011:

    “My aim is the United States of Europe – modelled on federal states like Switzerland, Germany or the U.S.”

    Well, in my view that is a respectable political aim, honestly expressed, but it is not one that is shared by the great majority of Britons.

    An aim secretly shared by most of the top politicians in the UK, arguably, including Prime Ministers from Harold Macmillan six decades ago through to the present day, but supported by only a small minority of the electorate.”

    Which small minority would include those like Andy who post here, and the chap from the European Movement who has a poor letter printed alongside my letter.

    1. Mitchel
      July 12, 2019

      The United States of Europe(including the UK) is one of the costs of our American “alliance”,even if President Trump is not a fan.

    2. Caterpillar
      July 12, 2019


      It does seem that the HoC and HoW both still aim to stop the now 3 year old democratic decision. The continual distraction of irrelevant arguments should have stopped by now, that it hasn’t reflects how corrupt, rotten politics and the elite are.

      If Hunt / Johnson does not fulfil the democratic decision before the end of October (and they should not wait that long) it will confirm.The irrelevance of people and democracy. If whoever becomes the PM makes a deal including adjudication in which the UK is a rule taker, any extended duration if uncosted commitments etc. It will do firm.The importance of democracy and the people.

  27. bigneil
    July 12, 2019

    So they hand money over with absolutely no guarantee of anything positive coming back – -just like the EU – and both German led.

  28. Dominic
    July 12, 2019

    Someone, anyone push this PM into obscurity.

    And here we have another leftist, virtue signalling Quango obsessed with the tosh that is the fictitious Gender pay gap and other tedious social ‘discrepancies’. And all have it infers that the feminist invention that is the white, male patriarchy is too blame.

    I am exhausted by her attack on my gender, my skin colour and my sexuality.

    Just go NOW!!

    1. Anonymous
      July 12, 2019


      I spend many more hours and weeks out of the house than my working wife and any reduction in my hard earned profits will hit her hard too. Then we worry about the effect of May’s attack on our boys.

      Stupid STUPID woman.

  29. DICK R
    July 12, 2019

    The Germans are getting worried, the whole thing is going belly up, even they
    won’t be able to print enough money, the EURO is doomed.

  30. Denis Cooper
    July 12, 2019

    Boris Johnson would be a fool to trust Amber Rudd when she says she now accepts that we may have to leave the EU without a withdrawal agreement.

    At a chosen moment she would stab him in the back, just as Theresa May has stabbed us all in the back, and Greg Clark is now stabbing us in the back.


    “Greg Clark: No-deal Brexit would kill ‘many thousands of jobs'”

    I’m getting fed up to the back teeth with all of this.

    Once again the Tory party proves to be a mechanism for scum, not cream, to rise to the top of our political system, and thanks to the liar cheat hypocrite and traitor who blagged her way into becoming my local MP it goes on and on without any end in sight.

    I find this from last June:


    “The Bank succeeds in slowing money and credit – nothing to do with Brexit”

    and I find the same false claims being made by Remoaners and the same kind of replies being offered, and I find this:


    “I don’t know how long it is since I first complained about the absence of any rapid rebuttal unit in the Department for Exiting the European Union, but it’s too late now anyway because the damage has been done.”

    And I find this:


    “That is the kind of catastrophe which should have followed on just from our vote to leave the EU if George Osborne’s most doomladen prognostications had come to pass:


    “Leaving the European Union would tip the UK into a year-long recession, with up to 820,000 jobs lost within two years, Chancellor George Osborne says.

    Publishing Treasury analysis, he said a Leave vote would cause an “immediate and profound” economic shock, with growth between 3% and 6% lower.”

    Not just a slightly lower growth rate which may well represent nothing more than a continuation of a pre-existing medium term trend.”

    We have to get this finished, if it cannot be done through and orderly exit then it will have to be a disorderly exit, and we will know who is most to blame for that, and we will have to hope that it it does cost ‘many thousands of jobs’ then that will just be a small addition to the continuous jobs “churn” in the economy:


    “Andy, do you have any idea how many old jobs disappear and new jobs appear each year across the UK through the natural “churn” of the labour market? Of course you don’t, you don’t concern yourself with such boring facts, and so I will tell you that it’s about a quarter of all jobs each year. And that is not a problem, provided that jobs are being created at about the same or a greater rate.”

    1. margaret
      July 12, 2019

      You work hard on this site Dennis.

  31. Mark
    July 12, 2019

    I think we need the government to stop closing down industry and trade through its policies. Then we can talk about financing real economic growth instead of white elephants, crippling energy bills, zero carbon, and property bubbles.

  32. Bill
    July 12, 2019

    The fall off in British economic activity is all down the Brexit. Well, that is BoE Governor Carney’s objective in his plan to prove his scare stories are true. It is why we are the odd-man out in CB across the world.
    I trust a new PM will replace this unabashed and dedicated europhile.

  33. Denis Cooper
    July 12, 2019

    The traitors come crawling out of the woodwork:


    “Philip Hammond backs taking legal action if Boris Johnson tries to suspend Parliament for no deal Brexit”

    Because he believes that Tory Remain MPs like him should be given the opportunity to renege on their previous votes, as well as on the promises made to their electors.

  34. lojolondon
    July 12, 2019

    “The Bank of England looks increasingly isolated and cut off from central banking trends elsewhere.”

    Because, John, the BOE is not acting in the best interests of Britain, it is intentionally causing poor financial outcomes and blame BREXIT. Similar to IR35 and Stamp Duty laws from the Treasury.

    Truly a massive clean-out of this failed organisation is well overdue.

  35. a-tracy
    July 12, 2019

    This is all so unfair to the private sector workers who rely on savings and investments for their retirement pensions. Unlike the vast majority in the public sector who have defined benefit pensions, secure pensions, secured on their highest final salary which is usually bumped up just before they leave, the rest of the plebs have to rely on, what was it acorn called them yesterday “Clever Kiddies” to invest their compulsory nest defined contribution pensions, their p poor state pension that is getting more and more out of reach (mine has gone up 7 years in the blink of an eye #waspi) and their self contributory private pensions with terribly poor rates of return and are market dependent at the time you wish to retire, so god knows what they’ll be like in a decades time.

    So people like Corbyn and McDonnell can pontificate about people’s hard earned savings put on one side to cover the sensible workers pension shortfalls (a worry they themselves don’t have) capping returns, higher taxing returns, well only when you put your safe public sector pension in the same p pot Mr Corbyn, put your money and your Union mates pensions in the same nest pots and private sector pots, no more defined benefit returns and let’s see you make the same decisions when it affects you and yours.

    Reply Many pension pots are invested in government bonds which go up as interest rates fall

  36. Richard Evans
    July 12, 2019

    Who owns the FED.? Who owns and controls the majority of Central Banks throughout the World.
    Powell is Trump’s man and what is Trump planning to achieve?
    People WAKE UP and do your OWN research.

  37. BR
    July 12, 2019

    I’m not sure if JR is saying that the BoE is cut off from other banking trends in the sense of rates being too low or too high.

    On the one hand we have a rate much lower than the 2-2.5% he mentioned in the USA, so that could mean that he thinks rates are too low.

    On the other hand, the most recent moves have been to increase rates, so that could mean that they’re too high.

    A clarification would be useful.

    1. Richard Evans
      July 13, 2019

      Who owns and controls the BoE plus 143 other central banks throughout the globe?
      These people control everything from interest rates to stock market crashes and peaks to suit “events”. Do your own research.

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