Can we discuss the performance of the Bank of England?

Media commentary on the outgoing Governor and the new Governor hit a new low. We were told of the rock star Governor leaving, with silly mildly abusive comments on  the alleged personality of the incoming Governor. There was  no critical commentary of the failings of current Bank policy, nor comment on the huge opportunities  to change things for the better under new direction.

Governor Carney leaves an economy stalled, pursuing a uniquely tight money policy at a time when all the other main  Central Banks are rightly fighting slowdown and recession with a range of monetary tools at their disposal. He has been besotted by Brexit to the point where he has not understood the forces at work on the UK, which are largely  the same as anywhere else in a globalised world economy suffering from sluggish growth and mercifully low inflation in the advanced world. All the time he has been Governor we have been full members of the EU, just as he wanted .

When he first arrived he promised reform. He told us he was going to use forward guidance to give markets a clearer steer of where interest rates and monetary policy were going. The first two occasions when he guided people to expect a rate rise he did not follow through with one, and after the third warning of a rate rise after a gap   he actually cut rates. It was difficult to see  how any of this helped.  

During the referendum he politicised the Bank by producing a series of  very pessimistic short term forecasts  of jobs, unemployment, output and house prices  which only Remain  could accept. They turned out to be very wrong as I and other Leavers forecast.

After the vote he did nothing. A few weeks later he decided to cut interest rates, relaunch Quantitative easing and make money  available to the banks. This stimulated activity and inflation, and pushed the pound down a bit. From 2017 onwards he then changed tack, withdrew necessary facilities from the commercial banks, put through two rate rises and slowed the economy markedly until over the last three months there has been no growth at all. This was needless and predictable.

He could have shifted UK policy in late 2018 to promoting more growth and activity as the Fed did. He could have done so this autumn when the ECB did. Instead he ignored the obvious signs of global weakness and tightened controls over commercial bank lending. On his watch the repair of the commercial banks has been completed so they are  now robust and able to withstand bigger external shocks.  They now need an LTRO or funding for lending scheme to access money to lend on to businesses who wish to invest and to people who want to buy homes and cars.

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98 Comments

  1. Shirley
    Posted December 29, 2019 at 6:10 am | Permalink

    Did Carney do these things because he was incompetent, or spiteful because we didn’t vote to Remain? We will probably never know, but there have been some very spiteful acts from some Remainers who are obviously more loyal to the EU than the UK.

    Why are we unable to rid ourselves of those who actively work against us?

    • Fred H
      Posted December 29, 2019 at 9:01 am | Permalink

      “Will no one rid me of this turbulent banker!” Step forward Sir John with sword in hand. Except we don’t want you to serve time on the Crusades!

      • Martin in Cardiff
        Posted December 29, 2019 at 7:49 pm | Permalink

        Of course, you blame those working diligently to counter the damaging effects of leaving the European Union, and not the fact which causes those.

        The electorate will make up its mind in time, when they take stock of the material effects on their own lives, whatever the national statistics.

        This enterprise is now wholly owned by the Tories and Leave campaigns.

        • Edward2
          Posted December 30, 2019 at 9:09 pm | Permalink

          They just did.
          You are in denial Martin.

    • Sir Joe Soap
      Posted December 29, 2019 at 9:28 am | Permalink

      His behaviour was political rather than economic, without much philosophy in between.

    • Lifelogic
      Posted December 29, 2019 at 9:53 am | Permalink

      Boris even let 10 of them return to the party and some were even re-elected as fake Conservative MPs doubles to try undermine this government and act against the interests of the UK just as they did in the last. Contrary to Berow’s “there are no traitors in this house” the place was stuffed with traitors and still is.

      • Fred H
        Posted December 29, 2019 at 5:42 pm | Permalink

        LL – – well Bercow would say that, wouldn’t he! As Mandy Rice-Davies once famously retorted.

    • cynic
      Posted December 29, 2019 at 10:39 am | Permalink

      Indeed, why did Carney slow the economy? Was it part of a plan to show that leaving was bad for business? He did seem very close to the Chancellor.

    • bill brown
      Posted December 29, 2019 at 11:13 am | Permalink

      Shirley,

      Be careful you are getting caught up in your own propaganda, you might even start thinking that Boris Labour

    • Fedupsoutherner
      Posted December 29, 2019 at 11:21 am | Permalink

      Shirley I couldn’t agree more. I felt it was an act of self destruction so they could say, look we told you so.

  2. Stred
    Posted December 29, 2019 at 6:17 am | Permalink

    The selected new governor is, it’s reported, in charge of the FCA. This is part of the BoE? Is this the same FCA that oversaw the collapse of a direct lending organisation this year, which has caused problems for other direct lenders. Has the Treasury chosen another highly paid person who would be better employed for much less elsewhere?

    • Lifelogic
      Posted December 29, 2019 at 8:45 am | Permalink

      We shall see a manager at HSBC told me the reason for there new 40% for all overdraft rate was idiotic regulations coming from the FCA forcing them to charge good and bad risk customers the same rate. Which idiot at the fca pushed this lunacy in effect another tax.

  3. Lifelogic
    Posted December 29, 2019 at 6:32 am | Permalink

    Indeed it has been appalling stewardship of the BoE, plus Carney is full of climate alarmist claptrap too and was hugely overpaid and over pensioned to boot. Another dire Oxford PPE chap. He was chosen by the incompetent chancellor George Osborne and was retained by the even more appalling, tax to death, Europhile dope Philip Hammond.

    Another huge failing of the BoE and FCA has been the failure to ensure any real completion in banking, the spread between deposit rates and lending/overdraft rates is absurd. Even the big banks are charging up to 68% on overdraft fees even to sound customers. Perhaps 140 times what they pay to depositors. Huge margins, restrictive terms and high fees are hugely damaging to investment. I have turned town several development opportunities due to lack of funding at sensible rates and terms plus the very slow and over complex processing of borrowing applications.

    Does the new BoE chap, who is coming from the FCA, approve of the 40% and 78% one size fits all overdraft rates the daft FCA rules have produced? I note that he also like Carney does not seem to have any decent logic, science or maths qualifications but is it seems he is knowledgeable on the Napolionic Wars. The PRA/FCA has done a very poor job in my opinion. He also seems to have little experience of the private sector.

    Let us hope he is better than he looks on paper. He must surely be better than Carney. Is he another green crap pushing climate alarmist I wonder?

    • UK Qanon
      Posted December 30, 2019 at 12:29 am | Permalink

      LL – Carney is joining that other corrupt global institue, the UN, as special envoy for Climate Action and Finance. You could not make this crap up. Fail in one position and get promoted.

      • Mockbeggar
        Posted December 30, 2019 at 9:09 am | Permalink

        Not only that, but on the Today programme this morning (30.12.19) he was advising pension funds and other investors to get out of Fossil Fuel shares etc. The fact that these are amongst the few producing a decent dividend when cash etc. is almost negative is, apparently, neither here nor there.

        It also contradicts what the outgoing boss of BP, Bob Dudley, said only yesterday which was that fossil fuels will have to be here for much longer than the low CO2 targets are asking for and that the first thing we should be doing is reducing reliance on coal in India and China and using natural (including fracked) gas as a first step.

  4. agricola
    Posted December 29, 2019 at 7:14 am | Permalink

    If Boris is true to his word and intends to create a much more dynamic economy (Singaporean) then we will require a very different attitude at the BoE and throughout the banking system. I have no idea whether our current Chancellor and the new Govenor are on board with this or not. Given a no nonsense Brexit we need a budget that lays out in detail the new plan A and the means to facilitate it. We have bumbled along in a suspended limbo for the past 3.5 years. We need to see an end to it. The first indication will be the scything of the Cabinet, and much of the negative Civil Service. When we see this happening we will know that change is afoot. The BBC needs addressing too. The first step should be a bollocking of a lifetime for the Chairman and a clear message that they are living on borrowed time. Six months or radical surgery will be performed.

    Technical detail I leave to our host, I am not qualified to offer more than direction.

    • eeyore
      Posted December 29, 2019 at 8:16 am | Permalink

      Auction off the BBC.

      • Martin in Cardiff
        Posted December 30, 2019 at 4:47 pm | Permalink

        Almost all of its physical assets already have been, along with functioning units and staff.

        It is now mainly a commissioning body.

    • Mark B
      Posted December 29, 2019 at 9:02 am | Permalink

      Regarding the BBC. The solution is much simpler and closer to hand. Repeal legislation that criminalised watching live broadcasts. Then let market forces do the rest.

    • Andy
      Posted December 29, 2019 at 1:05 pm | Permalink

      Of course the main ‘dynamism’ you talk about in Singapore’s economy is created by absence of workers rights. No minimum wage, a complete absence of independent unions, halving holiday pay, scraping sick pay, getting rid of maternity / paternity provisions – that sort of stuff.

      More than 10% of Singapore’s workforce are also immigrants. Where we know Brexit is about getting rid of immigrants.

      In any case you are obviously retired so this sort of dynamism will not apply to you. But you want it for the rest of us, right? You want fewer rights for those of us who actually pay your pension? How about we just scrap your pension and make you work again instead? It would boost all of our incomes if we weren’t spending 50% of our income taxes on the deadweight elderly who don’t contribute.

      • Edward2
        Posted December 29, 2019 at 4:34 pm | Permalink

        Singapore GDP per capita….$57,714

        UK GDP per capita…$39,720

        PS
        Brexit isn’t about getting rid of immigrants
        You are being very silly.

        • Lifelogic
          Posted December 31, 2019 at 6:39 pm | Permalink

          In PPP purchasing power parity terms it is an even starker difference.

      • Roy Grainger
        Posted December 29, 2019 at 5:46 pm | Permalink

        You’ve obviously never worked in Singapore Andy. I have, despite it not being in the EU, I wonder how I managed that ? The dynamism comes from it being a low-tax free port environment in which to do business – creating free port areas in UK is an excellent idea. Education standards in Singapore are also very high and R&D is encouraged by the government. Also things we could learn from. Your idea that halving holiday pay would create dynamism is very curious – where did you get that from ? Honestly, you need to travel a bit more, your Little Englander views are a bit embarrassing.

      • John Rollinson
        Posted December 29, 2019 at 7:46 pm | Permalink

        Andy, As I understand it, pensions actuaries will have been advising the government over the years what money had to be put aside to pay for future pensions. Given that UK pensions are one of the lowest in the EU despite the UK being one of the wealthies countries in the EU makes it difficult to imagine that any cuts would be possible. As it is, it is scandalous that women expecting and planning over a lifetime for a pension at 60 now find themselves having to wait, in some cases 8 years. I am sure this bit of nastiness would not have happened if the pension change had been aimed at men! Don’t forget you will be a pensioner one day!

      • agricola
        Posted December 29, 2019 at 7:47 pm | Permalink

        What s load of Horlicks. Having spent time in Singapore I was obviously remiss in not seeing it as the southern plantation economy you conjure up without offering a shred of hard evidence.

        The sort of dynamism you describe was applied throughout my working life enabling me to make my own pension provision. I have little time for political correctness but I would be happy to see you taken to court for the ageism you wallow in. Incidentally I still pay more in tax than I receive in state pension so I consider your contribution irrelevant in the widest sense.

      • steve
        Posted December 29, 2019 at 8:08 pm | Permalink

        Andy

        “Of course the main ‘dynamism’ you talk about in Singapore’s economy is created by absence of workers rights.”

        Not so. Singapore’s success is due to very encouraging business incentives.

      • steve
        Posted December 29, 2019 at 9:02 pm | Permalink

        Andy

        “You want fewer rights for those of us who actually pay your pension? How about we just scrap your pension and make you work again instead? It would boost all of our incomes if we weren’t spending 50% of our income taxes on the deadweight elderly who don’t contribute.”

        I feel obliged to say; what a bigoted, nasty, narrow minded view.

        You can only refer to state pension, since that is tax funded.

        Has it not occurred to you that recipients have already paid their way for much longer than you have existed ?

        You obviously don’t seem to think they’re entitled to a pension. Remember some day you will be old, and when you are you’d better hope karma skips a page.

        I mean, do you get off with posting that bigoted crap ?

        We are reminded by our host that extremist views are not allowed, well Andy I for one find your views extreme, and in fact downright disrespectful to the elderly.

        I’m convinced by your attitude you must be someone who doesn’t know what hardship is, and has never have had to graft to survive.

        I wish I could send the likes of you back in time…….I doubt very much if you’d keep a family fed, let alone survive yourself.

        You have no idea how hard the lot of the elderly was in their day. Show due respect.

      • dixie
        Posted December 30, 2019 at 7:49 am | Permalink

        @Andy – HMRC reported 2018-19 receipts from IT, NIC, CGT and BPT of £620b. DWP provided guidance on benefit expenditure and caseload tables in November 2018 that gave a 2018-19 forecast of £97b state pension.

        According to fullfact.org total health spending in England 2018-19 was around £129b. So even if the entire NHS expenditure was on pensioners the total (£226b) is nothing like 50% of income taxes, more like 37%.

        But pensioners don’t account for the entire NHS expenditure do they and you are either too lazy to look things up or you are lying – which is it?

        BTW, I get most of my income from investments in APAC and UK so I welcome more of a move towards the entrepreneurial dynamism of Singapore and the like. I am not yet in receipt of a state pension but will certainly relish getting it even more knowing that it will be costing you personally in income tax and NICs.

    • UK Qanon
      Posted December 30, 2019 at 6:37 pm | Permalink

      I am very sceptical regarding the chancellor, Sajiv David’s long term motives. I do not trust him and he needs to watched very closely.

  5. Anonymous
    Posted December 29, 2019 at 7:57 am | Permalink

    Had Remain won I expect we’d have been in the euro by now.

    • Lifelogic
      Posted December 29, 2019 at 9:57 am | Permalink

      Thanks goodness they didn’t despite all the blatant bias of the BBC, the government and the establishment.

    • Andy
      Posted December 29, 2019 at 1:17 pm | Permalink

      We will be in the Euro when we rejoin the EU. Which we one day will.

      An elderly Brexiteer told me the other day that she feared being in the Euro because she didn’t understand how it worked. I didn’t like to tell the poor dear that it is split into 100 units, like the pound, and – thanks to Brexit – is worth about the same too.

      But I guess blue notes with 20 on them are confusing to those who still whine on about the awfulness of decimalisation.

      • Richard1
        Posted December 29, 2019 at 4:36 pm | Permalink

        Indeed if we re-join the EU we will have to join the euro. And there will be no opt-outs or rebates. It will be full-on euro-federalism. Rejoin will therefore have to make a much more honest case than Remain ever did, and stop pretending it’s all about market access and making trade a bit more efficient.

        We may yet one day vote for it, but 2 things would have to be clear: (1) Brexit would have to have failed to deliver any of its claimed advantages – such as an independent trade and regulatory policy & 2) the further integrated eurozone would have to be seen to be a success, to have out-performed the independent U.K., and to have delivered prosperity and political stability for the EU countries.

        Meanwhile it’s a pity really that your posts continue in this inane vituperative tone. You certainly won’t win any converts like that.

      • Edward2
        Posted December 29, 2019 at 4:36 pm | Permalink

        Ask Greece Cyprus Spain and Portugal what they thin about the benefits of the Euro.

        • margaret howard
          Posted December 30, 2019 at 11:39 pm | Permalink

          Edward2

          Have you asked them?

          I am certain that they would tell you that their euro membership is vastly superior to having the Greek drachma, the Cypriot lira, Spanish peseta or the Portuguese escudo.

          They now belong to a currency which in just a short time has replaced the £ as the world’s second most popular currency after the US dollar. The pound meanwhile continues on its downward spiral against it.

          What’s not to like?

          • Edward2
            Posted December 31, 2019 at 9:27 am | Permalink

            Poverty, unemployment, low growth, business failures, higher cost of living, property price slump and real austerity.
            That’s what not to like.

      • Roy Grainger
        Posted December 29, 2019 at 5:38 pm | Permalink

        Maybe she meant how it worked in terms of setting an interest rate and QE policies which would make the Euro suitable for the economies of both Germany and Greece simultaneously – but obviously as you can’t answer that you chose to assume it was her, rather than you, who was ignorant.

      • Fred H
        Posted December 29, 2019 at 5:39 pm | Permalink

        funny that Andy – – with 4 grandchildren still in education, I have come across lots of ‘mates’ who a) don’t understand politics, nor want to b) haven’t a clue about political parties, nor how you might tell them apart c) generally say ‘what’s a euro?’ d) what’s the EU and why do we want to join!’ And you and others childishly whinge about those who are now frail in mind ( be careful what you wish for) yet insist the 16 year-olds should have a vote.

      • Helen Smith
        Posted December 29, 2019 at 6:34 pm | Permalink

        I suspect you misunderstood her, she meant how interest rates are chosen and effected, and how the economy is regulated.

        Is suspect she was looking at Greece, and thinking how can one currency can possibly suit 20 or so different countries, with different economies, rates of inflation, rates of unemployment etc.

        She probably noted how the Euro only seems to suit Germany, and how it is either under or over valued just about everywhere.

        She probably considered how just in the British isles the £ is undervalued and overvalued according to where you are and reckoning that being part of a currency stretching thousands of miles across Europe would be 10 times as problematic.

        But like all Remoaners you chose to write her off and indescribably thick because it makes you feel better to suppose that all the cleverer people voted Remain.

      • agricola
        Posted December 29, 2019 at 7:54 pm | Permalink

        It’s denomination is not its modus operandi.Your friend was quite right to question it, a currency floating on quantative easing or in terms your might find easier to understand, printing money. It’s decline is about to begin.

      • steve
        Posted December 29, 2019 at 8:06 pm | Permalink

        Andy

        Total fabricated rubbish of course, but kindly leave the elderly out of it eh.

      • JohnK
        Posted December 29, 2019 at 8:12 pm | Permalink

        Hi Andy,

        Did you ever hear the saying that it is better to keep your mouth shut and be thought of as an idiot, rather than to open it and confirm the fact?

        You are welcome to go and live, work and play in your beloved European Union. You might find that people there hate the Euro even more than we do, but I doubt it make you change your mind.

        Have a happy new year, though. I intend to do just that.

      • steve
        Posted December 29, 2019 at 8:13 pm | Permalink

        Andy

        “We will be in the Euro when we rejoin the EU. Which we one day will.”

        When the time comes, please can I have the pleasure of putting the egg on your face myself ?

        We are not rejoining the EU, nor adopting the euro.

        The next phase after we have left is that one or more member states will follow suit…..and the EU falls apart like a cardboard bath seat.

      • Anonymous
        Posted December 29, 2019 at 9:00 pm | Permalink

        You’d struggle with imperial.

      • Czerwonadupa
        Posted December 29, 2019 at 9:50 pm | Permalink

        The empire will have collapsed before then. In the meantime I’m sure being a good europhile you with all the others who have been waving the blue flag for the past 3 years will be eagerly joining up into Merkel & Macron’s EU army to maintain peace in their parts of the empire.

    • Robert mcdonald
      Posted December 29, 2019 at 5:34 pm | Permalink

      The remoaners definitely didn’t know what they were voting for, an eu army .. no way, an eu superstate .. no way, join the crashing euro … no way .. instead they sort to remain in the fundamentally racist trade only with predominantly white European nations eurocracy. Amusing how the managed to twist the truth so completely.

    • margaret howard
      Posted December 29, 2019 at 11:31 pm | Permalink

      Anonymous

      Pity we weren’t. Then we too could belong to the most dynamic world currency which has replaced the £ as number two to the US $. Instead the ‘pound in our pockets’ has dropped like a stone against it.

      • Edward2
        Posted December 30, 2019 at 11:13 am | Permalink

        Whilst in the EU the pound varied greatly.
        Versus the dollar from near parity to over 1.50
        Versus the euro from near parity to over 1.50
        Was that the effect of our membership of the EU?

  6. Everhopeful
    Posted December 29, 2019 at 7:58 am | Permalink

    Very strange idea to “forward guide” interest rate rises ( and then not raise them when the “marker”/unemployment rate is reached).
    Surely there should be a flexible approach based on day to day situations? ( A bit like Princess Anne’s warning re adherence to “elf n safety”).
    I do think that the application of a rigid economic policy based on prediction is a bit weird…might as well run the economy using Tarot cards!
    There are reports that Mr Bailey intends to scrap the crystal ball stuff ( although I guess that investment in funds is actually just that!).
    Might as well put it on the horses?

  7. Anonymous
    Posted December 29, 2019 at 8:08 am | Permalink

    Off topic please. The BBC and its biased reporting of Carney and many other issues. Also the fact that it’s the go-to advertising corporation for luvvies in music, film, tv and theatre who get millions of pounds of exposure for free.

    Why is it allowed to use state apparatus as its debt management and collection operation ? The Magistrates Association has for twenty years been calling for the decriminalisation of the licence fee.

    Prosecutions take up 13% of magistrate cases and disproportionately hurts women with young children as the BBC operates a zero tolerance policy.

    • Fred H
      Posted December 29, 2019 at 8:58 am | Permalink

      yes – exactly – -we need to raise this issue (Boris briefly touched on) to white heat.

    • Lifelogic
      Posted December 29, 2019 at 9:00 am | Permalink

      Indeed force them to charge only those who want to pay to watch. I for example occasionally want to download some programme while abroad but it does not let me unless I go through some device to fool it that I am in the UK. I cannot even pay the BBC to do so. So in commercial are the BBC.

      The funding of the BBC just like schools, universities and the NHS is hugely anti competitive.

    • Mark B
      Posted December 29, 2019 at 9:11 am | Permalink

      People in the last GE had the opportunity to vote for a political party that wanted to reform the BBC and the license fee / telly tax. Instead they voted for a party whose leader stated that they would look at it. Missed opportunity, methinks ?

    • Martin in Cardiff
      Posted December 29, 2019 at 10:50 am | Permalink

      The prosecutor is not the BBC as I understand it, but the Crown.

      Whether the law is changed is a matter for our supreme Parliament, as it is for all other statute.

      • Edward2
        Posted December 29, 2019 at 4:51 pm | Permalink

        Bit pedantic Martin.
        The Crown are always the “prosecutor”.
        The BBC instigate the prosecution.

        • Martin in Cardiff
          Posted December 30, 2019 at 4:50 pm | Permalink

          No, there can be private prosecutions.

          • Edward2
            Posted December 30, 2019 at 9:13 pm | Permalink

            Just a tiny number
            Try again.

      • Anonymous
        Posted December 29, 2019 at 8:59 pm | Permalink

        There still needs to be a crime complaint.

        Abolish the crime !

      • steve
        Posted December 29, 2019 at 9:19 pm | Permalink

        “Whether the law is changed is a matter for our supreme Parliament”

        ……which is accountable to those who elected it, most of whom wish for the licence fee to be abolished.

        Nothing supreme about Parliament, not in the real world.

        You might think of them as supreme beings, but most of us will just laugh at the idea.

    • Mary McDougall
      Posted December 29, 2019 at 12:11 pm | Permalink

      How pleasant to hear from someone with some common sense as well as a brain. Makes it a much easier read and indeed, interesting

  8. Johnny Dubb
    Posted December 29, 2019 at 8:21 am | Permalink

    Accurate and to the point Sir John.
    From the minute he arrived at the behest of that other financial wizard, Osborne, Carney has been abysmal. More worryingly, he has been allowed to “remain” and to be abysmal! Some down to incompetence, some down to anti-Brexit politics. Slowing down our economy suited Hammond and Remain, Hammond asking Carney to “remain” even longer! We don’t want to remain and I for one am glad he will remain no longer! Good riddance!

  9. Mark B
    Posted December 29, 2019 at 8:54 am | Permalink

    Good morning.

    Governor Carney leaves an economy stalled . . .

    There is nothing to stop the government cutting taxes and reduce unnecessary spending. eg The Foreign Aid Budget.

    Politicians need to understand that markets work when their is economic stability. In the last five years we have had three general elections, three different PM’s, an EU referendum and calls from the SNP for another independence referendum for themselves. And finally, the grim specter of a Marxist government. All caused by self seeking politicians who are more interested in themselves rather what is good for the country.

    I would like to ask our kind host a simple question. In the last ten years of both coalition and conservative governments, has he ever once voted against the Chancellors Budget ?

    Reply No. I have been elected as a Conservative and usually support a Conservative budget even when I disagree with individual items in it. Trying to vote down a whole budget is close to voting No Confidence in the government you are elected to support.

    • Mark B
      Posted December 29, 2019 at 8:56 am | Permalink

      Sorry.

      For, ” . . . is economic stability.”

      Please read, ” . . . is political stability.”

  10. George Brooks
    Posted December 29, 2019 at 9:04 am | Permalink

    After all he is Canadian and whilst they are a kind and generous nation they are not over endowed with creativity and foresight. They live in the shadow of the US which might have influenced his thinking and desire for us to remain within the EU. Furthermore he would have been heavily influenced by the last chancellor and the ‘Remain Vibes’ circulating in the Westminster Bubble.

    Despite these excuses, he should not have ignored the signs and actions taken by the other major banks as you have clearly pointed out Sir John, and it is unfortunate that we have to wait until mid March before the new governor takes over.

    The decisions taken in following 9 months will be vital to our success and standing in the world. We don’t owe the EU any favours (just a monumental amount of money) and therefore whilst remaining friendly, all future decisions have to be self centred and solely in the interest of this country and it’s future standing.

  11. Newmania
    Posted December 29, 2019 at 9:37 am | Permalink

    UK interest rates are much lower than either the US or China and we already have a huge lump of QE debt ( which cannot be written off !)
    This is merely , “Please sir can I have some more “,the’ more’, being free money, to flush away Brexit ..at least temporarily.
    Given his enthusiasm for what we might call People`s QE ,borrowing and cheaper money I imagine John Redwood is disappointed we did not elect Jeremy Corbyn
    Both also wish to tax the South to subsidise the North and each is as disdainful of the City Services and Business.

    “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”

  12. Gareth Warren
    Posted December 29, 2019 at 10:47 am | Permalink

    I am pleased to see him go, he presided over creating a housing bubble in Canada and then let the UK one inflate.

    His strange pro-EU support is unneeded, he is supposed to be supporting the UK and not a foreign government.

    While I am naturally cautious and support higher interest rates I believe brexit is both an opportunity and a danger – both are helped by more money for lending to seize opportunities and allow businesses to refocus on new markets.

    And on a different note, its time to decriminalize non-payment of the BBC license fee.

    • steve
      Posted December 29, 2019 at 8:04 pm | Permalink

      Gareth Warren

      “And on a different note, its time to decriminalize non-payment of the BBC license fee.”

      Yes absolutely. I think Boris should make it a priority before people actually take the law into their own hands by refusing to pay.

      It will only take a bit of social cohesion around this issue and that’s the end of the license fee, the courts wouldn’t be able to cope.

      I don’t know of a single person who is happy to pay the licence fee, and everyone I know says they object because of the BBC’s left wing bias and political correctness.

  13. Grant
    Posted December 29, 2019 at 10:56 am | Permalink

    Hard to know what you would expect any bank governor to do given the dithering of government and parliament- for over three years now- ‘forward guidance indeed’

    So then Sir John you’re such a clever clogs- why didn’t you put your own name forward for the BoE job? – OK then why not put yourself forward for the No’11 job when the reshuffle comes- but I suppose it’s a lot easier sniping from the fringes

    Reply You do not apply to be Chancellor but are chosen by the PM. I haven t turned it down!

    • L Jones
      Posted December 29, 2019 at 7:22 pm | Permalink

      Mr Grant – this is just a rough guess, of course – but you’re a remainer, aren’t you?

      Never a comment without an insult. Same old, same old.

  14. DOMINIC
    Posted December 29, 2019 at 11:10 am | Permalink

    Risk capital will always find a home if there’s a home to be found. Politicians encouraging loan issuance for the sake of loan issuance isn’t just unwise but downright dangerous. This government’s job must the encouragement and promotion investment by removing barriers to business. Its job is not too encourage indebtedness for some pathetic, political gain

    If we slash personal and business tax, reform the sclerotic, political public sector, make impotent the left (unions and Labour) and unleash the free-market then our economy will respond eventually. Tweaking monetary and fiscal policy is mere fiddling and utterly counterproductive

    I just wish John and his party would admit they have embraced the politicisation of economic activity when once this activity was a purely private matter. That is abhorrent and reveals a fundamental shift in the reach of politicians and the State into all aspects of our lives

  15. bill brown
    Posted December 29, 2019 at 11:10 am | Permalink

    Sir JR,

    Your view on Carney is far too biased , because he most likely righty explained that the performance of the economy was due to the uncertainty about Brexit and what would slow down the economy, which it also did as most of Europe has had higher growth then the UK for the past three years. a lot of the QE was kept in train as one would expect.

    The forecasts from most economists was out of kilter with the performance of the UK economy not just the BoE.

    Fortunately , lots of reputable sources such as the FT and the Economist and a number of independent think tanks disagree with your judgement of the performance of Mr, Carney as do I

    • Roy Grainger
      Posted December 29, 2019 at 5:33 pm | Permalink

      Since when were the hyper-Remain Economist and FT reputable sources in this area ?

      • bill brown
        Posted December 30, 2019 at 4:27 pm | Permalink

        Roy Grainger

        The were two of several and I am sure they know as much about it as you do.

        Happy New Year

    • zorro
      Posted December 29, 2019 at 5:45 pm | Permalink

      Wrong – QE stopped in the UK some time ago, whereas the ECB has been on a continual asset purchase programme in latter times and is the only thing which has kept the EU from recession. All the BoE’s tactical steps in the last 2/3 years have been to frustrate growth and fulfil their failed prophecy! It has been a purely political assault designed to frustrate our exit and support Remainer efforts to undermine their own country. Disgraceful!

      zorro

      • bill brown
        Posted December 30, 2019 at 4:26 pm | Permalink

        zorro

        QT stopped but the extra money is till in circulation

      • bill brown
        Posted December 30, 2019 at 4:28 pm | Permalink

        zorro,

        I am sorry to see you are getting caught up in your own fake news.

        Happy New Year

        • Edward2
          Posted December 30, 2019 at 9:15 pm | Permalink

          As usual bill you dismiss others without any facts.
          Zorro was right.

          • bill brown
            Posted December 31, 2019 at 10:04 am | Permalink

            Edward2

            I refer to the question asked to Zorro as you seem to have all the answers

        • zorro
          Posted December 31, 2019 at 12:58 am | Permalink

          What fake news? QE stopped in the UK so e time ago whilst QE in the ECB is ongoing? Which bit is incorrect?

          zorro

          • bill brown
            Posted December 31, 2019 at 10:03 am | Permalink

            Zorro,
            Simple question, the existing QE requires the BoE to issue bonds to ease the money which has been sent into the system.

            Has the BoE started to issue bonds to that effect?

            Reply The Bank reinvests the repaymwents

          • zorro
            Posted January 1, 2020 at 6:59 pm | Permalink

            https://www.bankofengland.co.uk/monetary-policy/quantitative-easing

            Explicit new asset purchases finished when the BoE said. As JR states there will be some reinvestment of receipts/repayments.

            As for winding it back, that is another question….

            zorro

  16. ADAMS
    Posted December 29, 2019 at 11:36 am | Permalink

    Interest rates in negative territory mainly for savings the politicians necks with the vast debt they have built up . Cut spending John if the Tory Party want to do something useful . Savers are being robbed 24/7 .
    Do you care ? Thank God for FPTP voting . N’est-ce- pas ?

  17. Derek Henry
    Posted December 29, 2019 at 12:26 pm | Permalink

    So glad that he is going. He polticised the monetary system way too much. When there should be no politics involved when you look at his twin mandate.

    The give away was right after the financial crash. When he said he was increasing reserves to help banks lend.

    In the mainstream framework, the money multiplier is a central mainstream proposition. In mainstream courses, students get taught that the central bank determines the supply of loans in the economy by controlling the quantity of base money (reserves).

    They then learn that there is a (constant) ratio of broad money (money supply) to base money, and when the central bank adds reserves, they are multiplied up to create a greater change in bank loans and deposits.

    The theory has two elements:

    1. Reserves constrain lending – a supply-determined approach.

    2. Central banks control reserves.

    The important point to understand is that banks do not loan out reserves. A build-up of bank reserves doesn’t increase their capacity to make loans nor does it guarantee that there will be more loan activity.

    The latter depends on the number of credit-worthy customers who seek credit.

    The central bank will always ensure there are sufficient reserves in the system to maintain integrity of the payments system (cheque clearing etc).

    It is an absolute error on Carney’s part to think that leaving excess reserves in the system increases the inflation risk of government deficits.

    And consider this graph (among others) which shows the M1 money multiplier for the US (calculated by the Federal Reserve Bank of St Louis).

    Try justifying a theory that requires this aggregate (ratio) to be pretty much constant. There are many ways to compute the conceptual money multiplier that students find in their textbooks that link the money base to the broad money supply – but all deliver a similar story of variability.

    https://fred.stlouisfed.org/series/MULT

    Issuing debt does not reduce the inflation risk of the spending as the funds to purchase the debt were not being spent anyway they were being saved.

    The Bank of England released a new working paper on Friday (May 29, 2015) – Banks are not intermediaries of loanable funds – and why this matters –

    That showed clearly Banks are not reserve-constrained. So there is no sense to say that when governments issue debt they are increasing competition in the finite saving pool and pushing up interest rates as a consequence. Bank loans create deposits and banks will make those loans to any credit-worthy borrower who seeks funding, meaning that the whole premise of crowding out (which is central in the mainstream GBC story) is false.I

    Carney knew this when he worked in Canada. Reserves were zero for nearly a decade and bank lending carried on as normal.

    That is inexcusable !

  18. APL
    Posted December 29, 2019 at 1:36 pm | Permalink

    JR: “Can we discuss the performance of the Bank of England?”

    Yes, it has been very successful implementing government policy to devalue Sterling. A policy of 3% a year each and every year, under successive governments, then it boasts about its success by advertising how much poorer we are with its inflation calculator.

    So to get the same spending power as you might have had spending ten 1950 pounds you would have to scratch together £331.61 in 2019 Sterling.

    The Bank’s proudest boast: “Inflation averaged 5.3% a year”.

  19. DavidJ
    Posted December 29, 2019 at 3:14 pm | Permalink

    I do hope that Carney is on his way back to Canada, never to darken our doorways again. Unfortunately I expect he is going with a bagful of UK taxpayers cash owing to his being overpaid. Pity that he wasn’t sacked before he did the damage…

  20. ukretired123
    Posted December 29, 2019 at 3:41 pm | Permalink

    Even Mervyn King in retirement could have done a better job part-time rather than Carney.
    Interesting that he kept quiet about his Irish roots and his decisions were not influenced by Irish concerns for Brexit?a

    • bill brown
      Posted December 29, 2019 at 4:57 pm | Permalink

      ukretired123

      Mervin king did a lousy job during 2008/09, much worse

  21. acorn
    Posted December 29, 2019 at 5:52 pm | Permalink

    The cheapest money a bank can get to bolster its capital/equity reserves, are from households depositing their wages and savings in accounts that pay bugger all interest. Low central bank interest rates squeeze banks’ lending margin; the difference between the cost of loans and the price (interest rate) they can charge for those loans.

    The “cost of funding”, the amount the bank must pay to borrow the reserves required to make loans will be higher. Also, it has to acquire the regulatory capital to back the loan; capital is more expensive than household deposits.

    Pricing Brexit risks is the current major hold on bank lending according to my banking mates. Subsidizing Banks’ borrowings; that is, raising their profit margins, is unlikely to overcome the Brexit risk premium except for one particular sector; residential mortgages. So once again yet another off balance sheet scam to give banks cheap money, will again raise residential property prices. Owner-occupier assets that earn no income.

  22. Helen Smith
    Posted December 29, 2019 at 6:25 pm | Permalink

    A cynic might say he did everything he could to screw up the economy and make people feel poorer to try to reverse the vote for Brexit.

    Whoever comes in next it is hard to see how they could be worse.

  23. Bob
    Posted December 29, 2019 at 6:44 pm | Permalink

    I’m glad that Mr Forward Guidance is leaving as BoE Governor, his politicisation of the Bank has been damaging to the UK.

    Next on the agenda are the politicised educational Establishment, politicised Judiciary and politicised BBC/MSM.

  24. Jasper
    Posted December 29, 2019 at 11:39 pm | Permalink

    Carney was clearly out of his depth or he was in the pocket of those who do not want the UK to be a success- either way his position was definitely questionable!! Mervyn King spoke so much sense over the last few years and I know who I would trust looking after my own money ….

  25. Mike Wilson
    Posted December 30, 2019 at 2:20 am | Permalink

    Lending to buy homes and cars. Credit, credit and more credit. Is that it? Is that all you have to say about getting the magic growth we, allegedly, need?

    Maybe it is time for retirement so we can get some politicians who can come up with something a bit more enterprising and innovative than the tire old cliche of more borrowing.

    • APL
      Posted December 30, 2019 at 10:19 am | Permalink

      Mike Wilson: “Lending to buy homes and cars. Credit, credit and more credit. Is that it? ”

      All good comrades will borrow money for the good of the state. Refusniks will be taken out side and shot.

  26. Narrow Shoulders
    Posted December 30, 2019 at 9:40 am | Permalink

    Apparently Mr Carney is now also an authority on climate change.

    I hope his climate predictions are as wayward as his financial predictions have proven to be.

  27. rose
    Posted December 30, 2019 at 12:10 pm | Permalink

    I couldn’t believe Carney’s contribution to the St Greta edition of Today this morning. It warrants another little essay from Sir John.

  28. Steve Reay
    Posted December 30, 2019 at 1:21 pm | Permalink

    Funding for lending is unpopular with savers as it just punishes them. A vote losers policy.

  29. Mike Wilson
    Posted December 30, 2019 at 8:46 pm | Permalink

    Instead of this tired, hackneyed, pointless (because credit booms always end in a bust) plea for us all to borrow to inflate house prices even more, what about some practical ideas for improving training and investing in renewable energy. Why not try to increase high tech manufacturing? Why not STOP immigration and work out how to increase productivity so more people can work in the care sector?

    Lots of elderly people volunteer. Why not organise this properly so, when you retire, it becomes almost a social obligation to help look after people less able to manage?

    For heaven’s sake, Mr. Redwood, let’s have a bit more from you than the desire for more debt!

    • Fred H
      Posted December 30, 2019 at 9:25 pm | Permalink

      Mike W – -Lets all take on a large debt to buy the best new German car, with a 10% fuel saving, monstrous service bills, and safe in the knowledge that their factories will forever be grateful to us.

  • 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.

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