Let me quote something I agree with:
Since the crash of 2008-9 “The proportion of people in work moved to its highest level on record, nominal wages are up 17%, real GDP is up 15% and the UK has consistently been one of the strongest economies in the G7. All major income groups have seen their income and wealth rise”.
That was the Governor of the Bank of England.
Here’s something else he said that I also agree with: “Growth appears to have been materially better than we had expected in the summer. Households appear to be looking through the Brexit-related uncertainties at present. For them, signs of an economic slowdown are notable by their absence. Perceptions of job security remain strong. Wages are growing at around the same modest pace as at the start of the year. Credit is available and competitive. Confidence is solid”.
In other words, the Bank now agrees that growth in 2016 is good and unaffected by the referendum.
There is a residual of the Bank’s pessimism of the summer in the lecture. He now says that he still expects inflation to come through and cut real incomes, which could turn off what so far is a consumer led growth rate and recovery. He bases this on the fall in the pound, which he did predict. He acknowledged in the lecture that the pound is up 6% since early November, so the pressure is abating. The Bank needs to research why retail prices were down 0.7% in the year to October, when much of the fall in the pound occurred in 2015 and early 2016. it looks as if highly competitive world markets for goods and highly competitive retailers with too much shop space in the UK are keeping prices down despite the long term fall in the pound over the last eighteen months. It looks as if some price rises may come through in the new year, but it is also the case there is a strong competitive headwind against bad ones.
The Roscoe lecture was clearly the Governor’s wish to be in line with present government policy and with the run of good figures about the economy in recent months. He praised the decision to relax the fiscal constraints a bit. He agrees that a range of measures is needed to boost productivity as the Chancellor has advocated, which is the way to higher real wages. The most notable omission from the lecture was any mention of high levels of migration, which must be having an impact on wages and the labour market, and is having an impact on public attitudes.