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

The Bank of England has taken a lot of action to tighten money and credit since early last year. As this gets little attention I thought it might be helpful to remind people what it has done:


  1. Increased rates from 0.25% to 0.5%
  2. Cancelled the Term Funding Scheme which allowed banks to borrow at low rates to lend on to the UK economy  (£127bn used by end of scheme in April 2018)
  3. Increased Counter Cyclical Capital Buffer banks have to hold to 1% from November 2018 to reduce bank lending for any given amount of bank capital
  4. Toughened “prudent affordability limits” on home loans
  5. Imposed new tight limits of mortgages above 4.5 times income
  6. Warned against credit card zero interest rate promotions
  7. Required tougher standards for car loans related to future value of vehicle
  8. Warned that Central London office properties were expensive
  9. Set out to “tighten consumer credit conditions”

Given this, as predicted here, it is not surprising the UK economy has slowed. Similar action is not being taken in the USA or the Eurozone. The Eurozone continues with zero interest rates and still more Quantitative easing. The USA is deregulating banks to allow more credit, and undertaking a major fiscal stimulus  though it is raising rates.


  1. Mark B
    June 19, 2018

    Good morning

    Apart from what I see as financial advice, which I be live they should not be giving, I am afraid I have to agree with these policies.

    We have had good growth but I would sooner have lower growth over a long period of time the return to the ‘Boom and Bust’ of Gordon Brown.

    What is wrong is for those on the media and with a political axe to grind is to blame BREXIT for all this. These people need to be reminded that we have had boom and busts whilst in the EU.

    But yes, it is good that our kind host brings these things to our attention.

    1. alan jutson
      June 19, 2018

      Mark B

      I agree, I think Banks and other institutions have been rather too relaxed about letting people borrow far more than they could probably ever afford.
      In reality we have been living in a false boom, because of cheap and extended credit, it simply could not go on forever.
      The question was how to slow it down gradually.

      Kicking the can down the road had to stop at some stage. The fact that we are still growing albeit slowly is actually in my opinion good news.

      Commercial borrowing, certainly for smaller owner companies is usually set against some sort of collateral, be it personal or company assets.

      Printing money is never really the right answer in the longer term.

    2. acorn
      June 19, 2018

      But. Everything to do with Austerity.

      Over the last 5 years expenditure on public services as recorded in WGA has remained flat at around £746 billion. This is because increased expenditure on social protection and health has been offset by lower levels of impairments, for example on the government’s shareholding in Royal Bank of Scotland, and by lower levels of new provisions (as opposed to valuation changes for existing liabilities).

      Over the same period revenue has increased from £621.5 billion to £693.9 billion, primarily as a result of an increase in tax revenue of £69 billion. This means that net expenditure on public services in WGA has decreased by 62% from £128.5 billion to £48.3 billion, mirroring reductions in the current budget deficit from £81.1 billion to £40.1 billion. (Treasury WGA)

      1. acorn
        June 19, 2018

        Whoopee! I got one passed censorship.

        EU-UK financial accounting, is not a strong point on this site. There is a lot of nonsense about a Brexit dividend. Trying here, to avoid the “delete key”, can I simply suggest a read of this Commons Library brief

        Keep in mind that the “public sector receipts” does not include EU payments that go direct to UK private sector entities, which will be close to £2 billion for 2017. Thus yielding a net contribution to the EU of £7 billion.

        1. libertarian
          June 21, 2018


          You try to sell us MMT , you claim that all money is government money and printed into existence . So what is the point of all these other posts, in the light of you telling us we are all stupid for not knowing MMT is the real deal ?

          PS I’m still laughing about how detached from the real world you are

      2. Edward2
        June 19, 2018

        That is very strange way of looking at UK spending statistics.
        Since 2000 state spending has risen every year from 340 billion towards a projected 900 billion by 2020.
        The annual deficit had to be reduced.
        And it has halved with a prediction of continued reduction towards a balanced budget.

      3. Mark B
        June 19, 2018

        So where has all the money gone ?

    3. NickC
      June 19, 2018

      You mean it’s not just Mark Carney protecting his career prospects?? The UK has had more booms’n’busts whilst within the EU than we had for our economy in the period since WW2 prior to entry into the EEC.

  2. Prigger
    June 19, 2018

    Very Good to Excellent!! Though Point 5 should 2.5 to 3.5 times income and should not include any income of a spouse of child-bearing or adoption-age.Point 1 ..increased rates to 0.5 in negligible and, 2 and 3 …I am not qualified to see all the implications but on the surface of it… Good!
    4.Toughened “prudent affordability limits” on home loans. Good!
    5.Imposed new tight limits of mortgages above 4.5 times income See Above
    6.Warned against credit card zero interest rate promotions. It should ban them!
    7.Required tougher standards for car loans related to future value of vehicle. Absolutely Excellent and will hopefully curb a practice bordering on gangsterism and loan-slavery in the sector!
    8.Warned that Central London office properties were expensive. If it wards off future over-development in London then good!
    9.Set out to “tighten consumer credit conditions” These should be tightened immediately before the downturn in the economy which is not due to Brexit but will be blamed on it.

    I agree with the BoE for ONCE. But it should be more proactive in its quest. The EU is heading into deep and long-lasting recession. We must prepare for its break-up. Get out of it pronto and batten down the hatches. When it sinks it will drag down under the waves much of Europe with it. Of course the BoE’s reasoning for its own behaviour is opposite. but what it does is what counts. Well done BoE!!!Out of the mouths of babes and, the BoE by pure coincidence…………..!!!!

  3. Mick
    June 19, 2018

    Off topic
    If this is defeated in the commons and the remoaners thwart the will of the people and stop Brexit then I’m afraid democracy is dead and buried , so your fellow mps had better think very hard before they vote on it and take us back centuries to a Cromwell moment

    1. Hope
      June 19, 2018

      May is going to capitulate to Grieve to leave in name only and buy off leave MPs with a pyrrhic victory about NHS spending.

      1. Denis Cooper
        June 19, 2018

        He complains that she has betrayed him, but he thinks nothing at all of betraying the 33.6 million people who took the trouble to vote in the EU referendum on the government’s unambiguous promise:

        “On Thursday, 23rd June there will be a referendum. It’s your opportunity to decide if the UK remains in the European Union (EU).”

        “The referendum on Thursday, 23 June is your chance to decide if we should remain in or leave the European Union.”

        “This is your decision. The Government will implement what you decide.”

        He had ample opportunity to object to the government making that promise during the Commons debate on the leaflet on April 11th 2016:

        but he said nothing at all then, it is only since his side lost the vote that he has become a devotee of parliamentary sovereignty.

        Indeed as I mentioned a few days ago here:

        he has a track record as an opponent of parliamentary supremacy.

        1. Hope
          June 19, 2018

          Dn now he did not have stand at the last election on the Tory manifesto. He did knowing he was and was gong to consort with remainers to try to stop Brexit. To say oterwise is complete rubbish.

          But what has May done to him and the Lords who acted against govt. and party policy? Nothing, she will not cry in her beer. It is already a complete fudge where JR and other gutless MPs and ministers have not brought May down.

          Why is there a punishment extension and extension to that extension where the UK remains in the customs union and single market for years after we leave, paying billions which May as well as leavers claimed would not happen. May is now conning people to say she is spending the EU fund on the NHS which has already been allocated n her £100 billion, plus add ons and th EU bill cniuesmwhile in the punishment extensions !

      2. Ian wragg
        June 19, 2018

        That won’t wash witb 17.4 million voters.
        Democracy will indeed be dead with Awful consequences.

        1. acorn
          June 19, 2018

          No there won’t be awful consequences. The 17.4 million will just go back to watching Eastenders; Coronation Street and playing the Lottery.

          If they understood anything about the referendum; it was what they were voting against; the known, known, that is, “remain”. They had no idea what they were voting for in the known unknown “leave”. (With apologies to Donald Rumsfeld.)

          1. Edward2
            June 19, 2018

            What a dreadful snobby comment acorn.
            How superior you elite think you are.
            One person one vote thank goodness.

          2. libertarian
            June 21, 2018


            In defence of acorn, there is absolutely nothing elite about him.

        2. Denis Cooper
          June 19, 2018

          I would say 33.6 million, all those who bothered to participate in what they were told would be their democratic decision, irrespective of which way they voted during the referendum to make that decision. It is just as insulting to those who voted to Remain in the EU as it is to those who voted to Leave, some of the former may not mind so much but basically we are all being told that we were stupidly wasting our time because the Right Honourable this and the noble Lord that and Baroness the other who has never been voted into anything know better anyway.

        3. Peter
          June 19, 2018

          The only hope is for somebody else to collapse the government. So that Brexiteers can regroup.

  4. Prigger
    June 19, 2018

    Mrs May taxing us more whatever the excuse would be bad…throwing the money into the blackhole of the non-productive non-profit making NHS will be a national catastrophe ongoing…feeding the habit.

    The government has lost the war against nationalisation.

    The House of Lords & Devolution are sowing the seeds of our destruction,constitutionally and politically.

    We may yet be saved. We need a leader. One usually turns up,in every nation’s darkest hour as if from nowhere.
    We must hope.

    1. Lifelogic
      June 20, 2018

      Indeed. We need to grow the tax base not completely extinguish it. May and Hammond are, as usual, completely wrong.

  5. David Cockburn
    June 19, 2018

    As you say, it is clear that the Bank is taking steps to cool the economy and that is the reason it is slowing a bit. However, the British economy is notoriously susceptible to inflation when employment is high so it may be no bad thing for the Bank to be ahead of the curve for once. Hopefully the government will use the pause to implement supply side steps to increase capacity.

    1. Nig l
      June 19, 2018

      Yes agree especially with household debt levels potentially over heating and commentators starting to talk of another crash. Better a slow soft landing than a sudden hard one.
      One thing that does annoy me is the constant blaming it on Brexit when as JR points out it is nothing of the kind.

    2. A different Simon
      June 19, 2018

      Although the UK’s biggest import from the EU is it’s unemployed , real decent paying (relative to accommodation costs) employment is not high by our standards .

      Many of our citizens are doing (low paid ed)Jobs or multiple (low paid ed)Jobs which have to be supplemented by in-work benefits .

      So much money is being sucked out of the real economy by the finance and real estate sector that demand for goods and services in the real economy has evaporated as people just do not have the money to spend anymore .

      This is not a consequence of consumer confidence or any of the measures J.R. has listed the B.O.E. of taking . Auto-enrolment into pension schemes / compulsory saving for old age has reduced what is available to spend now but the low household savings ratio is also a concern .

      Wage inflation is looking unlikely given the penchant for offshoring and what people can afford to work for elsewhere .

      The problems seem to be on the demand side , not supply side .

    June 19, 2018

    The inference of this article appears to be that Carney is taking policy actions based on political considerations rather than economic considerations. If that is the inference that it’s an inference I recognise myself

    Carney isn’t a central banker but a pro-EU political officer.

    The above shouldn’t come as a great surprise to anyone who’s followed this banker’s career since he arrived in the UK.

    The question is does the remit of the Governor of the Bank of England extend into politics? Well, in the case of Carney the answer to this question is yes it does

    I am sure that once we have a PM who is committed to reclaiming the UK’s sovereignty and independence then people like Carney will be dispensed with and booted into obscurity

    If Labour-EU can create a client state then so can the Tories

  7. Tabulazero
    June 19, 2018

    Not your fault as usual. It’s either the Remoaners, the BoE, Barnier, the Treasury, the BBC… who are to blame.

    1. Anonymous
      June 19, 2018

      As with Mark B I agree with the policies the BofE has taken. What I do disagree with is them not being included in explanations for the slow down.

      Rather, WE are not to blame.

      In spite of all this the catastrophe Osborn predicted has not materialised. I suppose you’re going to tell me it’s Carney’s actions which have prevented it but one would have thought that a loosening on credit (on previous Blairist form) was the way to go in a crisis.

    2. Edward2
      June 19, 2018

      Good to see that you are beginning to see the real reasons behind the performance of the economy.

    3. Andy
      June 19, 2018

      I think you are forgetting the Civil Service, Supreme Court judges and the unelected House of Lords too. They are also all most definitely to blame.

      But Brexiteers are most definitely not to blame for the entirely predictable negative consequences of Brexit. 😉

      1. NickC
        June 20, 2018

        Andy, Remain policies are being pursued by the government as the civil servants, the BBC, the HoL, the LibDems, large numbers of Tory and Labour MPs, all propagandise or impose a Remain outcome on putative government policies (which veer towards Remain policies themselves). Apart from leaving the (existing) EU treaties, everything else is Remain. Don’t like it? Neither do we.

      2. libertarian
        June 21, 2018


        Is one of those people who doesn’t understand that its the politicians, government and civil service that are running things here. Yet his answer to their failure ( which he celebrates) is to have far more of them, in another country, even further detached from day to day reality and to tell us this is a perfect solution to all our problems

    4. Nig l
      June 19, 2018

      Well said, totally correct

  8. Richard1
    June 19, 2018

    The US policy mix is surely the most sensible – tax cuts to be globally competitive and normalisation of interest rates. Pity about the trademark nonsense though – Mrs May should have jumped at the idea of immediate abolition of all tarrifs and subsidies throughout the G7, as proposed by Mr Trump.

    1. Richard1
      June 19, 2018

      Trade War nonsense

      1. Caterpillar
        June 19, 2018

        I don’t think it is meant to be trade war nonsense, it is as the POTUS G7 suggestion of truly free trade – no tariffs, no subsidies, no artificial barriers to locate businesses, no subsidies … I agree PM May should have agreed with this, rather than risking getting stuck in the trade diversionary policy of the EU CU.

  9. Fedupsoutherner
    June 19, 2018

    What more proof is needed that we need to get rid of May and Hammond? Between them they are damaging the UK for their own ends. Please, when is someone going to put us out of our misery and save the Conservative party?

  10. MIke Stallard
    June 19, 2018

    Mr Redwood, I want to ask a couple of pertinent questions here.
    1. How many derivatives used as fractal reserves are in fact worthless? I refer especially to Spanish and Italian banks. Greek and Cypriot banks crashed years ago.
    2. How serious is the national debt of most Western and indeed EU countries? The list has been published on the internet and trillions seem pretty normal.
    3. In the event of another Lehman Bros crisis, how will governments and banks make good? Brexit, of course, in spring next year, could provide that crisis.
    4. How much is the IMF able to step in?

    1. Anonymous
      June 19, 2018

      Well… if we are punished too harshly we will not suffer in isolation.

    2. Alison
      June 19, 2018

      One Christine Lagarde heads the IMF, the lady who produced dire forecasts for the UK during the referendum campaign.
      Recent conversations with Germans showed that there is lots of concern about German government debt, and resentment that Germans are paying to support Greece, Italy etc. instead of repaying German debt. They volunteered these concerns. They also wished they had their powerful Deutschmark back.
      Horst Seehofer yesterday on TV said that he thinks EU countries should be allowed to do more in their home countries (ie rather than working on an EU basis).

      In reply to Mr Ivers below, there’s not much confidence in the economy in many eurozone countries.

      Separately, whatever the vote and the deal with the UK, I can’t see Mrs May as being the right person to lead and galvanize the country in the years ahead. We need somebody with fire, vision, energy and who doesn’t fudge communication.

      1. hans christian ivers
        June 21, 2018


        are you sure you are not mixing apples and peers here?

    3. NickC
      June 19, 2018

      Mike Stallard, Last I read Italian banks have about 16% NPLs – a truly frightening figure. How much of their working capital is worthless derivatives I don’t know. I suspect that governments tend to hide their debt more successfully than (retail) banks, examples being the UK failing to put Network Rail on the PSBR for a decade (2003 – 2013) and the EZ Target2 debts.

  11. hans christian ivers
    June 19, 2018


    when there is confidence in the economy , there is investment and consumption as is the case in the US for the moment and to a lesser extend in Europe.

    When, there is no confidence there is less investment and consumption as is the case in the UK for the moment and this is due to uncertainty of what comes next and in this case it is Brexit and where we are as a nation after March 2019.

    This is pretty straight forward

    1. matthu
      June 19, 2018

      Of course, uncertainty may be a good thing at the moment if the country needs to avoid profligate spending in the run up to Brexit.

      Also, the time for confidence and spending is needed after any deal is reached in order to bring the country back together again … or would it be your contention that we can never be brought back together again?

      By the way, I liked the idea (in The Telegraph) of a number of free ports (tariff and customs free) being established across the north of England and the UK after Brexit which might serve to stimulate the economy quite massively in the north and result in a large Brexit dividend.

      Of course, this would never be permissible within the EU.

    2. NickC
      June 19, 2018

      Hans, EZ consumer confidence has been significantly negative for years. In the last few months it has indeed trickled over zero, but even that has faltered.

      What UK businessmen have told me (ok, a small sample) is it is not Brexit per se, but the uncertainty of government policy towards it. Businesses can work with the WTO deal, for example – they just want to know with certainty that it is the policy.

    3. libertarian
      June 21, 2018


      It might be straightforward if you were correct, but you’re not, and not for the first time your posted opinions are fact free

      The ONS released the latest figures for Gross Fixed Capital Formation (GFCF) which covers investment across the whole economy, public and private sectors, manufacturing, construction, services and extractive industries.

      They showed that contrary to the received wisdom that investors have fled the UK following the Brexit vote, investment grew by 1.1 per cent in the fourth quarter of 2017, to a total of £84.1 billion. Over the course of 2017 it grew by 4 per cent compared with 2016. This was higher than for any other G7 country – with Italy following on 3.7 per cent, France 3.5 per cent, the US 3.2 per cent

      Are you ever going to actually stop posting your opinions and post a fact?

  12. Lifelogic
    June 19, 2018

    Indeed the current bank lending restrictions are absurd and irrational. They are preventing many sensible business investments and expansions. On property lending the rules are often forcing expensive and entirely pointless “red book” valuation to be done every few years. The situation is made even worse by Hammond’s appalling decision to tax landlord interest (twice) (once on the bank and once on the landlord). Thus hitting tenants and effectively taxing profits that are not even being made (hardly sustainable for long). Furthermore his absurdly high stamp duty rates of up to 15% do huge damage to the property market. As does his absurd attacks on Non Doms. His and the courts attacks on the self employed and the gig economy are also hugely damaging.

    We have the opposite policy to the one we actually need. Austerity, higher taxes, expensive energy & more regulations in the productive sector but endless bloated and incompetent waste in the state sector. Where, with pensions included the state are paid about 50% more for producing very little of any real value.

    Fire Hammond and Carney or get them both to have a brain transplant. Kwasi Kwarteng is far brighter and more sensible than his boss. But then most people are. We are taxed far too much already for almost nothing of value in return.

  13. Andy
    June 19, 2018

    The economy is dreadful – and there are 6 main reasons for this:

    1 – Brexit
    2 – Brexit
    3 – Brexit
    4 – Brexit
    5 – Tory infighting
    6 – Brexit

    But I understand it is so dreadful that you have to blame some elsewhere for it.

    Also, you should legalise cannabis. Use the tax revenue to fund your Brexit.

    1. NickC
      June 19, 2018

      Andy, The economy is only as “dreadful” as you imagine because we are still in the EU. And there is good reason to suppose that we won’t get Brexit for at least another 4 years, if ever.

      The reality is the only EU policy we appear to be actually leaving is the CAP. For every other EU treaty policy I am aware of, Mrs May is capitulating just as you have demanded.

      This is a Remain shambles, and we Leaves don’t like it.

    2. Ian wragg
      June 19, 2018

      Grow up you etc
      Never a good word to say about Britain.
      We will prosper because some of us have a positive view of our fellow citizens.

      1. Andy
        June 19, 2018

        Not true. I have plenty of good words to say about Britain. I just have no good words to say about your car crash Brexit.

        You mistakenly assume that the entirely predictable Brexit mess – which just 28% of the population voted for – is the same as Britain.

        Not so. Brexit is the most unBritish thing this country has ever done.

        1. Edward2
          June 19, 2018

          Gosh 28% now is it?
          Going down.
          Soon you will be claiming it is zero.

        2. mike fowle
          June 20, 2018

          Andy: “Not so. Brexit is the most unBritish thing this country has ever done”

          In that sentence Andy you have shown just how profoundly you do not understand the British character.

        3. keith
          June 20, 2018

          And an even lower percentage voted to remain.

        4. NickC
          June 20, 2018

          Andy, The mess we are in is a Remain mess – as Remain politicians and media manipulate a weak minority government (led by the openly Remain PM and Chancellor) into adopting Remain policies. In April 2019 we will have left the EU treaties and the CAP only. We will remain subject to the EU in everything else for years to come, some in perpetuity.

    3. Anonymous
      June 19, 2018

      How convenient.

      Brexit was responsible for the credit crunch too, I suppose.

    4. a-tracy
      June 19, 2018

      As far as I see the only reason against legalising cannabis is the health problems it inflicts on those that get addicted, mental health problems, young men with strokes, stealing to fund the lifestyle to afford the drugs, increased use of NHS services so I don’t think we should be as casual are you are about legalising a product that is known already to affect well-being.

      1. Andy
        June 19, 2018

        Lots of things can affect wellbeing. Smoking, drinking, junk food, computer games, driving, horse riding, rugby, jumping out of planes. All sorts.

        The job of government is not to ban stuff that may be harmful. It is to regulate it to ensure it is as safe as can reasonably be.

        1. a-tracy
          June 19, 2018

          At the moment people are protected, the minute the government accepts drug use as legal we will open up claims against the State for the resultant Strokes and mental health issues that we know they cause, I know of young men under 30 having strokes with years of problems afterwards, be careful what you wish for you just might get it.

      2. alan jutson
        June 19, 2018


        There are a number of reports that suggest cannibis oil helps some of those with MS and Arthritis, unfortunately supervised Clinical trails the type of which can be verified by Government, appear to be thin on the ground, may I suggest such trials are completed properly before a decision is made that may keep too many in discomfort and pain, rather than them getting some relief.

        Scientists are now finding more and more medicines are being able to be manufactured from natural resources such as plants, indeed many cancer fighting drugs are just some examples.

        I do not support those who use any products to get the so called “High effect”

        1. a-tracy
          June 22, 2018

          alan, just this last week my friends Mum took ill 15 mins away from a hospital, she had a bowel cancer tumour that was to be operated on soon as it was in situ. It perforated her bowl distending her stomach to that of a heavily pregnant woman. It took four hours for an ambulance to respond (no paramedic) this was from 4pm on a Thursday. She was given no pain relief and my friends enduring memory of the last hours of her Mums life was a woman frightened of dying and spent in agony, even sicking up a paracetamol drink they tried to give her as the only advice from emergency services for 3 of those hours, a volunteer attender came out but could only offer her oxygen.

          I don’t want to see anyone in this Country in pain and the properly licenced and regulated pharmacy companies need to get on to this oil if it is truly a solution to pain BUT only if it doesn’t result in Strokes and mental health issues.

  14. Denis Cooper
    June 19, 2018

    I will not be surprised if it turns out that growth of the UK economy has been less this year than last year because declining growth has been the medium term trend starting around 2014 or earlier, from a time when the EU referendum was still no more a glimmer in the eyes of opponents of EU membership.

    As can be seen from a chart such as this:

    2014 3.1%
    2015 2.3%
    2016 1.9%
    2017 1.8%

    On the other hand it would not have been surprising if that medium term trend had run its course and growth has started to pick up.

    There is something on that chart which resembles the worst Project Fear forecasts of the consequences of a vote to leave the EU, but it took place in 2008 and 2009:

    2oo7 2.4%
    2008 -0.5%
    2009 – 4.2%

    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.

    So, JR, why has the government not been pointing this out, why has it allowed the false narrative of a shrinking economy to become established along with all those other false narratives which the Remoaners have successfully implanted?

    1. Lifelogic
      June 19, 2018

      I too see a lack of confidence largely caused by banking restriction, expensive greencrap energy, absurdly high, irrational and complex taxes. Then made worse by a visionless, broken compass and weak PM with Corbyn and the SNP waiting in the wings.

      Is it any wonder that confidence is low?

    2. Mark B
      June 20, 2018

      Denis, good post and an interest site.

      I also notice that our International GDP Spending power also continues to fall, whilst in the EU.

      The thing is, post BREXIT, will we have the right people in place to reverse this trend. A little voice tells me not. Ergo the problem lays elsewhere.

  15. Lifelogic
    June 19, 2018

    So the May government are not not just increasing taxes massively but actually announcing a policy of further increases in taxes to give to the basket case NHS so they can waste it.

    The Conservatives are nothing if not the party of low taxation, efficient economic management and low taxation. Not that they have been any of these things for many years. We still have a deficit of 2% of GDP.

    The trouble is raising tax rates from the absurdly high rates Osborne & Hammond have given us just kills the tax base and raises less revenue.

  16. Anonymous
    June 19, 2018

    House sales slowing – nothing to do with interest rates being raised

    Housing sales slowing (2) – nothing to do with new affordability limits

    Slow down in shopping – nothing to do with tighter credit

    Slow down in car sales – nothing to do with tightening of car loans

    All because of Brexit. I see.

    1. Lifelogic
      June 19, 2018

      Yes to do with absurd stamp duty rates and other absurd tax hikes, over tight credit rules and lack of confidence in May and Hammond to deliver a real Brexit (or indeed anything sensible) and the appalling risk of Corbyn/SNP

  17. Tabulazero
    June 19, 2018

    So basically, the BoE is worried about a credit bubble growing on the back of the UK’s historically low rates and is doing what it can to deflate it.

    Wouldn’t this be what you expect a Central Bank to do ?

  18. Sir Joe Soap
    June 19, 2018

    Added to that the government has discouraged investment in the UK by

    1/ our PM addressing a number of world leaders as would a schoolmistress,
    2/ both PM and Chancellor discouraging investment in UK property by increasing stamp duty
    3/ government handling negotiations with the EU in a cack-handed unclear way

    1. Lifelogic
      June 19, 2018

      Not just absurd stamp duty rates but double taxation of landlord interests too and very tight bank lending rules. We clearly have idiots in charge.

  19. Sakara Gold
    June 19, 2018

    This discussion may shortly become academic – Donald Trump has initiated a trade tariffs war with the rest of the world. I’m not sure of the effect that increased global tariffs will have on the algorithims that quantitative and other types of hedge funds use to control risks on their (highly leveraged) market positions.

    I suspect that the stock market will suffer a correction as the big institutions analyse the multiple effects of a protectionist trade war and reduce their leverage. The markets hate uncertainty; Mr Trump, in his attempt to protect American jobs, may have initiated the next great depression.

    Maybe the BoE has seen this coming and this is why it wishes to reduce the nation’s credit exposure.

  20. ChrisS
    June 19, 2018

    There is a factor you don’t mention that has had an even greater effect : Taxation.

    Like it or not, the housing market drives the UK economy.

    The current penal rates of Stamp Duty, Capital Gains Tax, restrictions on mortgage lending and 20% VAT on home improvements, such as building an extension, are all working together to depress the housing market. This is severely damaging to many sectors of the economy from the building trade to retailers selling products such as kitchens, bathrooms, furniture and appliances.

    It even impacts on the car industry. As if Hammond has not done enough damage to the motor trade by his ridiculous VED reforms and the diesel debacle, a surprising number of people moving house, whether they are retiring and trading down or moving upwards by capital raised with a new mortgage, divert a small proportion of the proceeds to buy a new or used car. If they don’t move, that does not happen.

    Reply I have often pointed out what these higher taxes have done

    1. Lifelogic
      June 19, 2018

      Exactly Hammond must go or get a new brain or compass. He is an economic illiterate.

      Also the way to get more money into health is to encourage people to pay or go privately not the complete reverse that we get from Hammond with his 20% hike in IPT and abolition of tax relief for medical insurance.

  21. Stred
    June 19, 2018

    Net migration dropped by a third approx. As about half of growth is from migration, which is why big business wants more, we have to expect lower growth. Growth per head is a more realistic figure.

    1. Ian wragg
      June 19, 2018

      Take out immigration and government borrowing there is no growth really.
      The government likes immigrants as they increase consumption. Never mind the negative consequences GDP is the be all and end all.

  22. Steve Reay
    June 19, 2018

    Funding for lending was only stealing money from savers anyway.Good riddance to it.

    1. Caterpillar
      June 19, 2018

      And (allegedly) aided banks’ profitability.

  23. Michael
    June 19, 2018

    It underlines the point that the huge sum of 39 billion must not be paid to Brussels without us receiving something of at least equivalent value in return. Political promises are not good enough to justify such a big payment. We need the arrangement to be firm and free of fudge.

    1. Denis Cooper
      June 19, 2018

      Once again the government has failed to counter the false propaganda about these payments and allowed the misleading Remoaner narrative to prevail.

      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.

      I find I did write on October 7th 2016:

      “If Theresa May wants a strong starting position for the EU negotiations then she needs to put the government propaganda apparatus into reverse gear on Project Fear … ”

      But she did not do that, and now we have Remoaners saying “The government has accepted …”, “… on the government’s own figures … ” etc etc.

      Whether or not it is justified David Davis has acquired a reputation for laziness but I suspect it goes beyond that, possibly to bad advice given to him by Olly Robbins when he was the senior civil servant in the new department.

      1. alan jutson
        June 19, 2018


        Agree the Governments PR on almost everything has been nothing short of diabolical

  24. Edward2
    June 19, 2018

    Another negative created by the Government is the recent attack on car ownership, with much stricter MOT tests, an anti diesel policy and now the banning of the sale of all combustion engined vehicles by a certain date.
    All this on top of stricter conditions on obtaining loans to purchase vehicles.
    This has led to a dramatic drop in vehicle sales.

  25. John E
    June 19, 2018

    You are being disingenuous in disregarding the Fed interest rate rises.

    Our problem is the Government, not the Bank. They can’t raise interest rates here because the Government would quickly be unable to afford to service it’s debts.

  26. Newmania
    June 19, 2018

    That is absurd. Interest rates were supposed to be back at 2% plus , by now , thanks to Brexit they have had to held at low levels , the economy slowed down quickly after the referendum and the Bank acted to flood the economy with credit as did the treasury , by letting borrowing rip. This was due to every indicator showing we were going into recession , some slight moderation to this picture is the ;least we can expect and if the economy tanks at this level then we are in serious serious trouble
    Its all very well just inventing ” Another point of view” but if we are to abandon information facts and knowledge entirely then why bother with any of it .
    In fact why am I bothering to deliver products to my clients to day , why should I not tell them that their opinion( that they have as yet go nothing) is just a contestable remainer myth . The big bag of nothing in the warehouse is just a point of view

    We cannot go on with this fairy tale “debate”.

    1. Edward2
      June 19, 2018

      You prefer high rates of interest.
      How odd.

    2. Denis Cooper
      June 19, 2018

      “… the economy slowed down quickly after the referendum … ”

      Did it? Where is your evidence for that assertion?

    3. Anonymous
      June 19, 2018

      Interest went low long before Brexit and whilst in the EU.

      1. Newmania
        June 21, 2018

        Yes and normalisation was schedule d to have been completed before now which means at least 2% . That was cancelled due to Brexit
        The problem is one cannot spend ones life chasing down these lies and this is hat they rely on , the waters are muddy its just a shouting match

        This is why Brexit is a threat to basic Renaissance and Enlightenment civilization , it is almost tribal in the way that magic replaces logic and a commonality of truths

        1. libertarian
          June 21, 2018


          You are totally wrong

          The 2% “target” has been in place for over 7 years now. Every quarter the BoE have a different excuse as to why they can’t raise interest rates. These excuses have been pumped out well before the referendum.

          Why are they doing this? Because the government are terrified of raising interest rates thats why

  27. jack Snell
    June 19, 2018

    Don’t know how you can say it has nothing to do with Brexit- everything has to do with brexit now- the Bank is only being prudent in it’s actions and in it’s policies- they see ahead very clearly the chaos coming down the it’s time to rein in everything until we see exactly where we’re going..there is much too much uncertainty out there with Trump on the rampage, economies failing in South America and now Mrs Merkel in danger over the EU borders and the migrant problem. Suffice to say that Brexit has slipped way down the agenda for the upcoming EU Council talks 28th June..the way they see it if the UK political class cannot sort out their mess then what is the point? We’ll probably hear more when Barnier speaks in Vienna this morning. In the meantime we should hold off having a go at the BoE- they are as baffled as anyone else

  28. agricola
    June 19, 2018

    The vagueries of the BoE are a mere bagatelle compared to the way that Brexit is being handled.
    Barnier insults our intelligence and sells his EU citizens short. I feel no sense of guilt in likening him to Napoleon or Charles de Gaulle. There is only one way to deal with bullies and that is overwhelming confrontation. Following the threats of Galileo exclusion, exclusion from any security cooperation, and a ban on EASA and the CAA discussing the implications of a no deal conclusion to these talks, it should be pointed out to him that failure in any of these areas would be to the detriment of the EU, end of story. The fact that he sees Brexit as a threat to the continuance of the EU is his problem. The EU is a threat to the continuance of the EU.

    We now need a hard nosed Trump like approach to doing a deal, not a continuance of the school of political diplomacy that to date has only gained us insult. Insult encouraged by our own fifth column in the Lords and H o C, for whom I have nothing but contempt. A trade deal on goods and services or WTO rules is success both financially and politically. Failure is a cobbled together compromise that leaves us half in half out, but still paying a fortune for the privilege , leading to political instability in the UK. Ensure we get it right.

  29. Andy
    June 19, 2018

    Incidentally – I understand that the Brexit backing Tory pensioners are bringing in a new migration policy soon. An updated plan from those who brought us the hostile environment.

    Perhaps they could implement Donald Trump’s preferred new method of dealing with migrant families. By that I mean splitting them up and keeping the kids in cages.

    Or maybe it’ll be more like Italy’s hard right method. Leaving more than a hundred children and pregnant women starving on an unsuitable ship at sea for a week.

    Seeing that compassion and empathy are entirely lost on the mob incharge at Westminster, maybe our government will also move on from just being significantly deranged to being full on evil too.

    1. Edward2
      June 19, 2018

      Depends if you believe in the rule of law Andy.
      You are confusing legal immigration with illegal migration.

      1. Fedupsoutherner
        June 19, 2018

        Edward, exactly. There is a big difference between legal and illegal.

    2. Gawd!!
      June 19, 2018

      Do you believe EVERYTHING that is said about people with whom you disagree politically? ( Trump “preferred new method” etc..) Why on earth don’t you find out for yourself!!!??? Don’t let the revelation stop you from being a liberal-leftie but do realise you are being lied to by persons you no doubt respect. Your own side, in politics, sometimes tells the most terrible lies….lies they wish people to believe for they are dishonest.

      1. Ed Mahony
        June 19, 2018

        ‘Don’t let the revelation stop you from being a liberal-leftie’

        – strawman to justify what loads of Republicans in the US and Conservatives here in the UK are condemning as wrong / evil.

        1. libertarian
          June 21, 2018

          Ed Mahony

          Whoops you missed the news that this scheme was in place & justified while Obama was President.

          Gawd is right, go and do some research and stop believing everything the media feed you that agrees with your point of view

          ( ps , I dont agree with the scheme, but then I’m not the US supreme Court who in fact implemented it)

      2. Ed Mahony
        June 20, 2018

        Mr Redwood,
        Apologies for going on. But i think Mr Trump is bad for America, the UK and British Conservatism. He’s going to make it a lot more difficult for the Tories to do well in the next elections if we’re seen too close to him.

    3. Ed Mahony
      June 19, 2018

      And the USA and the UK can be GREAT. But not through this kind of Trumpism. But, essentially, through changing the culture – 1. Instilling sense of work ethic 2. Sense of duty towards others 3. Sense of patriotism 4. the importance of looking after oneself physically and mentally 5. The importance of the family. And so on. This is the only way we can radically improve our country in the long-term. To make it truly great. Anything else is just short-term trickery, and will only make the USA and our country worse.

    4. Chris
      June 19, 2018

      Essential viewing with regard to the illegal immigration into the US is on Fox News Insider website, Laura Ingraham’s programme The Angle. “Ingraham: Trump Enforcing Immigration Laws Long ‘Ignored and Unenforced’ . Ten minutes of excellent information.

    5. a-tracy
      June 19, 2018

      If kids are held alone in cages that is deplorable, but I read on twitter yesterday it was a fake picture from anti-trump demonstrators. Then a few years ago the democrats were saying just because your child gets across the border illegally doesn’t mean they can stay. Are these people evil too Andy?

      1. a-tracy
        June 19, 2018

        If these detention centres are indeed cages where children are expected to stay, eat and sleep then American people near these centres must offer to foster the children and put a roof over their heads and look after them whilst their parents are incarcerated, there must be a way for people to help in a positive way.

      2. Ed Mahony
        June 20, 2018

        No offence intended to anyone. Best wishes.

  30. Adam
    June 19, 2018

    Sensible controls, such as on bank lending & home purchase mortgages would prevent the onset of what becomes rampant inflation. However, the Bank of England & our economy would be likely to perform better without Mark Carney, who presents signs of being misguided & incompetent.

  31. David D
    June 19, 2018

    Why is the BofE giving commentary on property values? Why are they dictating what restrictions are made to bank and vehicle loans? They should not be involved in commercial agreements between banks and their customers. What they should do is make it perfectly clear that no bailouts will be given to any bank ever. Also that any bank executive is responsible for their actions, just as the borrower is, and therefore criminally liable in the event of problem. Carting a few bank managers off to prison would do more to control bank lending than a million new rules. Given the absolute power of banks over the government I’m fully aware this will never happen by the way.

  32. Ghost of JB
    June 19, 2018

    Whilst there are undoubtedly factors causing the economy to stutter, your point that much of the economic news is a direct consequence of government policy is well made.

  33. Bob
    June 19, 2018

    The Tory govt are embarked on a course plotted out for them by Labour and the BBC.
    Her latest announcement to raise taxes will do nothing to stimulate the economy.
    Stamp duty on buying property is prohibitive and prevents people from moving home and all the refurbishment work that is associated with it.

    Heaven help anyone who moves to London and then decides they made a mistake. The stamp duty will likely cost forty or fifty grand, and that’s a sunk cost they cannot recover if they decide to sell up and move out again.

    The country is being taxed to a standstill.

    As Ronald Reagan observed

    ” If it moves, tax it, if it keeps moving, regulate it and if it stops moving, subsidise it.”

  34. Juiliet
    June 19, 2018

    BoE is dancing to the EU tune, talking down the country is affecting the economy and investors, negativity is steering us into a mini recession to halt Brexit and make UK less attractive.

  35. Derek Henry
    June 19, 2018

    Raising interest rates are a fiscal stimulas John. If you don’t believe me forget about theory look at the real data.

    Pick a graph any graph after 7 US rate hikes. Any graph you like you can choose.

    Increasing interest rates does not fight inflation it causes it and it does not make a currency stronger it weakens it.

    Why is that ? You need to look at the Macro not the Micro.

    Because all lese equal rate hikes are price hikes. The increased cost of credit gets passed on and people always forget about the interest income channels.

    Interest on Treasury Securities, $188.3 bln, up $15.2 bln, growing at 8.8% y-o-y. This is the fastest growing item of the major expenditures and has one of the highest y-o-y increases. This is due to higher rates

    Increasing interest rates increases those payments. Raising rates supports the economy via the interest income channels, and the higher the debt to gdp ratio the larger the effect.

    Paying interest is like basic income for people who already have $’s.

    It’s just another thing economists have back to front and upside down.

  36. Derek Henry
    June 19, 2018

    Let’s put the theory to the test aginst the real data.

    If increasing interest rates fights inflation and makes the currency stronger then when the FED first sarted hiking in Dec 2015 you would have…….

    Shorted GBP/USD @ 1.2

    Shorted EUR/USD @ 1.06

    Long USD/CAD @ 1.45

    Long USD/JPY @ 1.21

    Shorted Gold @ 1055

    You would be in the poor house. Bankrupt.

    Interest rate hikes cause inflation and thus weaken a currency as they are price hikes and a fiscal stiulas via the interest income channels.

    The real data does not back up the theory. How I make my living.

    In Dec 2015 the US inflation rate was near 0%.

    7 US rate hikes later it’s near 3%

    No wonder the country is in the mess it is in when the BOE clearly don’t know what they are doing. Which suits me because I make a fortune.

    1. libertarian
      June 21, 2018

      Derek H

      Make your mind up, you told us that the government have all the money and they create it whenever they want . Yeh of course you made a fortune trading….

  37. Derek Henry
    June 19, 2018

    You need to phone the BOE and quick John and tell them raising interest rates does the exact opposite of what they say they do.

  38. a-tracy
    June 19, 2018

    John, in 2012 George Osborne reduced the rate of interest charged on the loan to Ireland to 3.5% so why are student loans for our English children charged 6.1%?

    2. Why was the interest rate dropped saving Ireland £7.6 million a year in 2012 alone (the Journal) when I’m frequently told on this blog how brilliantly Ireland are doing and are held up as doing better than the UK, I think I read they grew 3.5% last year. They are also not repaying the capital – why? The RUK needs the money, especially Northern Ireland.

    3. You need to consider the money taken out of free circulation by the Workplace Pension savings, now I’m not saying there is anything wrong with people saving for their own pension (even though they were told that’s why they and their employer were paying 25% national insurance each year) but the 5% out of the money bowl isn’t there for spending any longer.

    4. When money slurps out of the UK in benefits to other Countries it is not retained in the UK for economic boosts here, just how much went out of the UK in Working Tax Credits and Child Tax Credits last year, it must be big or it wouldn’t be such a big deal for the EU to have ended it to persuade the UK to stay in the EU in 2016.

  39. Eh?
    June 19, 2018

    I’ve never heard a government minister of any party in any country ever speak openly of “speeding up ” clinical trials of drugs. There is process, scientific process.

    But worse, much worse, I have never heard of any MP in anyone’s Parliament or even the appointed Court Jester in a Curia Regis speak as Mr Jarvid, Home Secretary MP of all posts (!) did today in Parliament today. He stated clearly that his notions on the public usage of an illegal drug should be enacted “speedily” to circumvent ” legal challenges”

    Of course he must go. He has invalidated his position as a lawmaker never mind a Home Secretary. The law is there to be upheld!

    1. graham1946
      June 19, 2018

      As regards the case of the epileptic children there is no need to hurry trials of the cannabis oil part of their drugs – it is already done and is legal in a number of countries. What is the point of re-inventing the wheel? Our government just need to see the reports and legalise it here also so our children can have the best treatment as well. I suspect the real reason is cost – I think it is about £400 per month per child.

      As regards recreational use, I clearly heard him say there would be no change in the law.

  40. Denis Cooper
    June 19, 2018

    It’s excellent news that innocent people living in this country will no longer be exposed to the risk of arbitrary arrest and summary deportation under EU Arrest Warrants. Some of us have fought against that vile system since its very inception. Of course we know that Theresa May loves it, but luckily in its stupidity and spite the EU is saying that it will not be possible for us to remain part of it, so she will just have to get over that one.

    “European Arrest Warrant: EU demands deal with Britain end after Brexit”

    There’s an interesting table in that article showing how the UK issues very few warrants compared to the number it receives, now over 14,000.

    1. Edward2
      June 19, 2018

      Totally agree Denis.
      The most dreadful system of arbitrary arrest and deportation of UK citizens without any proper prior scrutiny by UK courts.
      To think centuries ago we created the Magna Carta and habeus corpus and the right to jury trials, to stop powerful elites threatening the ordinary citizen.

    2. Bob
      June 19, 2018

      @Denis Cooper
      Good news.
      UK authorities abuse the EAW in the same way they abuse anti terror legislation to repress law abiding citizens.

    3. Norman
      June 19, 2018

      The smugness of M. Barnier was palpable, I thought. He was enjoying every minute of it, as he said ‘no’, and proceeded to lecture us. I trust the British people can see the spirit of this organization, even if some of our politicians can’t. Please make sure you get the job done soon, Teresa – and no messing, either!

  41. Anonymous
    June 19, 2018

    The war on drugs is not lost. So few take cannabis compared to alcohol. How quickly this medicinal issue was turned into a campaign to legalise pot… by a leading Remainer.

    Sorry to go ot.

    1. Bob
      June 19, 2018


      “How quickly this medicinal issue was turned into a campaign to legalise pot”

      Yes, it makes you wonder whether there’s an agenda going on here…

      1. Prigger
        June 19, 2018

        The House of Lords should resign en masse before a democratic government is established in Moscow. The clock is ticking my lovelies!

  42. DUNCAN
    June 19, 2018

    Why are we having to bend to the will of Dominic Grieve?

    Why is this person afforded so much leverage in the Commons regarding Brexit legislation?

    Leave won the vote and we face the prospect of Remain winning the war. Is there anyone in my party that will stand up to the Remain bullies in the Tory party?

    It isn’t just Carney, Hammond and Heywood we have to contend with but a fifth column right at the heart of our party

    1. Rien Huizer
      June 20, 2018

      According to ebeything one can read, the ERG is only one fifth of the parliamentary party. Maybe one should call that the fifth column? Imo associations with war time themes are utterly inappropriate when the national interest is at stake – in peacetime.

  43. Rien Huizer
    June 19, 2018

    Mr Redwood,

    The Bank’s policy is entirely appropriate for an independent central bank and in this case probably not what politicians would like to see. Comparisons with the EU and the US are wrong. Both are very large, predominantly autarchic systems, the US a superpower that can truly print its own money, the other blessed with a very large external surplus and steadily improving public finances. In addition, the UK is facing a potentially very large external shock (the loss of EU connections before a replacement is found) whicis not the right thing to do for a country with high levels of government debt (even if held by the CB) and a persistent external deficit. Under your proposals the UK would be at the mercy of market predators.

  44. Monty
    June 19, 2018

    I note that Merkel has signed up to some closer integration measures with Macron today. A common EU Asylum Authority will be established to ‘harmonise’ asylum policies across the EU. And the Eurozone will have a common budget, initially thought to cover about 1 percent of Eurozone GDP, to start with, with permanent taxation powers. Within 3 years. According to Deutsche Welle, dissenting national governments will be forced into line.

  45. Ron Olden
    June 20, 2018

    I find the final paragraphs of this post odd.

    Since 2015 the US Federal Reserve has raised it’s Federal funds rate from 0.5% to 2% and has indicated that there will be another two rises by the end of 2018.

    It’s even talking about reversing it’s ‘Quantitative Easing’ (QE) i.e start SELLING bonds into the market.

    The Bank of Canada is at 1.25% and has warned the markets to expect early further rises.

    The Australian Central Bank has rates at 1.5%.

    The UK however has the same 0.5% rate it had in 2015 and the consensus now appears to be that Base Rate will reach no more than 0.75% (with an outside chance of 1%) by the end of the year.

    Carney however has even said that he’ll CUT rates if the situation requires.

    The ECB has also recently announced the end of its’ QE Program by the end of this year. And in any case, who cares that the EU has 0% interests rates? If their economy is in that state that’s their problem.

    The Bank of England sets interest rates and determines monetary policy for the UK not the EU. That’s why we’re not in the Euro. And we set fiscal policy for ourselves. Not to copy what Donald Trump is doing.

    Deregulating banks is also all well and good, but they have to have adequate capital ratios
    and sound loan books which can withstand economic shocks. Otherwise we’ll end up back where we were in 2008, and the taxpayer will have to bail them out again.

    The UKs monetary stance is fine as it is. And there’s no case whatsoever for a ‘fiscal stimulus’, (ie borrow yet more vast sums of money and leave the bill to today’s young people to wrestle with).

    We’ve ripped off the next generations enough as it is.

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