Lessons for the Bank of England from the ERM, the banking crash and Brexit

I am reproducing this article which was recently posted on CapX in co-operation with the Centre for Policy Studies:

There is no such thing as an Independent Central Bank. They are all the creatures of the states that own them. To those who thought otherwise the virus is changing the reality and rhetoric. Central Banks and treasuries are working together to try to offset the damage lock down and closures are doing to economies.

In some parts of the world this is nothing new or unusual. The People’s Bank of China proudly proclaims that it follows policies to promote the wider economic goals of President Xi. They set out how they work in harmony with the government, and how monetary and fiscal policy combine to deliver the aims of the state. In the USA the Fed has twin objectives for inflation and growth, and understands it needs to work with the Executive government and set its monetary policy into the general economic policy framework.

Any dictator ensures the central bank bends to his will and may appoint a friend or family member to ensure it does. In some of the democracies there has been a myth in recent decades that their central banks are independent. This is allied to the view that a small team of dedicated officials are better equipped to make crucial decisions about interest rates, money and credit than elected politicians. This can elide into a view that they are going to get these judgements right. As a result the officials are in various ways placed outside the normal political exchanges that characterise a lively democracy. Whilst Oppositions can debate the conduct of economic policy, the position on tax and spend and all the things the government does, there are attempts to put banking, credit and interest rates off limit from full democratic scrutiny on the grounds these are “technical”. This view has been particularly prevelant in the EU, where the idea of so-called central bank independence was incorporated into the Treaties and was a requirement of the Euro scheme. It has worked out rather differently in practice.

It is true that a democratic government can create a so-called independent Bank for a period. The independence lasts for as long as the central bank pleases the government, for as long as no other overriding policy issue arises which takes priority, and for as long as the opposition parties go along with it. Maybe the closest we have seen to an independent central bank was the German Bundesbank in the post war period. It did a good job at allowing decent growth whilst keeping inflation low. It attracted cross party support, so it appeared that it was indeed independent. Two issues then came to the fore in the 1990s which revealed the underlying reality.

Even the Bundesbank was not independent when it mattered

The first was the merger of East and West Germany. The government wanted an early amalgamation of the West German DM with the Ostmark. The Central Bank warned of the dangers given the large divergencies in living standards, productivity levels and general performance, but they were overruled. They then argued for a lower valuation of the Ostmark to the DM for the takeover, but also lost that. As a result German economic policy was badly disrupted for a period, with mass migration of labour to the West, and a big build up of state debts to subsidise East Germany. East Germany could not compete successfully at the chosen exchange rate, so suffered high unemployment and needed cash transfers from the West. The Bank had offered good economic advice, but the political imperative was different.

Subsequently the German government decided it wanted to join the Euro. This meant the abolition of the domestic currency which had been developed and burnished so successfully by the Central Bank. Again there was no point in the Central Bank objecting. The German Central Bank was effectively abolished as a so-called independent body with its main powers transferred to the ECB without a fight.

How independent was the Bank of England?

In the UK so-called independence was claimed by the Labour government first elected in 1997 . The government changed the Bank’s Statutes and argued they had made the Bank independent. The reality was very different. Gordon Brown as Chancellor thought there was a Labour problem with the City. He feared there was always the danger that a Labour government would once again lose the confidence of markets. The 1945 and 1966 Labour governments had both been through the trauma of devaluations with required austerity policies to follow. The markets had forced a change of economic policy on the 1974-9 Labour government, including a trip to the IMF to borrow more with onerous policy conditions. Gordon Brown thought that the spin of a more independent Bank would reassure and make such economic disasters less likely. He invented a very lopsided and limited view of what an independent Bank might be like. The Bank of England was shorn of powers to manage and raise the state debt in the markets. It lost its powers to regulate commercial banks, crucial to the pursuit of a successful monetary policy. Arguably the loss of these considerable powers and the knowledge of markets they bestow was an important contributory factor in the poor decision taking during the banking crisis in 2007-9.

The Bank was given more control over setting interest rates, so it became a large organisation revolving around a Committee which mixed full time insiders and outside part time contributors which met monthly. Even this power was less than complete. There were probably plenty of contacts between the Treasury and the Bank behind the scenes so the Bank would be aware of the views of the government on monetary matters. On one occasion when the Chancellor probably feared a rise in rates he did not want, he decided to change the remit of the Monetary Policy Committee. He shifted the inflation target from the more buoyant RPI to the more restrained CPI so there was less excuse to hike rates.

When the banking crisis was at its height with money too tight and commercial banks in great distress, the leading Finance Ministers of the world including the UK Chancellor of the Exchequer agreed a concerted move to stabilise markets by all cutting interest rates together. In order to preserve the fiction of independence the UK Monetary Policy Committee hastily put together a meeting out of its usual cycle to agree spontaneously and” independently” to cut the rates in the way Finance Ministers wanted. The Finance Ministers were on that occasion right, and they effectively overruled so-called independent Banks as they had to do.

Today we see welcome collaboration and joint working between governments and central banks

No-one can have watched the amazing work of the Fed, and of some of the other leading advanced country Central banks in the last few weeks without recognising that they are now rightly working closely with their governments on joint monetary and fiscal packages . They are trying to offset the huge hit to incomes and output from the shut downs designed to counter the virus. It is time to call time on the notion of an independent central bank. It is time to welcome a new era of open collaboration between central banks and finance ministries, serving the same state.

The very architecture of central banks tells you they cannot be truly independent. Heads of central Banks are government appointments, usually chosen by the President/Prime Minister or by the Finance Minister. Some elected Assemblies have rights to confirm or reject the appointment, and to cross examine incumbents on their policies. No Parliament or Senate has the right to select and appoint against the wishes of the government. If there is an interest rate setting Committee, that too usually has appointees chosen by government. Central banks operate under a legislative framework set by the governing majority in the legislature.

What the legislature can support, it can also amend. In the UK the so-called independent central bank suffered surgery by legislation when a more independent rate setting Committee was established. There was further legislative change at the next change of government, with some powers being restored and the framework being amended. In some democracies central bank Governors are changed when there is tension with the government. Both India and Turkey have seen changes of Governor to get their Banks more into line with the strong minded governments running those countries.

The doctrine of central bank infallibility 

The idea of independence is based on the common fallacy that rule by technocrats is preferable to rule by elected politicians because they know the answers to how their areas should be run. Why not leave running banks, money and credit to bankers? And leave running health policy to medics, the criminal justice system to lawyers and the education system to teachers? After all, they are qualified, know what they are doing, and will not “play politics” with the great services they are involved with. The rule of the technocrat is particularly favoured in the EU, where the demands for evidence based policy produced by specialists is often most developed.

There are several main problems with this viewpoint. The first is the assumption that all bankers will decide on the same answer for any given banking problem, or all lawyers will have just one view of what the law is , or that all medics will agree on what is the correct treatment for difficult diseases. The professions have as many arguments about what is the right course of action as politicians have. There has to be some way of concluding these rows to turn opinions into policy.

The second is the assumption that experts will always be better at making right decisions than generalists charged with making decisions in the public interest. The elected Ministers have the advantage that they can call on any expertise they wish without themselves usually having any commitment to one professional faction or view over another. They can also make decisions which balance the best technical answers with the wider impact these may have on society, and can see the interplay between narrow professional fields and the wider public interest. There may be a conflict of professional advice. In the current crisis the best remedies proposed by economists for prosperity may be very different from the answers favoured by health experts to deal with the virus. 

The third is that so called experts have a right to be exempt from tough cross examination by journalists and politicians seeking the truth or trying to force a change of policy. It means technocratic government escapes the challenge and the need to think things through and defend them that Ministers are used to. It makes mistakes more likely.

The fourth is the assumption that because people are experts everyone else will accept what they say. The danger is if a group of experts of one way of thinking hijack policy in a particular area, they build resentment not just against their policy but against the whole system, as those suffering from it cannot see an easy way of changing it.

The major decisions have to be taken by elected officials who can weigh the conflicting claims, decide what the state can afford and draw on the best professional advice in the relevant fields.

The Bank of England’s experts have been more often wrong than right for the last 50 years

It is time to review the record of the Bank in its roles as setter of interest rates and regulator of the banking system over the last half century. The period began with the secondary banking and property crash which compounded the damage of the international oil price explosion in the period 1972-5. It led on to the 1989-92 Exchange Rate Mechanism disaster. It was followed by the big boom and bust culminating in the great banking crash of 2007-9. More recently we witnessed the Bank get its forecasts hopelessly wrong over the likely impact of Brexit, only to pursue an inconsistent and damaging monetary policy from 2016 to 2019. In each case the Bank made wrong forecasts and took bad decisions about the permissible levels of credit in the banking system. These were followed by over reaction to create a recession which then did damage to the economy.

The Exchange Rate Mechanism was the most perfect example of rule by the technocrats which went badly stray. The member states of the EU in the 1980s had widely divergent economies. The differing levels of inflation, debt and productivity caused considerable fluctuations in exchange rates. The countries with too much debt and inflation tended to devalue and the countries with strong balance of payments positions and low inflation tended to have strong currencies, led by Germany.

The advocates of European monetary union combined with the technocratic tendency to require the states to lock their currencies one to another within tightly proscribed fluctuation bands, with a view to reducing and finally eliminating currency variations. This they thought would move all the countries onto something like the German pattern with low inflation and reasonable growth. The UK was told by advocates of the ERM we would enjoy a “golden scenario of low inflation and good growth”. If only.

I argued that the ERM would instead prove destabilising, leading either to an inflationary increase where markets thought a currency was too cheap and should go up more than the bands allowed, or to a recession where markets thought a currency too dear and it should fall below the floor price allowed.

In my 1989 pamphlet for the CPS on this I said:

“The idea of the EMS (ERM) is theoretically flawed. The history of the pound against the DM over the last year illustrates why this is so. Despite government efforts to get the pound to shadow the DM and to hold it around 3DM, there have been periods of intense pressure leading to substantial fluctuations around that level. The main method for trying to keep the currencies in line is the sale or purchase of large quantities of the given currency by European Central Banks, acting in concert or individually. …………This action is intrinsically destabilising. If the Bank of England sells a large amount of sterling…. It then has a monetary problem. If it simply creates the pounds it has sold it adds directly to the money supply. Foreign banks and other buyers have more pounds at their disposal . If they go into the banking system they become high powered money, enabling a commercial bank to lend this money several times over expanding the amount of sterling credit in circulation. This produces upwards pressure on the British price level, causing inflationary worries and forcing a further rise in interest rates.….leading to a further demand for pounds requiring more pounds to be made and sold by the Bank of England.”

Once the inflation is well set the reverse sets in. Foreigners sell the pound, the UK has to buy up pounds. This contracts the money supply and brings on recession, aided by the need for even higher interest rates to defend the pound.

This was all obvious to a few when I published in April 1989. I lost the argument in government and we entered the ERM. It duly unfolded in a predictable way. The pound wanted to go up. Money growth and inflation accelerated. The pound then wanted to go down,. Rates rose too high, credit contracted and we entered a recession. The technocrats had proved to be sadly so wrong. This scheme was heavily backed by the Treasury and Bank of England, and supported by the leading opposition parties. When it failed many of its supporters claimed it had been badly executed or had been done at the wrong exchange rate. That was strange, as when we entered they did not complain about the rate which had been carefully calculated by the Bank and Treasury on the basis of past currency movements. The experts had their way and got it wrong. The price of their mistake was many bankruptcies and lost jobs.

In 2005-9 the UK went through an even more extreme boom/bust cycle than that in 1989-92. The so-called independent central banks and Bank Regulators presided over a big build up in lending to both public and private sectors, and to a huge expansion of derivatives, future and options which added to the levels of financial gearing in the system. Many people and institutions raised doubts or objected, but treasuries and central banks assured us all was well. In the UK both the Conservative and Liberal democrat Opposition parties argued there was too much debt. The official reply from the central bankers and treasury ministers was the financial world was now a lot more sophisticated. The extra credit was an acceptable risk, with better controls thanks to all the special financial instruments. They allowed commercial banks to greatly expand lending without proportionately expanding their capital. In due course general inflation started to rise, to reinforce the inflation of asset prices which was well embedded.

Central banks then decided they needed to control the inflation by throttling back the credit. They started to hoist interest rates, This sent shudders through the debt and derivative laden markets. The central banks lectured the financial world that they needed to rein in their excesses. Doing so in public and demanding immediate change speeded the collapse. Soon some of the largest institutions were illiquid with questions over their longer term solvency. The central banks left the squeeze in place long enough to threaten the whole system, before relenting and pumping cash into the banking markets to avoid a complete collapse. Once again the technocrat bankers ands regulators had been given their head, and once again their judgements had proved faulty. 

The Bank of England also showed a poor understanding and a lack of political sensitivity over the Brexit period. It took an active role in supporting Remain in a strongly and evenly fought referendum. In general elections the central bank wisely keeps out of economic disputes and does not mark the homework of the leading parties. On this occasion it decided to intervene on the losing side by producing a series of ill-judged forecasts alongside the Treasury to try to help Remain. Its famous short term forecasts of what would happen if we simply voted to leave were proved wrong in most respects in the two years that followed a Leave vote. The economy did not sink into recession. House prices did not crash. Unemployment did not soar. The Bank followed this unfortunate political and economic judgement by following an erratic monetary policy after June 2016, before settling on a generally negative policy of tightening monetary conditions to slow the economy.

Governor Carney arrived at the Bank of England from Canada with a new approach. He told us all he was going to give forward guidance on interest rates to avoid shocks to the markets. On three occasions he prepared us for a rate rise, only finally to cut rates when he did want to make a change. This was not helpful, and reminded us of the limits of the technocratic approach to Central banking. Immediately after the Referendum vote markets fell then rallied strongly. A few weeks later the Bank of England cut interest rates and loosened money policy, driving the pound down. In the following spring the Bank then decided to start tightening money which eventually slowed the economy markedly by the end of 2019. There was no obvious rationale for any of this.

The Euro – a currency in search of a country to back it

The Euro is the ultimate technocrat dream. Here is a currency and a central bank with considerable economic power that is not answerable to any single country or government. The president of France or the Chancellor of Germany cannot dismiss or even influence the President of the ECB. No member state can legislate to change the rules and guidance which govern it. The founding Statutes for the Bank represent a triumph for the German view. The European Central Bank will not fund the deficits of individual member states in the way a single country central bank can do in extreme conditions.The ECB can insist on the common EU rules governing state debts and deficits which need to be controlled under the Treaties. If an individual member state borrows too much then it will have to pay more for its next borrowings or will need to raise taxes or cut spending instead. The inflation target will be observed and is an average rate across the whole zone.

When the Germans and the other financially strong Northern states consented to the Euro they assumed the disciplines of the scheme would gradually make the southern states more like the north, as they had hoped for their ill-fated ERM. Instead the unimaginable happened. The world banking crash as replicated by the ECB and Euro regulators left the EU economy weak and with little inflationary pressure. The ECB ended up with zero interest rates and persistent high levels of state debt with little growth.

The German/Dutch surpluses on balance of payments accounts left the south short of Euros.The northern states refused to send them grants out of their tax revenues in the way stronger parts of a single country currency union do to help weaker parts . So the ECB allowed the Target 2 balance system to massively expand. This was meant to be a facility where a surplus state would make a short term deposit at the ECB which could be lent on to a deficit state, to clear overnight or weekly imbalances. Instead this became a semi permanent massive set of loans, with Germany currently depositing €930 billion with the ECB matched by large borrowings by Italy, Spain, Greece and Portugal, all at zero interest.

The technocrats have created another unstable edifice. Italy and others wants the EU to issue EU bonds to direct money paid for by all taxpayers in the Euro area to be spent in the places that need it most. So far the northern states refuse, so the ECB does the best it can to ease Euro shortages in the south. When the newly elected President of the ECB Mrs Lagarde let slip in a news conference that the Bank did not think it needed to ensure Italy could borrow at low rates related to Germany’s, the markets sold off Italian bonds rapidly. Shortly afterwards her remarks were clarified, and it turned out the relative cost of Italian debt was a matter of concern. The price of the error combined with the new needs of the time was an additional €750 billion of bond buying by the ECB, with more Italian and Greek bonds as part of the mix.

What makes a successful central bank

A successful central bank reads the cycle well and is sensitive to the economic and fiscal policy being followed by the government that backs it. The last 50 years have seen wild swings in approach, from allowing too much credit to being too tough on credit and inflation. These boom bust cycles have been augmented by the strange architecture of the ERM and Euro.

The current virus crisis is generating better signs of collaboration both in the USA and the UK between central Bank and government. This is welcome. Now they need to read the cycle wisely. All the time we have lock down they need to provide a lot of joint offset or stimulus. When we get to the recovery phase they need to gradually reduce stimulus at an appropriate pace. They need to allow enough cash and credit to extend the recovery phase without allowing so much that we have a worrying rise in inflation. There should be no restraint on people in a democracy discussing these policies and being critical if they wish. They are all judgements which have a big bearing on jobs and prosperity. By all means encourage expert debate, but recognise the experts do not always agree. I am all in favour of evidence based decisions. I admire successful expertise. I also think decisions are usually better founded if there is informed scrutiny of why and how they were made.

We should beware of the siren soundbite. The ERM did not deliver a “golden scenario” as promised. The Euro has not so far delivered the solidarity and stability its advocates often urge. At a time when monetary policy is being expected to deliver even more in difficult circumstances, the ECB needs to talk seriously to its EU Commission government about burden sharing, joint financing and banking stresses within the zone. Meanwhile it is good to see the USA and UK entering a new era of collaboration between central banks and governments, which needs sufficient debate and exposure to help it deliver better results than the era of so-called independence.


  1. bill brown
    April 24, 2020

    Sir JR

    A very good , well documented and comprehensive analysis, thank you very much.

    On one point there now seems to be an opening for some sort of mutual EU fund also paid by the north (to the sum of about EURO trillion) being worked out by the Commission for the moment. (It would also be about time), but as the (Economist ) write this week the policies between monetary and fiscal policies are becoming increasingly blurred with the EURO. Which also indicates a long term viability of the EURO. (according to the Economist)

  2. Lifelogic
    April 24, 2020

    Indeed I agree almost fully with this.

    Almost no organisation that feels the the need to claim it is ‘Independent’ is actually Independent. The private banks are not remotely independent of government either. As we have seen they can be ordered to bail out the Halifax and bankrupt themselves, or not to pay dividends out, they have the government deposit protection scheme and are pushed around by governments all the time or bailed out by them. We see with the one size fits all 40% overdraft rates how totally uncompetitive the banking system in the UK is.

    As you say:- “The Bank of England’s experts have been more often wrong than right for the last 50 years” This is surely true, they suffer, as all such organisations tend to, from group think. Are their experts even trying to get it right or just going with the group think, PC fashion and the political flow for career advancement? We know that being right in betting and business is good but in politics it seems to be the opposite.

    The energy “experts” pushing renewables, the experts who claim electric cars are zero emission, the experts who push climate alarmism and the damaging war on plant & tree food have also got it totally wrong. As of course have the “experts” pushing the economic lunacy of The Bank of England’s experts have been more often wrong than right for the last 50 years, ever higher taxes, ever more red tape and ever more government.

    The ‘experts’ who did the pandemic planning and buried the results of 2016 pandemic exercise were clearly negligently off target too. What was needed was fairly obvious or should have been.

  3. Piggy bankster
    April 24, 2020

    Mr Carney, as far as I am aware, has always maintained the BoE was independent.If he did and it was not true then why is he anywhere near the Bank?

    1. Otto
      April 24, 2020

      Good point on which JR has no comment.

  4. Peter Wood
    April 24, 2020

    Sir John,

    It seems we agree, my point from yesterday is far more eruditely explained by you:

    ” If the Bank of England sells a large amount of sterling…. It then has a monetary problem. If it simply creates the pounds it has sold it adds directly to the money supply. Foreign banks and other buyers have more pounds at their disposal . If they go into the banking system they become high powered money, enabling a commercial bank to lend this money several times over expanding the amount of sterling credit in circulation. This produces upwards pressure on the British price level, causing inflationary worries and forcing a further rise in interest rates.….leading to a further demand for pounds requiring more pounds to be made and sold by the Bank of England.”

    So creating over £200 billion now… that’s all right is it?

    Reply It is not inflationary because the government has taken so much demand out of the economy through its lock down policy. We have a deflationary crisis today. Then we had an inflationary crisis.Today it would be better to get more people back to work and have less QE

    1. Caterpillar
      April 24, 2020

      comment on reply

      Aggregate supply has also been reduced by switching off labour and capital, at a simple level the furlough scheme supports AD but not AS. This will be at a sectoral level when (if) the lockdown is unwound, changes in industry structure may also have a secondary effect. I think inflation/deflationary pressure will be heterogeneous.

  5. Peter van LEEUWEN
    April 24, 2020

    As far as I can see as a layman, the international markets haven’t lost confidence in the euro. It has gradually even gained some role as a reserve currency it seems.

  6. Lifelogic
    April 24, 2020

    Three cheers for the BBC and its excellent University Challenge Final that I watched the other day. It is amazing just how widely knowledgable and so fast that some people can be. Even when I know the answer someone always gets to it ages before I can retrieve it from my brain. Both teams were all male. The BBC amazingly even allowed a question on the mathematician G H Hardy’s famous quote that Mathematics is largely a young mans game. No one like Hardy could surely ever get a job at Google nowadays I suppose – with such sexist and ageist views.

    So not quite every BBC programme is insufferably PC, dumbed down and wrong headed – yet.

  7. Stred
    April 24, 2020

    If government really controls the BoE, who do shareholders blame for the decision to give large amounts of money to the banks, which they have not lent to businesses – even at extortionate rates of interest, and to ban the payment of dividends. These finance pensions to private shareholders and through private pensions. The grey pound is already trapped in lock down and now is reduced. This will contract the economy further. Why do the well financed banks need the money? Perhaps because the Treasury is planning for large scale bankruptcies?

    1. rose
      April 24, 2020

      I don’t know any bankers who want to deprive old people of their dividends. This was demanded by the media and is a political not economic measure.

  8. Lifelogic
    April 24, 2020

    The five test for lifting the lockdown remind me of Gordon Brown and his absurd fig leaf of five tests for the EMU/EURO.

    The last one:- “We need to be confident that any adjustments to the current measures will not risk a second peak of infections that overwhelm the NHS.” is they only one that matters really “if” the NHS is coping and can cope then we need to lift the lockdown in stages asap. The NHS currently though is clearly not coping with its normal operations and the virus patients. Many are dying without even getting to or being allowed into hospitals and many normal activities are cancelled.

    1. Fedupsoutherner
      April 24, 2020

      L/L. Correct once again. I know several people whose health checks have been cancelled. Even my husband who should have had another scan after having bladder cancer 6 months ago has not had a date for his 6 month check up. The nhs is not copine.

  9. oldtimer
    April 24, 2020

    It seems to me that decisions, whether at the personal, business or political level are usually complicated by the need to take multiple issues into account and by the uncertainty that surrounds them. For example business decisions need to take account of the firm’s ability to execute them (such as needed skills or access to the skills of others, time to implement, finance, competition, regulation, social acceptability, technological vulnerability). A contemporary example is provided by the car industry which has to work out the best route to manage a transition to a world in which the internal combustion engine is being legislated and regulated out of use by powerful political and social forces in several but not all markets. This trend poses acute problems. Decisions on the way ahead should be informed by expert opinion (being clear about regulatory boundary lines for example) but should not be based solely on one opinion. A judgment is needed on best balance of opinions of multiple issues. This results in different approaches by different manufacturers. Political decisions are perhaps even more complex. Abdication to experts amounts to failure by whoever is in charge.

  10. Stred
    April 24, 2020

    Sky News website has published the numbers of Covid19 patients being treated in the hospitals. The number of patients in the inner London area hospitals is approximately 2000. The Nightingale temporary hospital capacity is the same and nearly empty but the patients needing cancer, heart and other life threatening diseases cannot use the service because of the lack of staff and cross infection. This seems very strange.

    1. Anonymous
      April 24, 2020

      Death from COVID-19 must be avoided at ALL costs.

      And they really really mean it.

      1. Martin in Cardiff
        April 24, 2020

        A conspicuously higher death rate than in comparable countries must be avoided at all costs, yes. Just think of the mess that the Government would be in if they allowed that?

        I think that the Government were surprised, when some countries succeeded in practically eradicating the contagion. They hadn’t planned for that, it seems to me.

    2. Lifelogic
      April 24, 2020

      Indeed the lack of staff is surely the main problem I suspect. But if they have not got sufficient staff what is the point of the nearly empty Nightingale Hospital? It is just for PR purposes (to show the governemnt are doing something)?

      Surely it is better to put all the .Covid patients there and so keep them away from non covid patients and medical staff in the other hospitals, home or nursing homes?

      1. Stred
        April 24, 2020

        All of the consultant surgeons of any specialization in some hospital trusts are working 12 hour shifts in the ITU and covid wards. Presumably, they could be privately bused out to Nightingale, but then the other hospitals where cancer, heart and other special equipment is kept would not have enough consultants? But some consultants are saying that they need to get back to work and are off work. Are there enough nurses for the 2000 and reducing number that Nightingale was built for and if not. what was the point of building it?

        1. Lifelogic
          April 25, 2020

          Exactly was it build just as a look “we are doing something” PR exercise?

    3. Alan Jutson
      April 24, 2020

      Like you Stred I would have thought that the special centres for Covid 19 would be utilised first, then the overspill would go to the standard hospitals.

      Standard hospitals could then start to treat the cancer and debilitating illnesses which have so far been cancelled.

      Perhaps there is a problem at these special centres with staffing levels, equipment, or simply uncertainty about how they can best can operate at full capacity, as at the moment they have untried capacity.

    April 24, 2020

    This article isn’t about central banks or currency arrangements. It’s about politics. Ever more layers of politics.

    All I see is more government, more bureaucracy and more intervention. Politicians, bureaucrats and activists. They just cannot leave things alone. And all is about sucking power to the centre and away from the private space . The gravitational pull of the centre even overwhelms supposed free-market liberals like our kind host. It’s corrosive, disturbing and destructive. It is the cancer of the modern age. Politics is now immersive.

    We are slowly being politicised and most cannot even see it.

    If the BP had replaced rancid Labour at the last GE the indoctrination that we are now seeing would not be happening. The cozy status quo in Parliament has wreaked so much damage on our world. The Tory hierarchy working together with Labour to push through disgusting legislation

    1. Caterpillar
      April 24, 2020


      I agree with your first three paragrpahs, I still found the article an interesting read. Inferring from your fourth paragraph, the UK does need a change of political system as BP and LibDems supported but did not sell at last election, each distracted by one side or other of the already settled Brexit debate.

      I think your argument on “gravitational pull of centre” is well reflected towards end of Sir John’s piece which states “need to ALLOW enough cash and credit” (my capitals). One of the successes of Germany, though under threat and declining, was its regional banks responsiveness to SMEs, the power to create credit was diversified, both orthodox economists and MMTers seem to want credit creation to be a very centralised lever.

  12. Mark B
    April 24, 2020

    Good morning.

    A very long but interesting piece. Many thanks Sir John.

    I would like to give a little background on the unification of the two Germany’s and the EURO.

    As a condition for President Mitterand of France allowing the two Germany’s to unite, it wanted the German government to accept the EURO as its currency. This Chancellor Kohl agreed to but on one condition and, this condition is at the root of the EURO’s problems we see today. He (Kohl) would allow Germany to join the EURO so long as Germany would never be the lender of last resort. I would imagine that this piece of advice did come from the Bundesbank and was taken, wisely or not.

    Not government creation can be truly independent but we are told they are. If what here is being said is true, can it not be argued that all governments have been deliberatly misleading the people on this ?

    1. Iago
      April 24, 2020

      Don’t know how you spell the plural of Germany, but no apostrophe!

    2. margaret howard
      April 24, 2020

      Mark B

      “this condition is at the root of the EURO’s problems we see today.”

      Seeing that the euro despite its short history has overtaken the pound as the world’s most traded currency after the US $, just what are these problems you mention? And also as the pound has dropped like a stone against it?

  13. Sundown
    April 24, 2020

    I do despise socialism as I have experienced it… like no other British born and bred person who is likely to write. Unique.

    But the Tory Party by its actions objectively right or wrong, has now brought the likelihood of that which I despise with good reason right up to my door, as it were, and it is banging like hell on it like a devil possessed.

    And everything was something to look forward to with joy. Brexit. A free economy. Free speech, again. The Tory Party failed us.

    1. Lifelogic
      April 24, 2020


    2. Andy
      April 24, 2020

      We do have free speech. You can say what you like.

      Sure, you may be ridiculed for saying something nasty or stupid but nobody is stopping you from saying it.

      1. Edward2
        April 25, 2020

        You can be arrested fined and even imprisoned for saying things that other people perceive to be offensive to them.
        There are hundreds of Police officers just in London dealing with it.

        1. czerwonadupa
          May 1, 2020

          Too true. The police are more an arm of social sevices today rather than crime prevention & is why a relative of mine took early retirement

  14. Hope
    April 24, 2020

    JR, excellent opinion. A couple of deliberate omissions by you I feel. What is your view for the Tory party failing to balance the structural deficit by 2015 and changing the BoE to what your party wanted from it over the last ten years? Also why the reckless budget on 11/03/2020 i.e. £100 billion plus borrowing for HS2 when Chinese virus in full swing then 12 days later nation house arrest and business lock down requiring Sunak making bail out announcements? He coulda did should have delayed his budget. Views please.

    Reply I opposed HS2, and am setting out my views on economic management of the virus crisis as it unfolds with its predictably bad economic outcomes.

  15. Iain Gill
    April 24, 2020

    Somebody should do a similar analysis of the technocrat committees and politicians as far as other areas of life go, anti pollution measures, immigration, education fashions, tax and benefits, road traffic management, etc.

    In all its equally obvious that the decent non political public are being let down massively.

    Reply There are other stories to tell – how many green policies result in more CO2 and other pollution, how some experts at water management increased floods etc

    1. Iain Gill
      April 24, 2020

      Exactly John, exactly

    2. Lifelogic
      April 24, 2020

      Indeed most “green” policies are counter productive even in CO2 and pollution terms. Not that harmless plant and tree food is really a serious problem anyway. Using racing yachts instead of planes then having you crew flown in for you for example. At best they make trivial differences.

  16. Fred H
    April 24, 2020

    War and Peace.

  17. ukretired123
    April 24, 2020

    Excellent as usual Sir John!
    This demonstrates your life-long convictions on finance and economic matters at the most profound level. Awesome history and how do many politicians ignored your prognosis based on the facts you witnessed.
    I think folks lean to technical experts is due to exasperation with ineptitude where politicians are promoted beyond their capabilities as in the Peter Principle and become so called Executive Tap Dancers who put on a good show upfront.

    I myself prefer proven achievers be giving the technical advice and it is rare to find it also in a politician like your good self, which is why I believe you have worked tirelessly on our behalf.
    All I can say is thank goodness we have you in a desert of common sense.

  18. Sir Joe Soap
    April 24, 2020

    A slight contradiction in your argument here. You want CBs and goverments to co-operate, but sometimes when they do, as in 2016, they both effectively got it wrong.

    Who is to say (and it’s an easy argument to make at this stage) that both the Fed + Trump and the BOE + Johnson (both governments being expansionist) won’t keep the taps turned on full post- Coronavirus, and damn the consequences? I can’t see the ECB not also following this path.

    We could be back here in 5 years’ time with Starmer arguing for BOE independence so that he can raise rates and calm inflation.

    1. Ed M
      April 24, 2020

      Tories have to really nail this coronavirus (Health, Economy + Mental Health of citizens) otherwise Starmer will cruise into No 10).

      Personally, I think there is only one Tory who can now really nail this coronavirus and win the next election and that’s Rishi Sunak.

      Boris – missing 5 Cobra meetings and more things he’s done or not is going to haunt him like the plague.

  19. formula57
    April 24, 2020

    Cogent and refreshing: thank you.

  20. bigneil(newercomp)
    April 24, 2020

    I’ll have died of old age before I read that lot.

    1. Fedupsoutherner
      April 24, 2020

      Yes Big Neil. I have to confess it’s a bit beyond me but at least I can admit it unlike some on here who think they have the answers to everything. We’ll done John for such an in depth post with such a lot of content though.

      1. jerry
        April 24, 2020

        @Fedupsoutherner; If it’s “a bit beyond me”, how can you then in the same paragraph say well done on “such an in depth post”, just what is your judgement made upon, our host could have written gobbledegook for all you know (not that he necessarily has)!

        My problem with our hosts writings on this sort of subject is he always omits the 1979-1989 period, unless it is to lavish unreserved praise of course, he is never appears critical of the period and the mistakes made.

        The 1972-5 recession did not lead to the 1989-92 Exchange Rate Mechanism disaster, it was the appointment of the UK’s commissioner in late 1984, with the aim of modernising the EEC’s internal market.

        This encouragement, for the completion of the single market, rather than just a customs union, quite naturally lead to the ERM, EMI/ECB and ultimately the Euro currency, in place of the ECU.

        Did no one in Downing Street at the time read the Treaty of Rome, obviously not, no wonder Mrs Thatcher later sounded so surprised with the Delors Commission for simply stating the long term goals!

        The way our host write it’s as if the ERM and Euro came like a bolt of thunder out of a clear blue sky, landing on Mrs T’s desk one Monday morning…

        reply The drift of policy in the EU using the single market to launch ERM and Euro was obvious and damaging. I explained it to the PM at the time and she opposed the ERM for several years

        1. Fedupsoutherner
          April 25, 2020

          Jerry. Rudeness is unecessary. John’s post does contain a lot of information some of which I understand as I lived through some of the periods he is talking about. I don’t comment much on banking issues though because my experience on such matters is quite narrow but I am can see there is much content in John’s post and can see others think so too from their replies.

          1. jerry
            April 25, 2020

            @Fedupsoutherner; I was not rude, sarcastic perhaps but not rude, nor would our host have allowed me to be.

            I suspect most people commenting to this site lived through all or most of the period our host dealt with, yet how many simply accept his glaring omissions.

            @JR reply; My point is Mrs T should have opposed the Single Market if the ERM, ECB and Euro were going to be damaging and unacceptable, for surely each follows the other like days in the week, as the Treaty of Rome intended… In not doing so she was no better than Heath, indeed worse, for not only did she (like Heath) sacrificed much truly international trade but also sacrificed much UK manufacturing capacity at the table of the EC.

            Reply by JR to reply: Mrs T did accept the potential dangers of the ERM but was finally forced into joining against her better judgement by FCO/HMT joint extreme pressure. They also promised her we would get out quickly if it didn’t work, which of course they failed to do.

          2. jerry
            April 25, 2020

            John I think you missed my point, I accept what you say about the ERM but Mrs T should not have accepted the single market if she was aware of the dangers from a ERM, a ECB and common Currency, as the Treaty of Rome makes clear, they were always going to be the result of creating a single market -even Heath talked about the necessity of such a common currency back in 1972, during a BBC interview!

  21. Mike Wilson
    April 24, 2020

    A lot of the problems come from the obsession with ‘world trade’ and the Balance of Payments. I have never understood which bit is tricky. We need to be self sufficient in the production of:


    And a whole lot more. If there were a major war or, even, a major pandemic, we would, not to put too fine a point on it, be ****ed.

    We should only buy from abroad if it is not available here – and then it should be a raw material, not finished goods.

    1. Anonymous
      April 24, 2020

      As Martin in Cardiff rightly says, that would be close to Communism.

      Alas we do need a balance between strategically vital things being made and owned here rather than abroad.

      As a Brexiter I favour this and controlled borders and selective immigration for ALL countries, not just my own.

      1. Martin in Cardiff
        April 24, 2020

        I didn’t say that.

        I’d call that “isolationism”.

        What I did say was, that the Right labelled in-house provision by the public sector a microcosm of communism, and reacted with predictable horror towards it, compelling out sourcing and fragmentation by any means, whether those sources were national or foreign.

        It didn’t matter to the obsessed.

        1. Edward2
          April 24, 2020

          Did they ?
          Both main parties when in power allowed outsourcing and global purchasing.
          Labour used PFI for example.
          EU membership requires Europe wide tendering.
          That has save hundreds of millions which can then be spent elsewhere.
          It isn’t a right wing thing.
          However it seems one or two nations have a monopoly over certain products.

          1. Martin in Cardiff
            April 25, 2020

            The European Union does not compel out-sourcing in health however.

            That was a doctrine of the Thatcher governments.

            All that the European Union requires is that if you do tender, then you cannot discriminate in favour of your own nation’s companies on that fact alone.

          2. Edward2
            April 25, 2020

            Glad you used the word compel.
            It is required by the Single Market treaty.
            So if you tender widely the cheapest is usually chosen and that often isn’t the UK.

            GPs are private as are most opticians and many physiotherapists and chiropodists.

            Hospital beds, ambulances, bandages, drugs and much more are not made by the NHS or even by UK companies.
            Even employees are imported in large numbers.

    2. Caterpillar
      April 24, 2020

      Mike Wilson,

      If you cut trade to necessary raw materials only as you suggest then only countries with raw materials will be able to trade, others would have to go to war to access the raw materials.

      1. Mike Wilson
        April 24, 2020

        I think you are taking my suggestion a bit too literally.

        The problem with globalisation is that it is a race to the bottom – in terms of wages, working conditions etc. If you take global trade out of the equation, we could and should, for example, make our own cars from our own steel and other raw materials. It wouldn’t matter, then, if the price to sell them abroad was uncompetitive – who cares. We can’t compete with countries like China with massive, poorly paid labour available. So, why bother competing. We’ll make our stuff and they can make theirs. And we just trade if we want to, not if we need to.

  22. Ian Pennell
    April 24, 2020

    Dear Sir John Redwood

    Excellent article. Andrew Bailey, the new Governor at the Bank of England has certainly been thrown in at the deep end with the Coronavirus Crisis. He will have to remain on his toes and the Treasury also needs to be alert to the dangers of making the wrong policy calls. Too much worry about Inflation and not enough new money will be printed to support the banks and the British Government will have to rely 100% on the Markets to raise the estimated £ 1 Trillion needed to stave off disaster- with the National Debt already at 80% at the outset that will not happen without the Markets demanding a big rise in debt-servicing costs- such that it would defeat the object of the exercise to borrow in order to stimulate recovery.

    Deciding to monetise most of what the Government needs- with the Bank of England snapping up all Government bonds (via the banks) by printing money would lead to rampant Inflation setting in as soon as lock-down measures are lifted and people spend money. The Markets will only cope with so much of Central Banks directly funding Government expenditure this way- in Britain an amount of new money equal to 50% of GDP at the outset would lead to a collapse in our Fiat currency- and high Inflation.

    Fine if you want 50% Inflation to be the Austerity to help the Government pay for this Corona-crisis…only the Market response to Sterling will not be linear. Its not a case of print 50% of GDP will give 50% Inflation. The Markets will tolerate some of what the Bank of England and the British Government are doing up to a point- these are unprecedented times after all! However, a point will arrive when the International Markets decide that the Government is simply just monetising its Debts; when that happens their patience will snap- traders will just dump Sterling- leading to a panic sell-off: Inflation will thus sky-rocket to much more than 50% – requiring Interest Rates being jacked up to 15% to forestall Zimbabwe-style disaster! Such 15% Interest Rates, with the tail end of the Corona-crisis, will lead to the worst Recession ever known in Britain: Don’t expect the Conservatives to be re-elected in 2024 if you go down that route!

    Now, there is a way of printing the new money needed in a way that does not cause massive Inflation (through it can only be used at times of Recession). It’s using the printed money to buy gold or platinum (shares) that underpin the value of Sterling and so prevent Inflation taking off. It ought not to be beyond the wit of the Bank of England and Treasury policy-makers to work this out and act on it.

    Best wishes

    Ian Pennell

    1. Martin in Cardiff
      April 24, 2020

      Having effectively smashed the Fixed Term Parliaments Act, the Tories would now be able to fiddle interest rates for electoral purposes too, if John’s vision crystallised.

      So back to business as usual it would be then.

      1. Edward2
        April 24, 2020

        Lower them to what figure Martin?
        They are almost zero now.

      2. Andy
        April 24, 2020

        Indeed. So they have an electoral system which acts exclusively in their favour. And they change the rules to make it act more in their favour. I’m increasingly of the opinion that we need to forego the ballot box – what’s the point when those the majority oppose have an unfair advantage – and we should move straight to revolution instead.

        1. Fred H
          April 25, 2020

          have to giggle at you two and the language.
          ‘smashed’ and ‘revolution’.
          A pair of angry young men – but you are not young are you?
          Displaying the violent objection to things that don’t get majority support or are even just common sense.
          You protest too much, get over it, not good for your wellbeing.

    2. Ex-Tory
      April 24, 2020

      Basically agreed, Mr Pennell, except that many other countries are also printing money, so the extent of that would affect the exchange rate. Are you advocating the BoE buying precious metals or shares or both?

      1. Ian Pennell
        April 24, 2020

        @ Ex-Tory

        I would advocate the Bank of England using printed money to buy Shares and Securities in the precious metals like Gold and Platinum, rather than the physical metal itself (cumbersome to transfer to Bank of England vaults and store). The reason why the Gold Standard was abandoned in 1931 was because of the difficulties in getting enough physical gold in to back up Sterling which, tied to the value of Gold, could not be depreciated at all to make exports cheaper.

        The Policy here is one of using printed money to buy Shares in precious metal commodities; there is still something behind the currency to stop the Markets losing faith in Sterling as it is printed. This can be done much more quickly than having to transfer physical gold by ship from overseas (as in the 1930’s- which took weeks). Today this can happen at the click of a mouse, if one is buying shares. However much money is needed to rescue the British economy from Depression you print, but you use it to buy Gold/ Platinum backed securities from the London Stock Exchange and UK- based Gold/ Platinum companies.

        The only time it would actually be inadvisable to have this policy is if the British Economy is already growing healthily and is at Full Capacity- as soon as the Money Supply significantly exceeds the Productive Capacity in the Economy that, too causes a form of Inflation only cured by taking demand out of the economy. It could also give rise to economy-threatening asset bubbles. However, with the prospect of a 20% decline in the British Economy over this second quarter of 2020, that is not the case today.

  23. acorn
    April 24, 2020

    The Stability and Growth Pact contains two clauses allowing Member States to undertake appropriate budgetary measures, within the Pact, in the face of exceptional circumstances. The first is known as the ‘unusual events clause’, while the second is termed the ‘general escape clause’.

    In essence, the clauses allow deviation from parts of the Stability and Growth Pact’s preventive or corrective arms, either because an unusual event outside the control of one or more Member States has a major impact on the financial position of the general government, or because the euro area or the Union as a whole faces a severe economic downturn. (EU Parliament think tank)

    Hence, the ECB Balance Sheet has shot up from €4,600 billion to €5,300 billion in six months and it won’t stop there now the member state Treasuries and their own central banks, can engage in some real Trump style “deficit spending”, that the ECB will be obliged to create and issue a lot more Euro currency to fund it.

  24. Ex-Tory
    April 24, 2020

    Normally I agree with what you say, Sir John, but here I am confused.

    You give a number of examples where true central bank independence might have been a good thing if it existed, such as German reunification and the creation of the euro. To this I would add, in the UK context, Nigel Lawson’s decision to cut interest rates after the 1987 stock market crash. This was universally applauded in the press at the time, and later universally condemned by them when the implications became apparent. Ironically, of course, Nigel Lawson had wanted to make the BoE independent.

    The lessons to be drawn from our entry into the ERM in 1990 are surely the opposite of what you say: at that time the BoE was not yet independent. Again, John Major’s decision to take us into the ERM was greeted with such enthusiasm at the time that any other conceivable Chancellor (except you) would doubtless have done the same as him.

    One of the main arguments in favour of an independent central bank, of course, is that politicians have a vested interest in creating inflation which doesn’t manifest itself until after the next election.

    It seems you describe a number of past policy mistakes, some of which occurred under the remit of a so-called independent central bank and some which didn’t. I’m not convinced by your main argument.

    Reply The Bank was a keen advocate of ERM entry and therefore of Nigel Lawson’s decisions which were based on shadowing the DM as if we were in the ERM!

  25. Iain Gill
    April 24, 2020

    Another thing worthy of an article would be the way the public sector, and regulatory bodies, always take advantage of a crisis to slip through de facto policy changes, and rule changes in their favour, under the radar, as part of emergency measures the politicians think are there to deal with a crisis. This is not the first crisis this has happened.
    So, for instance, at the moment we have various state ombudsman, commissioners, complaints boards of other public bodies, and the rest, all relaxing the time limits in the law & regulations they have to deal with various stages of business processes, & agreeing not to enforce any time limits on each other, while at the very same time going even harder on enforcing the time limits on citizens to comply with any input they need to give. So, for instance, when they have to come to conclusions they are extending massively the time they have to do so, but when it comes to the citizens acceptance, appeal or whatever of such stages there are already short timescales, like a month in many cases, and its now being enforced even more harshly even though the individual citizen currently has little or no access to the usual advice of lawyers, citizens advice, and so on. So, these bodies are all bending the supposedly “fair” (it never was, and its getting even sillier now) quasi justice system heavily in their own favour, open corruption is there for all to see.
    Frankly many of these bodies already were completely out of control, with dire standards and corruptions often rife, and its getting even worse now that the public sector has been given the dominant hand by the politicians in response to the crisis. No accountability, some downright evil going on in the name of the public sector. Organisations like the Financial Ombudsman Service really are desperately in need of a bonfire, and replacing with something half decent.
    There are so many better ways of doing things. Stuff like this are massive side impacts of a crisis.

  26. ian
    April 24, 2020

    A another email from the US of A trader last week.
    43000 American millionaire receive a stimulus on average of 1.6 million dollars each under the C19 relief and economic security act while the rest get 1200 dollars a month.

    1. Edward2
      April 24, 2020

      Well if you work on a system of percentages then bigger companies and richer entrepreneurs will get more than smaller companies and smaller entrepreneurs.

  27. Mike Wilson
    April 24, 2020

    Looking at a graph of UK house prices since 1952 I note:

    Between 1979 and 1997 UK house prices tripled – from an average of £20k in 1979 to £60k in 1997 (with a much higher peak in the middle – because we had a house price crash in the early 1990s following the Tory government madness in the 1980s). – Under a Tory government.

    Between 1997 and 2008/9 UK house prices, again, tripled – from an average of £60k in 1997 to £180k in 2008. Under a Labour government.

    Conclusion? Both Labour and Tory governments allow massive increase in credit which causes house price booms – presumably to get growth in the economy. It is, of course, nonsense and short-termism of the worst sort which has priced much of the next generation out of home ownership.

    Well done to the Tory and Labour Parties.

    Now, stand aside for someone else to have a go. Neither of you are competent.

  28. outsider
    April 24, 2020

    Dear Sir John, you write (via reply) ” we have a deflationary crisis today” but there is little sign of falling prices, apart from a few closed shops promoting online “sales”.
    Rather we are suffering heavy negative shocks to productive capacity and net wealth, ie we are poorer.
    Yes, it is likely that the loss of jobs and spending power will spiral down into a severe cyclical recession after most of the economy exits from emergency. Measures should be taken to counter this. I suggest that Government and public sector procurement of things we make (fleets of plug-in police cars ?) would be more useful than just shovelling money.
    Debt is the overriding economic crisis of the first third of the present century, just as inflation was in the last third of the 20th century. Personal debt, investor debt, corporate debt and government debt. Debt delivered the last crash and would eventually have delivered the next one if the virus had not hastened things and made them much worse.
    To address this, we shall need a one-off debt haircut engineered through inflation, followed by monetary and other policies that encourage personal saving, a higher percentage of profits being ploughed back and (via tax) discourage excessive personal or investor leverage.
    Central banks, like economists and polticians, partly get things wrong because they are alway inclined to focus on the issues of the previous generation rather than the present one.

  29. ian
    April 24, 2020

    As usual, John hit nail on the head, get rid of the BOE it not needed and saving on staff wages will be hundreds of millions of pounds, it only there to protect the Gov from blame like most institutions and quangos.

  30. ian
    April 24, 2020

    How much will it cost the public to make sure no deflation or job loses are not felt by the top 5% this time around, I hear from some that the way to do it is to increase food prices and taxes to get inflation going and decrease wages for the plebs while increasing people in knows wages by 50% so that they can afford a tin of baked beans for 3 pounds each and carry on with the plan to import more workers from countries like India but this time in the middle instead of at the bottom to increase companies profits, it workers, accountants well mainly all the middle-class jobs. Good plan.

  31. Lindsay McDougall
    April 25, 2020

    The idea of an independent central bank was that it would manage the money supply in a steady, non-inflationary manner.

    Between 2001 and 2007, the chosen method was inflation targeting. The problem was that, under orders from the Chancellor, the wrong measure of inflation was chosen. The problem with the common measure of inflation, CPI, is that it excludes asset prices. During those years, inflation in the price of everyday goods was low but asset prices, including house prices, rocketed. Inflation was there but disguised. Incidentally, Mervyn King, the then Governor, repeatedly warned that this would end in tears, but Gordon Brown ignored him.

    When the housing bubble burst, things were reversed. In 2008/09, any measure of inflation that included asset prices would have gone negative. This was the period when, as Sir John says, monetary policy was too tight.

    I am perfectly happy for monetary policy control to return to the Treasury. The key thing is to target inflation using an inflation index that includes asset prices, particularly house prices.

  32. […] given us his kind permission to re-publish this article (in three parts). It was published in his Diaries but he also asked us to credit CapX  and the Centre for Policy Studies. Read Part […]

  33. […] given us his kind permission to re-publish this article (in three parts). It was published in his Diaries but he also asked us to credit CapX  and the Centre for Policy Studies. Read Part 1 here and Part […]

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