It’s obvious from the body language of Bank of England Governor Andrew Bailey that negative interest rates — much talked about this week — are the last device he ever wants to use. Deployed with mixed success in Europe, this monetary equivalent of Pulp Fiction’s adrenaline jab in the heart is a desperate remedy against deflation, recession and banks’ reluctance to lend. UK banks have been given six months to prepare for the possibility, while Bailey has been talking up the likelihood of rapid recovery as vaccinations advance and Brexit trade disruptions fade. So by the time the banking system is ready, the negative-rate tool should be back in the vault and the Bank’s Monetary Policy Committee — which last week voted unanimously to hold the base rate at 0.1 per cent — might even be looking forward to nudging rates upwards again.
The Bank’s chief economist, Andy Haldane, prematurely hailed a ‘V-shaped recovery’ last summer and has kept noticeably quiet since; let’s pray his boss has read the charts correctly this time. Personally, I’ll make a small bet that he has.
The British Academy’s second ‘Future of the Corporation’ summit, online last week, showed progress since the first event in London in 2019. Not least, its organisers had moved on from the slogan ‘Purpose before profit’, which was never going to catch on in FTSE 100 boardrooms, to a more workable definition of corporate purpose as ‘profitably solving the problems of people and planet, and not profiting from creating problems’ — which responsible businesses can readily buy into. Presentations from former US vice-president Al Gore, City investor Saker Nusseibeh and Treasury minister Jesse Norman brought real-world focus to a debate that in the past tended to echo May Day banners calling for capitalism to be replaced with ‘something nicer’.
But that sentiment hasn’t gone away.