Bank of england

Sir Mervyn King was his own man to the end: professorial, downbeat, against the tide. At last week’s Mansion House dinner — as in his final vote in favour of more QE, on which his Monetary Policy Committee colleagues bade him farewell by defeating him six to three — he was still worrying about a potential reversal of the fragile recovery. Even as he packs his collection of Aston Villa programmes and MPC minutes into plastic crates, the prospect of collateral damage from another euro-storm will be furrowing his brow. So his last speech as Governor was short on jokes and long on warnings: about ‘unfinished business’ and lessons unlearned,

On my way to chair a town meeting, I was chuckling over Phillip Warner’s cartoon last week headed ‘Mary Portas reinvigorates the High Street’. First, TV’s sharp-tongued queen of retail holds forth in front of a row of abandoned shops; then townsfolk dance in the street at the news that she has ‘buggered off in a taxi’. Call me an old cynic, but I think turning stars into tsars is a sign of Downing Street desperation: witness Alan Sugar’s lame stint as ‘enterprise champion’ in the dying days of Gordon Brown, and wince at James Caan from Dragon’s Den tackling social mobility. What I heard from the people of my

No Bank of England governor has ever been installed in office with quite so much advance hype as Mark Carney. When he moves from running to the Bank of Canada to his new office in Threadneedle Street, expectations will be running high. Carney arrives with a reputation as a master of economic strategy, a man who can single-handedly steer an economy through the most treacherous of waters, and get a country growing again with a few deft strokes of monetary magic. Certainly, George Osborne has invested his hopes in him. During Carney’s time as governor in Canada, the country was ‘acknowledged to have weathered the economic storm better than any

In Washington last week, I encountered amazement that the Bank of England is about to be run by a foreigner. This was not because of any contempt for Mark Carney, the Governor of the Bank of Canada, who will soon succeed Sir Mervyn King, but because Americans could not imagine how a job so pivotal in the national psyche could be bestowed on someone with a different allegiance. The Fed, though far from popular in a country constitutionally suspicious of central power, does have a mythic, incorruptible status. As a result, the chairman, Ben Bernanke, has a tiny (by banking standards) salary. Last year, he was paid $199,700. This is

Wonders never cease. I awoke this morning to hear that the Deputy Governor, Paul Tucker, had announced that consideration should be given to the Bank of England setting negative interest rates. Whatever next? Anyone who had seen our current fiscal and monetary predicament, outlined in detail in my Centre for Policy Studies report today, is certainly likely to feel bemused. By international standards British monetary and fiscal policy has been extreme. Interest rates, at 0.5 per cent, are already at their lowest rate in the 300 plus year history of the Bank. The fiscal deficit, at over 8 per cent of GDP, is far worse than during the 1970s crisis

Quantitative easing isn’t an eternal elixir of economic health. That was the admission from Bank of England Governor Sir Mervyn King last night at a speech in Cardiff. Sir Mervyn said there were limits to the BoE’s policy of printing money to buy bonds, which could not ‘continue indefinitely’: ‘One thing we can see clearly is that the recovery and rebalancing of the UK economy are proceeding at a slow and uncertain pace. At this stage, it is difficult to know whether some of the recent more positive signs will persist. The Monetary Policy Committee will think long and hard before it decides whether or not to make further asset

The IMF’s growth downgrades will make tomorrow’s newspaper headlines but the more striking point is its decision to massively rewrite British economic history. As Citi’s Michael Saunders notes (PDF), the IMF now believes that UK economy was massively overheating in the boom. What we had thought was normal growth was, in fact, crazy exuberance.  Britain’s economy was more overheated by any in the G7, the IMF now tells us. Things were worse in 2007 than in the ‘Lawson boom’. Had we known about this overheating, of course, it ought to have been remedied by an interest rate rise. The asset bubble might never have been blown and the cheap debt party

It seems that yet another coalition growth scheme is falling flat on its face: this time, Sir Mervyn King’s ‘Funding for Lending’ brainwave. The theory was that the Bank of England would lend money at below-market rates to the financial institutions: sub-prime loans, in other words. Not without its risks: chiefly, what if the banks just use this cheap cash to lend more to their safest borrowers, rich guys with big deposits? Don’t worry, Sir Mervyn said, the Bank would monitor every month and report back. It just has, and Citi Research has chewed the results (PDF). Rather than ‘get the banks lending’ the first four weeks of Funding for

The race to replace Sir Mervyn King started today when an advert searching for the next Bank of England governor appeared in the Economist. It wasn’t a particularly exciting start to the race: William Hill has named Paul Tucker the favourite to succeed Sir Mervyn. He is currently 7/4 to get the job. Tucker is the deputy governor of the Bank currently, and based on his job title alone, the odds would hardly be surprising. But remember that this is the man who made a meal of his appearance before the Treasury Select Committee in July, uttering the strange phrase that ‘we thought it was a malfunctioning market, not a

It’s official: Quantitative Easing has marked the biggest transfer of wealth to the rich of any government policy in recent documented history. The Bank of England released an analysis today, which was rejected as being an underestimate by the former government pensions adviser Ros Altman. But it was shocking enough, and the strongest point was made by the brilliant Ed Conway, economics editor of Sky News, who put it into a graph who would benefit from a QE-inspired boom in asset prices described by the Bank of England  today. “10th” means the richest tenth of the population, and so on. This is our new graph system: hover your mouse over each