Do you remember forward guidance? That’s OK, not to worry — not many others do either. It was the policy launched to enormous fanfare by Mark Carney when he became Bank of England Governor in the summer of 2013.
It was about as simple a rule as one could expect from a central bank. The Bank’s Monetary Policy Committee would not even consider raising interest rates until the unemployment rate dropped … Continue Reading ››
Did you realise that Britons are now more likely to take out big, long-term loans on cars than on housing? I have to confess, until I looked into the state of Britain's private debt markets for my Times column today, I didn't.
But, as you can see from the chart below, the proportion of new car purchases made with finance overtook the proportion of home transactions made with mortgages a … Continue Reading ››
What goes through your head when you hear the word “welfare”?
Chances are you’re thinking of job centres, of unemployment benefit, of the housing allowances that fund the disadvantaged so they can live somewhere.
Well it turns out you’re only half right. The Government, it transpires, has a slightly different definition. Yes, its brand of welfare includes all those kinds of things, but also some patently other non-benefits stuff … Continue Reading ››
So Farewell then, Quantitative Easing. The six most tiresome syllables in the English language have left the building. For the first time since the early days of the financial crisis, there is no major central bank around the world actively engaged in this experimental policy of creating money and buying bonds. And things may well stay that way — unless the European Central Bank presses the button on its own printing … Continue Reading ››
Every so often the New York Times gets a bee in its bonnet about the UK economy. Not all that long ago their main concern was George Osborne’s austerity policies, which they claimed were causing irreparable damage. Subsequently, in light of Britain’s rapid recent recovery, these complaints seem to have been discontinued.
It’s a rum state of affairs when Britain is apparently punished for having a strong economy. After all, we’ve spent the past five or six years telling ourselves that all we desperately need is a bit of growth.
And yet that’s how things look today, with the UK fighting off an attempt by the European Union to charge it an extra €2.1bn (£1.7bn) because of the strength of its recovery. As … Continue Reading ››
Here is a chart, part nicked from the OBR's latest Forecast Evaluation Report and part updated with the latest market projections. Very simply, it shows you how markets' expectations for interest rates have changed rather radically over the past few years.
So, for instance, had investors been right about rates back in March 2011, then at this very moment interest rates would have been up at … Continue Reading ››
Here's a Q&A on the market turmoil we've seen over the past few weeks, which you can also find on the Sky News website.
Why are markets plunging?
Good question: as ever with global markets there’s no straightforward answer, but here are three likely factors: first, the economy in the Eurozone is doing worse than many had expected; so you’d expect share prices, which have raced away in recent months, to come down. … Continue Reading ››
There’s a chart that comes in useful when you’re reflecting on George Osborne’s 2014 Conservative Party Conference speech today. Buried away in an annex to this year’s Budget [pdf], it shows you how the totality of the coalition Government’s economic policies have directly affected household incomes.