As The Guardian notes this morning:
Fears are mounting that Donald Trump's trade war will hurt the UK economy, even as the US president backtracks over some of his tougher measures.
Even though Britain is getting off relatively lightly with a 10% tariff, new trade disruption is likely to damage economic growth.
Andrew Bailey, the governor of the Bank of England, sounded the alarm in Washington last night, where the International Monetary Fund's Spring Meeting is taking place.
Three thoughts.
First, he was paid a great deal to make that statement of the bleedin' obvious.
Second, that he needed to say it suggested that he had previously thought otherwise: this reality has only just dawned on him.
Third, he is right. You only had to read what I have been saying here for a while to know that.
But, as ever with Bailey, he left the obvious question hanging. What are the consequences of this?
He hinted that one might be a cut in interest rates. Hallelujah! At last! But before I get too excited, I suspect that he means by a quarter of a per cent.
And after that? Who knows: Asking Bailey to think beyond the details of the time and location of his next dinner with the great and powerful is a bit much to expect; beyond his pay grade, he might say.
So let me spell it out. What we need is a fundamental rethink of the way in which the economy is managed:
- For whom
- With what goals
- And with what governance structures
- Based on what economic understanding
- To reflect which power relationships that are of importance in society, and, as significantly, how their corrosive impacts might be addressed
But that is too much for Bailey to think about.
He can only manage one task at a time. Inflation is his only goal. Interest rates are the only tool. Anything more than that really is too taxing for him (because he can't do fiscal policy).
And the chance that the status quo might need to be challenged really is beyond his comprehension.
At a time when big thinking is required, we have Andrew Bailey at the Bank of England: the Winnie the Pooh of central banking, surrounded by Piglets. Such is our fate.
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He can’t even manage one thing at a time. Current disruption may increase prices in UK. Then he will increase interest rates. Nevermind that interest rates in the UK will not affect the disruption caused in the USA. Nevermind that interest rates have a lag of 18 months.
So he’s not doing even one thing in a meaningful way.
To give him a slight jot of credit, it’s not his decision, nor that of his sham committee of experts, to decide interest rates!!!
Thank you, both.
I used to compile stats from my trade body employer’s members for the monetary policy committee.
The governor votes first. It takes a brave committee member to contradict the governor.
Has there ever been a more incompetent and uninspiring BoE governor?
P45?
I think you are being unfair to Winnie the Pooh!
My wife said so, too.
I will beat myself uo about it.
Read The Tao of Pooh
He’s far from being an idiot
I did, many years ago
I wonder if I still have my copy?
I don’t know. Maybe not entirely unfair.
Surely he IS stuck in a hole with his backside hanging out? And a situation of his own making too…
Has there ever been a more incompetent and uninspiring BoE governor?
I was musing the past couple of days on government economic policy and which tools any government has at its disposal in order to steer/nudge the economy in the way the party or coalition wishes.
As a resident in and national of 2 different Eurozone countries, a point of criticism or recognition of an undesirous situation was always the preceived folly of giving away control of monetary policy whilst retaining fiscal authority. There’s a lot to say for such criticism as well.
I then wondered why any UK government, historical critics of the Eurozone workings, would chose to do exactly that!
As far as I’m concerned, it only goes to prove that 11 and 10 Downing street still hold sway over monetary policy.
Thank you, John.
You’re right.
During the blue and yellow Tory coalition, there was a feeling that the Treasury listened to the Bank of England too much. I don’t think it made any difference.
Yes – lets keep Winnie out of it………
But the rest I totally agree with.
And remember this: it takes an awful lot of money to be paid to people to make a clusterfuck situation like this up.
Paying people highly to do the wrong things. That’s what we’ve got.
Agreed
I am now feeling contrite about Winnie..
Winnie will forgive you. That’s what Pooh does.
🙂
So Winnie the Pooh or Paddington for next Governor of the BofE?
Both excellent candidates
Worth remembering that President Zelensky did the voice over on the Paddington films 1 & 2!
Not here….
@ Martin E with regard to the quality of the governor, there are reasons why he got that job. I will spare Richard the libel risks by not elaborating.
Readers can look at Bailey’s career path since 2010 and thoughts on Brexit, including his address to the Swiss embassy in favour of Britzerland*, circa 2012, and read between the lines.
*I was there and was puzzled. The Indy’s Hamish McRae, on my right, welcomed the support and initiative. The FT journalist on my left wondered why the world needed a bigger Switzerland. We then retired to Wigmore Hall for some sooothing classical music and finger, not comfort, food, all thanks to the embassy.
🙂
Interesting . Thanks. I suspect many more than are willing to admit were influenced by Rees Mogg’s Sr ‘Sovereign Individual’ tenets in their political support of Britzerland. I had a conversation with a successful neo liberal Australian businessman around that time who was enthusiastic about both Brexit and Britzerland. He had shockingly little or no understanding about bloody civil war Swiss history and how it culturally informs Swiss democratic politics. A fact which I assumed at the time was probably shared by many Brexiteers. Their political theories, be it Britzerland or Singapore on Thames on how to implement Rees Mogg’s economic one, share a similar shallow historical cultural understanding, simplistically imposing one sovereign nation state governance structures upon the UK’s, and so are doomed to eventually fail. It is enraging that so many innocents are suffering as they continue to carry out their education in public.
Winne the Pooh the nature/ability of being in exactly the right place at the right time to get the honey/reward
Piglet the ability and bravery to do. Not matter how small the action or actor.
BofE
More a Tigger (react rather than respond)
or Eeyore “People say nothing is impossible, but I do nothing every day.”
or Owl talks the walk from the only books he’s read.
Accountants or pseudo science economists as treasury officials?
If not accountants then it’s any old stuffed bit of cloth of the relevant political cut.
Very good