This piece in a Telegraph newsletter this morning is a classic:
The Bank of England has warned its near 6,000-strong workforce of job cuts as it seeks to fund an overhaul of its flawed economic forecasts.
Andrew Bailey has invited all staff to apply for a voluntary resignation scheme as part of a £45m cost-cutting drive, prompted by the central bank spending millions of pounds on IT upgrades and changes to the way it analyses the economy.
While the Bank's Governor stressed the scheme was “entirely voluntary”, he also warned: “We cannot rule out compulsory redundancies later down the line.”
It comes after an independent review led by Ben Bernanke, the former Federal Reserve chairman, warned that the Bank's ability to control inflation had been undermined by “significant shortcomings” in its economic forecasts.
I am, of course, aware that the Telegraph has put its own spin on this, but let me do the same.
The Bank is worried about things right now:
- Its own economic incompetence, to address which it apparently needs to invest.
- The overvaluation of AI.
- The resulting risk of recession.
So, it has decided to:
- Sack staff, even if they are needed to address issues of its own economic incompetence
- Raise funds for investment by cutting costs, even though credit is (somewhat unsurprisingly) readily available to it and effectively costless, contributing to the paradox of thrift and the risk of recession.
- Presumably, substitute for the sacked staff with AI, about which it has significant reservations.
I have already noted Rachel Reeves' incompetence this morning, and suggested the captain is not in charge, or she would not still be in post. It would seem that the same problem is evident at the Bank of England.
Nine people need to go at the Bank of England: Andrew Bailey, its Governor, and the other members of the Monetary Policy Committee. It is not the Bank's economic forecasts that have done such harm: it is these people's collective lack of knowledge and wisdom that has done that, but others will, of course, carry the can. It was ever thus.
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The MPC members have been different voting records and views. At least 2 of them have been fairly consistent in pushing for lower rates. To say they all need to go is not necessarily fair on the minority there that do have better instincts than the likes of Mann and Pill.
They should look at the notes for those who have diagnosed the saving as being caused by Pele being worried about higher inflation, or who think that the current interest rates are not restrictive, or who clearly put investment returns above households, and drop those. 2 or 3 night qualify to stay
Spot on.
Sure, the forecasting is poor… but we know it is and, frankly, always will be given the human/political element in the system. “Economic forecasters exist to make Astrologers look good” (JK Galbraith).
But for the Policymakers to blame the forecasters for their own poor decisions is appalling. As you have often observed, a walk down the Mile End Road would tell them more than any forecast. This is classic “let’s throw the little people under the bus”.
We need a change at the top and diversity of MPC members that will challenge the “bankers know best ” attitude that currently prevails.
presumably supposed to be “Nine people need to go at the Bank of England” NOT ” to the Bank of England”
Prof reading not too good this mornings.
Back in bed now….