Mark Carney’s promise of prolonged low interest rates risks being broken August 7, 2013 THERE is a wind of change blowing through the Bank of England with new governor Mark Carney at the helm. Under his two predecessors – Eddie George and Mervyn King – the Monetary Policy Committee (MPC) was always very reluctant to make commitments about its future policy. The view was that the Committee would reassess [...]
Bad news for Labour: Voters are getting behind coalition’s cuts August 6, 2013 ED BALLS and the Labour party have a big problem. The British economy is recovering, despite the coalition’s relatively modest cuts, and the public is increasingly supportive of reducing public spending. This is a devastating blow for Labour’s entire narrative, which was predicated on the view that “cutting too far and too fast” would not [...]
Help to Buy unlikely to spur new house building August 6, 2013 THE PRICE of housing is being driven upward by the government’s Help to Buy policy, but may not stimulate new building, according to ratings agency Fitch. Though the intention of the scheme is to get more people a place on the housing ladder, Fitch expects that chancellor George Osborne’s mortgage guarantees will mostly push up [...]
US sues Bank of America for alleged fraud August 6, 2013 THE US government yesterday filed two civil suits against the Bank of America for an alleged fraud against investors, involving $850m (£553.5m) of mortgage-backed securities. The Justice Department and the US Securities and Exchange Commission filed the parallel suits in US district court in Charlotte, according to the court filings. The securities date to about [...]
Ratings agency says Help to Buy will push up house prices August 6, 2013 Ratings agency Fitch has said that chancellor George Osborne's mortgage backing scheme Help to Buy will "probably push up house prices" (release). The policy is also unlikely to help with very low housing supply, Fitch says that the "impact on the number of new homes built is less clear". House builders stand to benefit, but [...]
What to expect from tomorrow’s Bank of England Inflation Report August 6, 2013 Tomorrow sees Mark Carney's first Inflation Report as governor of the Bank of England, which should come with an additional statement on the central bank's plans for forward guidance. Berenberg chief economist Rob Wood gives his assessment of what we might expect: Here comes guidance The BoE will make an announcement on guidance alongside the [...]
Soaring services sector drives business activity to record high August 5, 2013 HOPES that the recovery is picking up steam were lifted further yesterday, after the UK’s businesses reported the strongest month of growth since records began. Markit’s surveys of the services, manufacturing and construction sectors in July got the most positive responses ever, bolstering recent signs that the economy is returning to sustained expansion. The unparalleled [...]
Business mulls one year of FLS July 31, 2013 ONE YEAR ago today, the Bank of England launched its funding for lending scheme (FLS), with the intention of spurring loan activity. Aside from a boost to the mortgage market, which has been partly attributed to FLS, lending to firms remains anaemic. Though interest rates have dropped, Vicky Redwood, chief UK economist at Capital Economics, [...]
City A.M. shadow MPC votes 8-1 against rise in QE July 31, 2013 ALLISTER HEATH | CITY A.M. “Given the expansion of GDP in the second quarter, there would be no benefit to extending QE or cutting rates. The MPC needs to privately work on a way to exit from our current monetary policy, which is now a net drag on the economy.” GRAEME LEACH | INSTITUTE OF [...]
Help to Buy is worrying but the real problem is inflexible housing policy July 31, 2013 MILTON Friedman once observed that, “with some notable exceptions, businessmen favour free enterprise in general, but are opposed to it when it comes to themselves.” With this in mind, if a market intervention is criticised even within the industries that could benefit from it, it is probably safe to conclude that it is a really [...]