UK News

Insights from the UK and beyond

No time to be boring for BoE’s King


mervynking.jpgBank of England Governor Mervyn King has made his first public speech since the emergency bank recapitalisation programme and several newspapers commented on the change in demeanour of a man who once said his ambition as a central banker was to be boring.

The dramatic events over the past two months since the collapse of Lehman brothers have forced King into the spotlight — like it or not. Being boring is not an option now.

Speaking to businessmen in Leeds, King said the economy is probably entering its first recession in 16 years and that the outlook has not worsened as rapidly as it has in the past month for a very long time.

He called the financial crisis an “extraordinary, almost unimaginable, sequence of events” and added: “We now face a long, slow haul to restore lending to the real economy, and hence growth of our economy to more normal conditions.”

Is the rates decision a good move?


Bank of England policymakers have held rates steady at 5 percent for a fifth month running.

Inflation currently stands at more than double the central bank’s 2 percent target but any rise in rates to try to choke that off risks aggravating the overall economic slowdown caused by the credit crunch.BoE

Where is the economy headed?


bank.jpgBritain’s second-quarter GDP growth was precisely zero, reflecting the country’s weakest performance since the recession of the early 1990s.

With growth in the services and manufacturing sectors equalling the dismal figures of 2005 and interest rate futures rising, it’s a double whammy, hitting both our pockets and, some would say, our morale.

Has the Bank been too cautious?


rtx71g6.jpgBattling with the twin evils of soaring inflation and weaker growth, the Bank of England has kept interest rates at 5 percent for the fourth month running.

With the risk of Britain possibly facing its first recession since the early 1990s, the MPC has clearly opted for caution.

Tuesday’s headlines


mail-pic.jpgHere is a round-up of Tuesday’s headlines:

DAILY MAIL: Father of Four Taken to Court and Fined…Because he Overfilled his Wheelie-Bin by Just Four Inches

Bus driver Gareth Corkhill collected a conviction and a 210 pound fine after he declined to pay a council on-the-spot fine for leaving the lid of his wheelie bin ajar four inches. Story here.

Media’s take on bank bailout


Bank of EnglandThe Bank of England’s 50 billion pound credit swap for banks hit by the global credit crunch leaves a “sour taste ” for the Daily Mail, which accepts it is a necessary evil.

“How could allowing banks to swap their risky mortgage and credit card debts (amassed during years of lunatically-excessive lending) for cast-iron Government bonds be anything else?,” it asks. “So much for moral hazard.”

Interest rate cut too little, too late?


houses2.jpgThursday’s cut in interest rates should come as some relief to hard-pressed borrowers, under the cosh from the credit squeeze which has seen lenders raise their rates, cut maximum loan-to-values and tighten lending criteria. Those on tracker rates – that mirror movements in the base rate – will, of course, see a reduction in the amount of interest they pay. Others, though, are at the mercy of their lenders.

A string of high-street names said they’d reduce their standard variable rates following the quarter-point Bank of England (BoE) base rate reduction to 5 percent. That, however, will only partially offset hikes imposed by many of these very lenders in recent times and many commentators argue that the Monetary Policy Committee has failed to go far enough to ease the pain in the mortgage market — and should have acted faster by cutting rates by 0.5 percent.