Mervyn King report - So I wasn't far wrong!Posted on: 10 February 2010 by Mark O'haire
The Bank of England's Quarterly Report emphasises there are tough times ahead for the UK economy and there are no magic fixes.
I’ve just finished watching the Governor of the Bank of England giving his Quarterly Report. Not that good listening – he very much repeated what I’ve been writing for the past week.
Inflation is set to rise to 3.5% and hopefully settle back to the BoE Target of 2% by the end of the year. Cause – the rising cost of oil and the extra 2.5% in VAT.
We are loaded with debt and that has to be paid back and will affect the rate of recovery. He used a very political terminology saying ‘We would experience gradual recovery’. To you and I, this means slow!
When questioned regarding the fact that we have control of our own currency and are not locked to the Euro he parried by saying he didn’t want to comment on what was a political issue. Should we read 'The pound is better for us as it gives us more flexibility to manage our own affairs!'
The meltdown in Greece and Spain is going to give the EU finance ministers a huge headache in the months to come and let’s hope we don’t face the same problems. Our friend Melvyn seems to think not – stating that our borrowing repayments are spread very long and unlikely to have the same effect. He did say that consumer demand, as it grows, will absorb some of the surplus capacity that manufacturing has at present but if consumer spending is slow we may lose this capacity forever! I think we read ‘Job losses’ on this one! In all he was cool collected but not in any way ebullient and went on to stress that this was a forecast – and things change!
Will his political masters like what he has to say – I doubt it. Is it the truth? Yes – so long as you read between the lines!
Is there a better view – no not really?
What does all this mean for the like of the older population in the UK? The answer is simple, conserve your cash, get the best interest rate you can, hold back on big spending (things are likely to get cheaper as retailers panic) and cut your costs. Lots to happen yet before you can relax.
Now what about poor George Osborne – I bet when David Cameron said to him ‘Would you like to be Chancellor?’ he had no idea what he was letting himself in for. A bit like Barak Obama when he decided to run for President – what a mess he faced on his first day! I hope George O was listening to ‘File on Four’ last night. It went into the horror story that has yet to unfold in the banking sector (not them again I hear you cry!). Yes the banks have a little problem – much of the commercial property they lent money against has crashed in value (mainly because it was overpriced when the banks lent against it). The result is the banks (especially the ones we own) are afraid to have the portfolios revalued as they may then have to get more capital to balance their books. The figures run into tens of billions and will have to be sorted in the next five years – over to you Mr Osborne.
Maybe George should ask the guy on the YouTube clip below how he does the trick! Happy viewing.
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