Andrew Bailey, the Governor of The Bank of England who earns £600,000 a year plus pension, pontificated on Monday that the UK is likely to experience weak activity over quite a prolonged period despite optimism prompted by falling inflation and lower energy prices.
So Long To React
Well, that is what you get for £12,000 a week – a lecture from someone who is supposed to know what he is talking about.
Frankly I believe that his personal publicity machine is far better than his ability to govern, that is a bit like Sadiq Khan as the Mayor of London.
Bailey botched up the B of E reaction to the onslaught of inflation in the early days of Covid, Ukraine, Energy Rises and Food Costs – together with the resultant wage inflationary pressures.
Bailey, it may be remembered, was boss of the City regulator, the Financial Conduct Authority, during a period of high-profile scandals – perhaps he did not know what was going on at that time either.
Just Like Canute
At the Bank he apparently disregarded all the signals of what was to come, possibly because he knew so much better.
His actions, or was it inaction, was just like King Canute as the sea engulfed him despite his stern defiance and against his protestations.
Household Costs Higher
Calling inflation as being beaten is horrendous and total nonsense – just ask any housewife paying household bills and for family food, especially with festivities about to peak.
We already know that energy prices are destined to rise next year, so too will food prices.
The recent continual rainfalls have hit the potato farmers, with rotting crops staying under waterlogged fields – supplies will weaken and prices will rise.
Rates To Rise Soon
There is a certain inevitability that interest rates will edge higher in the New Year – which is probably why Bailey is trying to now forewarn that the Bank may well need to raise its rates due to its derisory inaction over the last three years or so.
In turn that will hit mortgage lending, mortgage ability and, of course, house prices.
There Is Some Good News
Since the 1970ss I have been a big fan of gold (even though I don’t have any) so I am not at all surprised to see the commodity at $2019 an ounce, close to a six-month High.
That is some 10% below the peak hit in August 2020 – but there is still time for that to be repeated.