DCSIMG

Has Carney tipped balance in Tories’ favour?

The Bank of England for the first time linked the outlook for its benchmark interest rate to unemployment and inflation. Picture: Getty

The Bank of England for the first time linked the outlook for its benchmark interest rate to unemployment and inflation. Picture: Getty

  • by DAVID MADDOX
 

POLITICALLY, Mark Carney’s first major intervention as Governor of the Bank of England could be a turning point in the run-up to the next general election in 2015.

By announcing that the recovery “is now under way” Mr Carney has in effect put a stamp of approval on the coalition’s austerity policies –whether he intended to or not.

In a week where manufacturing figures are higher than they have been since 1992, new car sales have gone up 12.7 per cent and house prices have risen by an average of £10,000, it all adds into a picture that Britain is moving forward.

The decision to keep interest rates down at 0.5 per cent, probably for at least three years, will also feed the housing market and at least give the impression of prosperity.

With the Tories already clawing back ground on Labour and just five points behind in the polls, and with a some weighty international figures in their election campaign team including Jim Messina from the Obama team and the Australian guru Lynton Crosby, they appear to be in very good shape.

What the Tories needed though was an economic recovery, which had so far appeared to be allusive. But this week’s data and Mr Carney’s comments seems to suggest that finally they have something to boast about.

Labour are faced with a problem. Swansea MP Gerraint Davies’s criticism of leader Ed Miliband is a sign of the growing despair in the party over the way that the leadership has allowed the Tories to win the economic argument.

Meanwhile, Labour’s campaign on falling living standards is backfiring because they are the ones being blamed for the problem which most people see as starting with the banking crisis in 2008.

If the data continues to improve it will be harder for the former Treasury team of Miliband and shadow chancellor Ed Balls to argue that the coalition strategy is wrong.

And things potentially can only get worse because there is likely to be a sell-off of Lloyds shares and possibly RBS shares which would boost the Treasury coffers ahead of an election.

For those looking to take over from Mr Miliband after 2015 there is a crumb of comfort in that the policy now seems to be pinning the recovery on yet another housing bubble. If and when that bursts whoever is leading the opposition then could prosper politically.

 

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