The economic measures put in place by Mark Carney – including the decision to cut interest rates to a historic low – to stave off the expected post-Brexit economic storm might represent a logical strategic plan, but such a development is also worrying.
What the Bank of England has done makes sense. The aim is to stabilise the UK economy and by so doing, prevent a recession, with the effects of such a fiscal move being felt immediately.
Economic markers indicate that the UK is heading for a recession, leading the Bank to do what it can with the levers of power available to it.
In truth, it does not have much choice. Avoiding plunging the nation into a recession bringing in its wake the inevitable threat to business stability and a fall in our standard of living is an absolute priority. The one direct way to stimulate the economy is to cut interest rates, thus encouraging people to spend more and stave off the threatened recession.
So far, so good, But those of us who are not economic experts are now waking up to our own “new reality” and realising that the Bank is not a bottomless pit with endless powers to save the economy.
While this move was expected, what we did not expect was that rates could plunge lower still – beyond 0.25 per cent.
Minutes of the monetary policy committee show that most of its members would expect rates to be cut to a little above zero by the end of the year if growth slows, as expected. For the BoE to admit that, it would appear that the outlook is possibly darker than we thought.
There are understandable concerns that having done this, it leaves the Bank with nowhere to go if such measures are not enough.
And that has to be a real worry, because we do not yet know the full economic consequences of Brexit. No-one will be hugely surprised if there is trouble ahead on that front. We are more or less expecting the economic road ahead to be rocky. The Bank can cut rates again, then what?
What else can Carney & Co do? They have no option but to take this action.
However, to be effective, the Bank needs co-operation on two fronts. The benefit must be passed on to the consumer, and when Carney says there will be penalties if this fails to materialise, this has to be carefully and firmly policed. Secondly, the government has to come up with measures in the Autumn Statement which support the interest rate cuts, to ensure the Bank’s strategy has maximum effect. We have to believe that the Bank and the Chancellor are both on message.
Otherwise, the gesture is futile and a waste of resources.
Even if this all happens, it is no guarantee that the economy will be protected sufficiently. Failure to adopt a co-ordinated approach would be reckless. All eyes are now on the banks. They should be well aware of how much public scrutiny there will be of their responsibility, and on Chancellor Hammond.
Murray is Team GB gold
Tonight,Andy Murray leads Team GB, which includes 53 world-class Scots Olympians, out at the Rio 2016 Olympic Games. It is a deserved honour for someone who has brought joy to British sporting fans in recent years, ending those long barren years without a men’s champion in tennis.
Some might see Murray as a controversial choice, given his public support for Scottish independence ahead of the 2014 referendum. Murray was the victim of some vile online abuse over his views, and he later said he had regrets about what happened.
Critics will say there is a contradiction – someone who wanted to break up the UK, then leading a British team. But that would be very unfair. Murray has always been very upfront about the fact that he is proud to represent Britain, and his commitment to the Davis Cup team has demonstrated this. Likewise, one of his proudest moments was winning gold for Britain at the last Games, in London.
First Minister Nicola Sturgeon has today sent Team GB a good luck message saying: “I am delighted that so many Scottish athletes will be performing in Rio.
“The Olympics is one of the highest profile sporting events in the world, and is a tremendous opportunity to compete against the best sportsmen and women in the world.”
Whatever an athlete’s political views and wherever they were born, their dream is to be the best in the world.
There can be no doubting when Murray says carrying the flag in Rio will be one of his proudest moments, he means it. We wish him, and the rest of the team, the very best of luck as these Games begin.