Comment: Honeymoon coming to end for new governor

Bank of England governor Mark Carney. Picture: AP
Bank of England governor Mark Carney. Picture: AP
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MARK Carney has had a pretty easy ride in his first few weeks in the job.

The new Bank of England governor has enjoyed a run of relentlessly positive news on the economy.

That feelgood factor continued on Friday with an upward revision to second-quarter growth from the number crunchers at the Office for National Statistics. Expansion among construction firms and manufacturers helped fuel the upgrade to 0.7 per cent from July’s estimate of 0.6 per cent. There were also encouraging signs on the export front.

So far, so good. But Canadian-born Carney faces considerable headwinds, partly of his own making. The new governor’s forward guidance policy – to cap interest rates until unemployment drops below 7 per cent – will be severely tested as the economy heats up. Rates may well have to rise ahead of the central bank’s expectations. Indeed, markets already appear to be pricing that scenario in.

Compounding the headache are fears of a new house-price bubble and the yawning gap between inflation and wage growth – eroding consumer spending power and threatening the recovery. An eagerly awaited maiden speech this Wednesday should prove the first test of Carney’s resolve.

Let’s drink to small brewers’ success

WITH Edinburgh in the festival swing, trade has been booming for the city’s many bars and hostelries. There have been few indications that alcohol consumption is on the wane.

Yet, figures last week indicate that sales across Scotland fell by 3 per cent between 2011 and 2012, and by 8 per cent since 2009.

The £4-plus pint will have deterred some, while the Scottish Government has attempted to curb the worst excesses with measures such as banning multi-buy discounts. Plans to introduce a minimum price have met opposition. Besides ramping up the cost of some drinkers’ favourite tipples, the move seems unlikely to tackle the hard-core element out there. It could yet be thwarted by the courts.

The big brewers have been feeling the heat, with the economic woes across much of the Eurozone further puncturing sales. Results last week from Carlsberg and Heineken highlight the challenges facing the industry.

Running counter to the backdrop of declining UK volumes is the explosion in micro-brewing. Hundreds of small-scale beermakers have sprung up, with notable Scottish names including Arran, BrewDog, Harviestoun and Williams Brothers.

Many have carved a niche supplying local pubs and retailers. A number have pushed into overseas markets. Their success provides a reason to raise a glass or two.

Steam train pledge on the right track

STEAM trains have been promised when the historic Borders rail link reopens in 2015. The seasonal use of vintage locomotives and carriages mirrors the running of the Jacobite service on the West Highland Line and should ensure a boost to tourism in the area. Perhaps it can also bring back some glamour to the act of getting from A to B.

Twitter: @scottjamesreid