Readers' Letters: Bank of England should be preventing recession

The Bank of England is asleep at the wheel, or out to lunch, or it just does not care. The UK is slipping into a recession, all because of high interest rates, and next month rates should be reduced by at least 50 basis points, and then gradually fall to around 4 per cent to get the economy moving into growth.

Bank of England Governor Andrew Bailey needs to act quickly to avoid UK recession, says reader (Picture: Hannah McKay - WPA Pool/Getty Images)

The Bank has one main task – to control inflation – but the current inflation rate does not react to higher interest rates. Energy and grain inflation is down to Vladimir Putin, fruit and veg to bad weather in the spring, and mortgage rates to Liz Truss, who spooked the markets by cutting tax for high earners.

In the last year the Bank has been slow to increase Bank Rate and raised it too far in the end. Andrew Bailey, Governor of the Bank of England, needs to act quickly and decisively to save the UK from falling into a calamitous recession.

James Macintyre, Linlithgow, West Lothian

Second view

Ian McElroy’s letter (29 December) regarding the SNP Government’s Black Hole of £1.5 billion makes interesting reading. However, whether it be millions or billions, such sums can be beyond comprehension to many, unless you can convert them into something else. Let us assume that, instead of pounds, we use seconds; 1.5bn seconds equates to 47.53 years. Therefore, if we had spent a pound every second up to today, we would have started halfway through 1975.

Carrying forward Mr McElroy’s examples, the ferry fiasco’s amount of £360 million would equate to 11.41 years and the £97m it was estimated to cost would be the equivalent of 3.08 years. The overspend equates to 8.33 years.

“How many potholes would £260m fill?”, Mr McElroy asks. Try throwing a pound coin every second into a pothole and see how long that would take and how many coins would be used.

J Lindsay Walls, Edinburgh

Private eyes

If Shona Robinson, Humza Yousaf or anyone else involved in this month’s Scottish Budget had ever run a business and had to set prices for its goods or services, they would not have raised taxes. In the private sector, you look at the prices of your competitors before you raise your own. If your prices are higher, you take a hard look at your product and ask yourself whether there is something about it that the customer is willing to pay that premium for.

Taking a hard look at Scotland – income tax was already higher for many, and taxes on the sale of houses and land were considerably higher. At the same time, the product we are paying for – Scotland’s public sector – is considerably worse. Our NHS waiting lists are longer, our schools have plummeted down international league tables and Police Scotland is failing.

The inevitable result of this combination of higher taxes and a woeful public sector will be a net outflow of productive people to elsewhere in the UK. That in turn will lead to a shrinking tax base, higher taxes and more people voting with their feet.

Otto Inglis, Crossgates, Fife

Budget failure

In 2007 the SNP vowed to reform council tax but like many of their promises it has failed to come to fruition. Instead of reform we had tinkering around the edges and Alex Salmond froze council tax, thus depriving local authorities of funding so vital services began to spiral downwards, most never recovering.

Fast forward to 2023. Humza Yousaf, devoid of ideas and creativity, decides to freeze council tax once again, without any consultation. The promise of it being fully funded soon proved false at the recent budget. A freeze in council tax does not help those who are homeless and the social housing budget has been slashed by £200 million.

Stripping local authorities of the ability to raise and spend money where it is needed is, of course, more cynical SNP central control, the very opposite of devolution. Most homeless people would prefer to have a home and pay council tax rather than have no home and freeze.

I awaited the the 2023 budget with bated breath, I was hoping for a brave new vision for Scotland. How disappointed I was, the negativity was palpable. Shona Robison, while delivering her budget, reverted to type, quoting the imaginary social contract with the Scottish people and seeking to blame Westminster for 16 years of SNP fiscal mismanagement. That approach is both cynical and disingenuous and is wearing very thin.

On a lighter note I have added two things to my bucket list. I want to drive on the A9 when it becomes a dual carriageway, and sail on the Glen Sannox. I am an eternal optimist and my imagination has run riot.

Rob Linton, Dumfries

Cash machine

Jill Stephenson displays economic ignorance (Letters, 29 December). First, why shouldn’t Scotland benefit from pandemic financial support as it’s still part of the UK?

Second, Scotland doesn’t have a central bank. It relies on the Bank of England, owned by the UK Government. Its job is to create money to enhance the nation’s wellbeing, which it has generally failed to do. In 2020, the Treasury instructed it to create £400 billion to support people through the pandemic, which it did by tapping a computer keyboard. None of this new money added to the UK’s debt, because a central bank can’t owe money to itself.

National debt comprises government bonds and national savings held by citizens, pension funds, life assurance companies and foreign governments, who save with the government because it’s the safest place to put their money. They know the government, as a sovereign currency issuer, can always create the money to repay.

These savings increase our wealth and ensure the smooth operation of the banking system, pensions and foreign exchange markets. If all government bonds/debt were repaid, banks would fail because they wouldn’t have the money to function. The only constraints on government spending are inflation, resulting from too much money chasing too few goods, and bumping up against the productive limits of the economy. We are nowhere near either at the moment.

Because the UK government has managed its budget like a household’s when there’s no need to do so, it has chosen not to use the power of its sovereign currency to improve people’s lives, but to pander to the parasitic City of London.

Scotland’s future prosperity depends on creating the institutions and policies to harness our resource wealth and develop the human potential of all Scots, an excellent reason to leave the failing UK.

Leah Gunn Barrett, Edinburgh

Not a prayer

David Randall claims Christianity will thrive despite the Church of Scotland‘s demise (Letters, 28 December). I admire his optimism but it’s an indisputable fact that church attendance in both Scotland and England has plummeted to the point there are far, far, too many churches for the shrinking number of communicants, mainly older people, who, as they shuffle off this mortal coil, will reduce congregations even more.

The UK is now, like it or not, mainly secular. Selling a 2,000-year-old story, which depends upon belief in an invisible God, to a generation which sees a space station circling the earth, is just one of the problems facing Christianity. Now, with countless churches having congregations of fewer than 20 and a shortage of ministers caused by retirement numbers exceeding those recruited, some ministers/vicars are looking after as many as seven churches. In England, ministers still need to have fetes and whist drives to raise funds to repair the church roof, despite the Church of England having £18 billion in the bank.

The Roman Catholic Church is suffering similarly; although the many poor around the world still relate to that belief. The conclusion to be drawn is that poverty and religion are closely intertwined.

Doug Morrison, Cranbrook, Kent

‘Drawring’ a line

Far from championing the retention of the letter “R” at the end of words as your editorial proposes (29 December), we should first challenge the English tendency to add the same letter to words like “drawing” to produce “drawring”? I only ever encounter that irritation south of the Border.

And how about the extra "u” that gives us “nuculear” instead of plain “nuclear”. The latter seems a particular problem for Americans but can increasingly be heard from our politicians down south?

Robert Menzies, Falkirk

Yousaf on track

So a Reform Scotland report on Scotland's rail network includes the recommendation to set up a third body alongside ScotRail and the Scottish Government Transport department and ministry; yet another quango with the grand title Scottish Rail Infrastructure Commission (your report, 28 December). Perish the thought this could be a nice sinecure for SNP grandees like Tricia Marwick (ex-chair, NHS Fife) and Michael Russell (Professor in Scottish Culture & Governance; Chair of Scottish Land Commission), but if so the first head of SRIC should be former Transport Minister Humza Yousaf. I'd much rather he screw up the rail system again than the whole country.

Allan Sutherland, Stonehaven, Aberdeenshire

… and finally

It struck me on reading yesterday’s front page headline what a great entry it would make for the last game in Have I Got News for You: “Anger over Scotland's delayed and over-budget ________?”.

John Beck, Gairloch, Highland

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