The Bank of England is not among the regulators, including the Competition and Markets Authority and Ofcom, invited by the Chancellor to the Treasury to be reminded of their growth mandate enshrined in law in 2017.
Maybe Rachel Reeves chose to whisper her belief in expansion to the governor Andrew Bailey on the way back from China as bond yields zoomed up on financial markets.
Reeves cannot be seen to influence an independent central bank. Nothing would be more likely to excite the ire of the bond vigilantes.
But the Chancellor must know that nothing would produce faster results in terms of output and confidence than a reduction in Bank rate from 4.75 per cent in February and a declared path to much lower borrowing costs by year end.
Lower official short-term rates might encourage the yield curve to flatten, would bring instant relief for borrowers on tracker and variable rate mortgages and could ease pressure on firms facing higher costs a result of the increase in employer payroll taxes.
Before acting, the Bank’s over-cautious interest-rate setting Monetary Policy Committee has been waiting on a lower trend in wage settlements – the public sector is not helping on that front – and a moderation in services prices.
Hesitant: The Bank of England’s over-cautious interest-rate setting Monetary Policy Committee has been waiting on a lower trend in wage settlements before cutting rates
It should also keep in mind that monetary policy, in the shape of interest rates and quantitative tightening (removing the stimulus built up in the pandemic and at the start of the Ukraine war), takes time.
The unexpected December dip in headline inflation to 2.5 per cent offers an opening to the Bank. Consumer prices are doing better in the UK than the US where they rose 2.9 per cent last month.
Core good inflation in Britain fell, and services price increases dropped from 5.01 per cent to 4.73 per cent.
This decline is no less valid because it was led by a dip in air fares and hospitality. Bailey needs to lead from the front, as he did at the start of Covid-19, and cut hard and fast.
Tech boosters
Currys boss Alex Baldock is one of the most effective voices exposing the scale of Labour’s missteps since taking office.
At the electronics specialist, the practical impact of additional National Insurance costs of £32million is that the UK and Nordics retailer is redeploying IT jobs to India.
Baldock regards the false promise of business rate reforms ‘absurd’ and is actively lobbying against workplace changes which require colleagues to be offered guaranteed hours.
Far from protecting workers’ rights, the proposed reforms will make it much harder to work on flexible contracts which enable Currys to employ students, semi-retired people, women returning to work and others.
Baldock’s narrative might be less palatable had he not delivered. Currys is one of those firms which successfully beat of an effort from predator Elliott to take the retailer off the London market.
Instead of tanking, Currys stock has all-but doubled in the last year, money which would have accrued to opportunistic buyers rather than shareholders.
The shares are being supported by a recovery in the Nordics, and strong demand for mobiles (which have taken a long time to turnaround) and buoyant computer sales and gaming.
Currys says it has captured 75 per cent of the AI-enabled computer and cell phone market in the UK.
Baldock has just returned from a fact finding and buying trip to the US, visiting Nvidia and Microsoft among others, to help secure the company’s tech edge.
Profits are surging, forecast to rise 31 per cent on last year at £145million to £155million, and there is a promise of a dividend increase with the full year.
It’s a long time since we have heard such optimism from a diminished band of electronics retailers.
Profits geezer
There can be rewards for not changing the head honcho. After 19 years at the helm, Jamie Dimon at JP Morgan has cemented his reputation as the banker who walks on water.
He has delivered a stonking £48billion of profit in 2024, an 18 per cent increase with trading and deal making boosting the outcome.
That’s more than the 2024 projections for all four of Britain’s biggest banks – HSBC, Barclays, NatWest and Lloyds – added together.
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