The punch bowl
The Bank of England’s job, as the old joke goes, is to wait until the party is livening up and then to take away the punch bowl.
So while its prediction that the recession is going to be slightly shallower than it previously thought is good news, the downside is that its long term predictions are worse not better.
It used to think that the UK economy could grow at a not very impressive 1.5% before inflation became a problem, now it thinks the rate is just 1%.
That means when the economy starts to grow the Bank of England will feel bound to take the punch bowl away earlier, or put up interest rates sooner to curb price rises.
The big worry is why the UK economy seems incapable of sustained, high, low inflationary growth. It has been a problem for more than a decade and it seems to be getting worse.
Discovering why this is, finding a cure and implementing it is vital, yet it does not even seem to be on the government’s radar.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media