Policymaker Gertan Vlieghe shocked MPs with his admission about the limitations of forecasting. But it’s not hard to see where some hotspots are
It was like a private confession broadcast to the nation. When Gertjan Vlieghe cast his eyes down at the desk in front of him and said “we are probably not going to forecast the next financial crisis”, it was a moment of sorrow and self-reproach rarely seen from a Bank of England policymaker.
Vlieghe is a member of the Bank’s monetary policy committee, alongside governor Mark Carney and seven others who set the UK’s base interest rate.
Progressive parties have overwhelmingly failed to develop alternative policies. Listening to a modern progressive politician is like taking a tepid bath
The 10th anniversary of the global financial crisis looms this year, which means it’s almost a decade since neoliberal economics began to fall apart. The crisis spawned a global recession, the near collapse of global finance and the subsequent eurozone crisis as governments incurred huge debts amid efforts to rescue the hapless banking industry.
The then Australian prime minister, Kevin Rudd, observed in the immediate aftermath:
The current crisis is the culmination of a 30-year domination of economic policy by a free-market ideology that has been variously called neoliberalism, economic liberalism, economic fundamentalism, Thatcherism or the Washington consensus. The central thrust of this ideology has been that government activity should be constrained, and ultimately replaced, by market forces.
Related: We are unlikely to spot next financial crisis, Bank of England official says
Related: Neoliberalism – the ideology at the root of all our problems
Related: You’re witnessing the death of neoliberalism – from within | Aditya Chakrabortty
Flawed takeover bids, bad lending, and a tower of legal bills have left the Royal Bank of Scotland deep in the red
Sir Howard Davies, chair of Royal Bank of Scotland, described the £7bn loss the bank rang up last year as “stark”. But it is just a fraction of the bank’s towering total losses of £58bn over the nine years since it was bailed out by the taxpayer. And the bank will rack up even more losses this year.
Related: RBS braced for multi-billion-pound settlement for loan-misselling scandal
Related: Treasury plan may allow RBS to avoid selling 300 branches
We must restore the principle of parliamentary sovereignty – Theresa May does not have an open-ended mandate
Former UK prime minister Tony Blair’s recent call for voters to think again about leaving the EU, echoed in parliamentary debates ahead of the government’s official launch of the process in March, is an emperor’s new clothes moment. Although Blair is now an unpopular figure, his voice, like that of the child in Hans Christian Andersen’s story, is loud enough to carry above the cabal of flatterers assuring Theresa May that her naked gamble with Britain’s future is clad in democratic finery.
The importance of Blair’s speech can be gauged by the hysterical overreaction to his suggestion of reopening the Brexit debate, even from supposedly objective media: “It will be seen by some as a call to arms – Tony Blair’s Brexit insurrection,” according to the BBC.
Related: Blair has a far bigger vision than saving us from Brexit | Matthew d’Ancona
I lived through the 30s and 80s and know the only to beat the tyranny of austerity is through defiance. As long as you can love, there’s a purpose to life
I have lived a very long time. Tomorrow, it will be exactly 94 years ago that a midwife with a love of harsh gin and rolled cigarettes delivered me into my mother’s tired, working-class arms. Neither the midwife nor my mother would have expected me to live to almost 100 because my ancestors had lived in poverty for as long as there was recorded history in Yorkshire.
Nowadays, when wealth is considered wisdom, too often old age is derided, disrespected or feared, perhaps because it is the last stage in our human journey before death. But in this era of Trump and Brexit, ignoring the assets of knowledge that are acquired over a long life could be as lethal as disregarding a dead canary in a coal mine.
Related: Life expectancy forecast to exceed 90 years in coming decades
Related: Living to 90 and beyond? No thanks | Michele Hanson
I began studying economics at night school in Leeds in the 1950s and continued, at various institutions, as an external student of London University. Our courses were broadly, but not uncritically, Keynesian. We abjured fancy equations and sprinkled our essays with phrases like “a tendency to” and “pressure towards” this or that as a consequence of some other event. As a teacher I have tried to keep reasonably up to date, and learned in the early 70s, for example, to regard most monetarist nonsense as the fantasies of “Friedmaniacs”.
With this background, and aware of the influence on our leaders of Oxford’s PPE (philosophy, politics and economics) course, I have often wondered what on earth they taught them. Andy Beckett’s article (The degree that runs Britain, 23 February) gives the answer. PPE graduates are “intellectually flexible”. Or, to put it another way, they sway with the wind. And the winds of monetarism and arrogant attempts to make human behaviours as subject to mathematical predictions as the laws of physics, have captured economics academia for the past 40 years. Conservative, Labour and, to our eternal shame, Liberal Democrats have been equally culpable, as the damage done to the bottom 20% in this country, and to 80% of the population of Greece, so clearly demonstrates.
Your article (Pension changes could cost 11m Britons thousands of pounds, 21 February) says 75% of pension schemes use the retail price index (RPI). But all the public-sector schemes, which must be more than 25%, as well as many in the private sector – eg BT, BA – have used the consumer price index (CPI) for years. The article says RPI is usually greater than CPI; in fact it is virtually always greater because of the different way they are calculated – it’s called the formula effect. To cut a long and complicated story short, RPI may overstate inflation by about 0.2% on average but CPI understates it by about 0.8%.
Over time that’s a big difference and will of course affect future pensioners (today’s young) more than it will current pensioners – this is not a baby boomer issue. Basically CPI was never meant to be a real measure of inflation; rather it was a way of comparing inflation in EU states. Its adoption by the government as the measure of inflation rises – on benefits as well as pensions – since 2010 is basically a mendacious scam.
Britain loses top spot as ONS revises down annual growth to 1.8%, from an initial estimate of 2%
Germany overtook the UK as the fastest growing among the G7 states during 2016. Europe’s largest economy expanded at the fastest rate in five years, showing growth of 1.9% last year.
The expansion pushed Britain into second place among the G7 industrialised nations, after the Office for National Statistics revised down annual UK growth to 1.8%, from an initial estimate of 2%.
German economy was marked by strong and steady growth during 2016, with GDP increasing 1.9% – highest rate of GDP growth among G7 countries.