Economic Prospects for 2017: Andrew Simms – New Economics Foundation


As John Nightingale who sent the link says, this ‘reads well’: 

Each year the Financial Times conducts a survey of leading economists on the UK’s upcoming prospects. The New Weather Institute is part of that survey and predicts a bumpy ride. A lot of the FT material sits behind a paywall, so for interest here are the answers we gave to their questions (which are themselves interesting in terms of locating mainstream concerns) on issues ranging from economic growth, to Brexit, monetary and fiscal policy, inflation, immigration and, unavoidably, Donald Trump.

Highlights (full text on WM New Economics Group website):

It is time to stop measuring the health of the economy using orthodox economic growth measured by fluctuations in GDP as the primary indicator. By mistaking quantity for quality of economic activity, worse than telling us nothing it can be actively misleading. It tells us nothing about the quality of employment, the intelligence of infrastructure, the economy’s resilience, the environment’s health, or the life satisfaction of the population. As the United Nations Development Programme pointed out (as far back as 1996), you may have growth, but it might be variously jobless, voiceless (denying rights), ruthless (associated with high inequality), rootless (culturally dislocating in the way that fed Brexit, for example) or futureless (as now, based on unsustainable resource use) . . .

. . . tax breaks, subsidies and the way investment portfolios get managed means that money flows cheaply in fossil fuel infrastructure and operations. At the same time, necessary and successful emergent sectors like solar and other renewables can still struggle for affordable, patient capital. The privatisation and weakening of the mission of the Green Investment Bank is deeply concerning in this regard . . . prevalent economic uncertainties seem to be having the effect of putting everyone, the MPC included, on ‘watch’, and unlikely to do anything radically different in the ‘phony war’ period of approaching Brexit negotiations . . .

If anything, far from being downgraded by the Brexit debate, the economic importance of immigration to key UK sectors has been made more acutely obvious, ranging from higher education, to food, retail and a range of other service industries. Importantly, many of the drivers of population movement from inequality to conflict and environmental degradation show no sign of lessening and, if anything, growing worse.  The tone and promise of government policy seems mostly to affect the degree of xenophobia experienced by immigrants rather than significantly changing their numbers. With all these things in mind, I doubt trends in immigration will change much in 2017 and that this will buoy-up a UK economy facing a wide range of threats . . .

There is no reason in principle why QE cannot be used in a more intelligent and focused way. The UK is weighed-down with an aging, creaking, high-carbon infrastructure. The case for public investment as necessary to rebuild the foundations for a modern, clean and efficient economy to underpin our quality of life is overwhelming. The cost of money for conventional borrowing is cheap. And the decision by the Bank of England to expand its quantitative easing (QE) programme from £375 billion to £445 billion in the wake of Brexit, demonstrates that public money creation is also possible when the situation demands it. Up to date, QE has benefited the banks, and the holders of certain assets, with broader economic benefits being questionable. But, as Mark Carney has previously indicated, there is no reason in principle why it cannot be used in a more intelligent and focused way to aid the productive, low carbon economy. I and others have consistently argued that far more good could be done if the same basic mechanism was used, for example, to capitalise a much larger and more ambitious green investment bank via bond purchases. The work subsequently undertaken such as large scale energy efficiency retrofitting of the UK housing stock and the roll out of renewable energy would generate good quality local employment and better prepare Britain for the future. There is no sign yet that the government intend to seize this opportunity and rather too many signs that any borrowing that is undertaken will not be put to as good use . . .

Combined with the sentiments unleashed by Brexit, and the UK government’s active new embrace of industrial strategy, it is possible that the economic pendulum may swing back some degrees from globalisation toward localisation. Done in a purely autarchic way this might be negative. Done with respect to international cooperation and obligations, and to help build a more environmentally sustainable economy, it could snatch success from the jaws of chaotic self-destruction. Did you know… Adding your events to the NEON calendar will automatically promote them to our 1414 membersadd your events here.




Interest rates in the UK. Heading up

Mainstream economic commentators are currently anticipating an upward movement in interest rates in the UK. Many even anticipating it to occur in the immediate run up to the General Election.

However, rates paid by borrowers in the UK are already some of the highest in Europe.  And the lending rates are until very recently clearly lower. Here is my latest comparion of some key average interest rates across some of the most relevant countries in Europe.






There are links to the source data in the earlier comparisons – see below. And one can see that across Europe in these years borrowing rates have been lower in the countries compared here. And have even been falling more in the other countries since 2012.




This is the latest in a series of such comparisons

that we have done – begining in December 2011 when we used the comparison to call for the way in which the Bank of England set interest rates to be changed

We also did a comparison in late 2012 when we brought these issues to the attention of the Parliamentary investigation into the rigging of interest rates.

This has all been part of a stream of work concerned with challenging the power of the Bank of England, whose role in our recent UK history goes far beyond the setting of interest rates.

Should QE now be used for the common good – extending and adapting the work of Birmingham Energy Savers?


Quantitative Easing currently benefits the non-bank financial sector, commercial banks and the Treasury

HansardUnder QE, Hansard evidence informs us, the Bank of England’s Asset Purchase Facility purchase of just under £375bn of government bonds from the non-bank financial sector has led to a lowering of long term interest rates. The non-bank financial sector and commercial banks now hold more liquid assets in the form of interest-bearing reserves.

The consequent reduction of borrowing costs for the government means that debt issued or re-financed since 2009 has been substantially cheaper, saving some £50bn in immediate funding costs.

But QE could be used directly for the common good: MP Caroline Lucas:

Caroline Lucas 3“There is huge, and as yet untapped, potential in renewable energy, energy and resource-use efficiency and the transformation of our transport system that would create high-quality jobs across the country and reduce the UK’s overall ecological impact.

“If we are serious about staying below 2C warming, as we have legal obligations to do, then to invest in a destructive Dash for Gas when there is a Green New Deal on the table borders on criminal negligence by my parliamentary colleagues.”



GND logo


This is the National Plan advocated by the Green New Deal Group: Larry Elliott of the Guardian, Tony Juniper, formerly FOE’s director, Jeremy Leggett of Solarcentury, Richard Murphy Tax Justice Network, Ann Pettifor of NEF and Debtonation, Charles Secrett, currently working with ELF, Triodos Bank and London’s Development Agency and Wildlife Trust, MP Caroline Lucas, Andrew Simms director of NEF, and the convenor Colin Hines, LWM co-founder and Co-Director of Finance for the Future.

Birmingham Energy Savers

birmingham energy saversEarly beneficiaries of Birmingham Energy Savers’ (BES) activities gave testimony of the positive impact the innovative scheme is having on their lives at its official launch event at The Council House in February.

It was attended by local people helped out of long-term unemployment, residents that are now enjoying warmer homes plus lower energy bills joined representatives of Birmingham City Council, who originated the scheme, and its delivery partner Carillion Services.

If such schemes could be more widely implemented and adapted for use all over the country, welcome social, economic and environmental benefits would be offered to most people – but minimal ‘rich pickings’ for the few.


In similar vein, Fran, Ben, Andrew, Mira and rest of the team at Positive Money urge:

“Get the Bank of England to create new money instead. This new money would be granted to the government, who would spend it into the real economy where it can create jobs and support businesses”.


A Very British Coup – How the Bank of England brought us Austerity

Alistair Darling explains a crucial moment in the fall of Gordon Brown in his book Back from the Brink. He explains how as Chancellor he decided to keep Mervyn King on as governor of the Bank of England in 2008.

‘I told Gordon my view, that Mervyn should stay, and with some reluctance he aquiesced. I don’t think that he and Mervyn ever got on. Certainly the next two and a half years saw a growing antipathy between them. This really came to a head during the Treasury select committee hearings in 2009, when Mervyn appeared unilaterally to announce that there was no more money available for fiscal stimulus. Gordon quite rightly felt that this was crossing a line, that he was addressing fiscal policy, which was the remit of government. Certainly Mervyn would have been furious if Gordon or I had expressed an opinion on what the Bank ought to to be doing over monetary policy. Gordon was very angry and tried to phone me during the committee session, which I was watching from the Treasury. He asked me what I was going to do about it and suggested that I should go in and stop him there and then. It was tempting, but not practical.'(p.69)

Brown loses control of his own cabinet

Up until then the Tories had been supporting Labour’s plans to maintain public spending. Very soon after they changed tack to argue that the deficit needed to be addressed. Within the year Alistair Darling was then himself bringing forth a deficit reduction plan. The Labour Cabinet swung then behind Darling and spending cuts, despite the resistance of Gordon Brown and Ed Balls. In the end it was only Ed Balls who resisted.

As it became more and more clear that the outcome of the 2010 General Election would be a hung parliament, the Governor of the Bank of England and the Cabinet Secretary Gus O’Donnell began to work closely together to put together a coalition with a coalition agreement organised around the principle of deficit reduction.

Preparing a new government

For Mervyn King at least this would be a suicide pact of a programme. The measures required to shore up the country’s finances would be so unpopular that the next government would be out of power for a generation.  This is what he said to a American visiting  economist whom he had known for years, who then apparently blurted it out on Australian television. The story got picked up in the British press just hours before the final episode in the series of leaders’ debates that became central to the 2010 British election.

In his book  22 Days in May – The Birth of the Lib Dem-Conservative Coalition David Laws, who was the Lib-Dems  lead negotiator tells us how on the Sunday after the elections that resulted in the hung Parliament the negotiators met.

‘Gus O’Donnell welcomed us and made some comments about the state of the markets and the importance of our work. He said that the Civil Service could offer advice on constitutional issues, budgetary and other matters. He then offered a have us briefed by the Governor of the Bank of England and a representative from the Joint Intelligence Committee, so that we could understand the ‘seriousness of the economic environment’ and other matters.’

Laws goes on …

‘Both sides declined this opportunity. We Liberal Democrats suspected that we knew what both were likely to say, and we did not think it appropriate to have such a briefing at this stage in the negotiations. I suspect the Governor of the Bank of England’s intervention would be perceived to have been aimed more at us than at the Conservatives, and we didn’t want to feel manoeuvred into policy positions that we weren’t confortable with by outside advice.

Later in the day, concerned that our rejection might be misinterpreted, we suggested that Vince Cable, our Treasury spokesman, might speak to the Governor instead.’ (P. 95)

Despite the caution Laws professes about his party being manoeuvred, is it really credible that they really remained masters of their fate ?

Not even in Greece

Conaghan I have assembled these little known snippets from the already published recent history, in order to help get the change in government and policy  into perspective.

Many governments around the world have fallen since the crash of 2008, but nowhere else has the central banker played such a role in putting a government and its priorities together as they did in London in 2010.

Although in Greece a government was put together around a former central banker as prime minister, it was but a stop-gap government with a deliberately restricted lifespan put together by a president.

Andrew Lydon   – LWM Bank of Britain Project 

An important recommendation from Andrew Lydon in Birmingham and Andrew Hilton in London

Andrew Lydon (WM New Economics Group and Localise West Midlands) has long stressed the vital importance of giving a fair return to savers in his presentations and the latest LWM blog:

Long before the Governor of the Bank of England claimed he heard that the big banks were rigging the now famous LIBOR, we were pointing out how the banks were squeezing us all.

Savers in the UK are being offered derisory returns, but average mortgage-payers are usually paying over 5%.

The difference in the UK is far more stark than in France and Germany, or even countries in crisis like Ireland and Greece.

An elaboration on this theme was seen recently in the FT by Andrew Hilton, Director of the Centre for the Study of Financial Innovation – a forum for debate and research about the future of the financial services sector, supported by sponsorship from leading institutions in banking, insurance, investment, government, technology and the professions:

The key is confidence. If that is there, investment will follow . . .

If the authorities seem hell-bent on pushing interest rates down to historically unprecedented levels, consumers may well ask: Why? And when they realise the answer is panic, they will stuff the money under the bed. They certainly won’t go out and buy a new car or a washing machine . . .

[T]he fastest-growing demographic is the elderly – for whom low or zero interest rates are a disaster. If your old age income is to be determined by annuity rates, a cursory look at FT tables will be enough to dissuade even the most feckless oldie from that Caribbean cruise.

Mr Hilton’s answer: government should “keep calm and carry on” and increase interest rates, to “say 2 to 2.5 per cent real – not cut them”. People would then have more confidence in buying what they need and manufacturers would have enough confidence to invest.

Andrew Lydon recommends that – as the difference between what the banks are making on loans and paying on savings is currently so stark in the UK  [see also his December 2011 blog] – the Bank of England should start giving guidance on a norm for savings rates, which could be eased upwards without the need to put up rates for borrowers.



Interest rates being rigged – what the Parliamentary Banking Commission should be looking into

Since Christmas we have published a number of blogs looking at everyday interest rates in the UK. Long before even the Governor of the Bank of England claims he heard that the big banks were rigging the now famous LIBOR, we were pointing out how the banks were squeezing us all. Savers in the UK were being offered derisory returns, but average mortgage-payers are usually paying over 5%. The difference in the UK is far more stark than in France and Germany, or even in crisis countries like Ireland and Greece.

In the real world,  borrowers in the UK are paying some of the highest interest rates in the developed world. We have highlighted this in previous reports and the chart brings together some most recent comparable figures assembled by all Europe’s central banks and contributed to the ECB Data Warehouse.

We have compared the UK figures here with the Eurozone leaders and some of the countries in distress. The rate for savings is based on deposits that are only tied up for three months and the rate for loans is based on loans for house purchase based on a term of  at least 5 years .  So the savings rate is the one that would be appropriate to new and modest savers, and the housing rate is one of the most used in the UK given how much borrowing (even for business) is based on using houses as security.

This exploitation is really how the bonuses are being paid.

Anyone who looks up the LIBOR on the internet, will find it is usually well within one percent of the Bank of England ‘base rate’. But the interest rates real people get bears no comparison to the record low interest rates the Bank of England claims to be providing us.

The Bank of England has failed the UK. They have let financial practices occur in London, including rigging the LIBOR, that have damaged the world economy, and which would not be allowed in the USA.  Their monetary policy has failed us. We have long had the highest inflation rate in G7 countries despite us having such steep actual interest rates.

As the government’s new banking enquiry gets underway, we are looking to get our project to reform the Bank of England, and make it more representative, back on the road.  Reform of the Bank of England is something none of our political leaders have recognised as part of bringing our financial economy back under control.

This cannot be done by regulation, sealing up the loopholes or re-shuffling the names in the regulatory apparatus. People have rightly said that cultural change is needed. The most far-reaching way of doing this is to democratise banking supervision.

Our central bank is run by a board (‘the court’) appointed by whoever is in government. Seeking to foster some semblence of the bank being representative New Labour started the practice of putting a leading trade union magnate on the court; Dave Prentis, Unison general secretary, is on it now. But New Labour was never otherwise keen to enhance the role of the unions in the economy, as opposed to the role of the very biggest of businesses and the Bank of England, itself.
Women and Scots members would also improve the image  of the bank. If  both could be covered in a single nomination, the gods of diversity and equality would be chuffed.   The woman in question being head of Lloyds TSB in Scotland would even bolster the traditional banking interests. Further reading though confirms she is actually an American – but she would not feel at all out of place: an American who helps run the investment bank Deutsche Bank (after having previously been with Goldman Sachs) is also on the court. Goldman Sachs currently has an ‘old boy’ on the interest rate setting committee too. Lady Rice of Lloyds TSB  also happens to be a director of Scottish & Southern Electricity, one of the Big Six energy utilities that dominate the UK energy market. But she would not be alone in that either, because the Chairman of the parent company of British Gas is also there.

In the US, the central bank is dominated by people from the small local banks with representation weighted towards the regions. This sort of federal model was the basis of the old German central bank; and all the member nations are represented in the European Central Bank – and not forgetting Canada which has regional representatives on the board.

These examples offer food for thought for making maybe a Bank of Britain the voice of the peoples of Britain in finance, rather than the voice of the big interests laying down how things should be to the people… With Scotland possibly becoming independent in the next few years, and there being questions about whether it remains in the Sterling economy, these are issues that have only just begun to appear on the agenda.


Andrew Lydon

We have since done a piece on the role of the Bank of England in bringing Austerity government, which can be accessed here.

The nation`s money could be controlled and directed in the public interest

In the Financial Times today, James Skinner, a trustee of the Organic Research Centre and new economics foundation, clarifies points arising in the call for a debate to take place on “ultraradical policies” for “boosting aggregate demand, (“UK needs to talk about helicopters”, October 13).

It should start from a clear statement and understanding of how new money is currently created. He writes:

“Constant references to “printing money” and “newly minted money” only cloud the debate. In fact such money amounts to less than 3% of the money in circulation. The rest of the money in circulation is created by the private banking sector, for its own purposes, in the form of debt.

“So long as this system prevails, the banks will always hold on to the principal power to determine how much to boost aggregate demand.

“Fresh money”, as you call it, can best be transferred to both the public and the private sector through direct spending by the government, using money (not credit) placed in its account by the Bank of England to enable it to meet its democratically approved, budgeted expenditure.

“The amount of such “fresh money” would be controlled by the Monetary Policy Committee, thus providing the MPC with a much more direct and efficient method of controlling the money supply than is possible through the current system of manipulating interest rates.

“It would, of course, be necessary to abolish fractional reserve banking, thus restoring to the government the significant sums of income earned from seigniorage, currently enjoyed by the private banking sector.

The savings made through these changes, largely at the expense of the private banking sector, would greatly reduce the amount of government taxation and borrowing, while enabling the government to make direct investments, for example, in such sectors as Green Investment Bank equity and possibly even a Citizens’ Income.”


Read the full text:

Turn the economy round: release funding for real projects


Richard Murphy for Tax Research UK advocates positive action by government


Points made in January are just as relevant today

30% of all government debt is owned by the Bank of England – which is government owned – so debt is not as high as the Tories claim and the need for debt reduction not as pressing as the Tories say. This debt can be cancelled, releasing funding for real projects.

  • Investing in HMRC is about revenue-raising: closing the tax gap of up to £120bn is an essential part of this agenda.
  • Green quantitative easing involves spending money to create jobs: £200bn went to save banks which are not doing this.
  • Real pension reform is essential. Why give £37bn a year for pension tax reliefs when pension funds refuse to invest in job creation the £80bn a year they get as a result?

Murphy concludes:

If one quarter of pension fund money (£80bn a year) went into job creation, matched by a similar sum from green quantitative easing, investment in the UK could be transformed and gradually turn the economy around.



Housing reflation and housing inflation – Alternative inflation …

As this is being written, in 2012,  squeezed living standards have been the norm in the UK now for a good many years. The lastest news indicates apparently that the global downturn is taking the pressure off food and energy prices.   

Rental prices for housing are still edging upwards although purchase prices are subsiding, and it is only the inflow of Greek and Chinese money into the upper end of the London housing market that is hiding this in national figures.

With our ‘double-dip’ recession the coalition government is now talking about using house purchase and house building to look to return us to some sort of ‘growth’. Whether in the coming years this will ease or increase the inflationary pressures on the population, would be clearer to all if we had an inflation index in this country that properly took housing, and especially owner-occupied housing, properly into account.

New Inflation Indices

House price inflation in this country has always tended to become apparent in one part of the country before going on to become a general phenomenon. And it affects some social strata before going on to affect everyone. That is why we have been calling for regional inflation indices in the UK and indices that follow the fortunes of different types of households. However, none of these indices would be any good unless housing was properly factored into these figures.

The Office for National Statistics (ONS) is currently doing a consultation on these issues. They are consulting on the formula for owner-occupied housing and the regional issue at the same time. You might have heard of the consultation on owner-occupied housing, but you will not have heard about the consultation on regional indices because it takes the form of a few sentences on the last but one page of  the document on the housing issue. And it says – let’s just forget about them.

This is something worthy of Sir Humphrey Appleby, the satirical character from the 1980s BBC comedy, who was endlessly inventive at stopping anything happening that he did not want to happen. Indeed earlier in his career, Appleby might well have helped kill off the idea of regional inflation indices, when in the early 1970s Whitehall decided not to follow the rest of the developed world, and much of the less developed world, in establishing them.

…so that things remain the same.

Sir Humphrey has also been involved in framing what we are being offered as a new national inflation index that will include housing inflation, and owner-occupation inflation especially. Over a year ago they were offering us a choice of 2 indices. But when you looked at them closely there was no significant difference between them. Below you will see a chart which shows these two choices. It is a very busy chart. The green and the purple lines represent the two ways of including owner-occupied housing  that were being considered until early this year.

The green line is the index that the ONS wants to use and is currently asking approval for. It is the line that is closest to the black line that is the current Consumer Prices Index. Indeed for most of the time shown here you will barely be able to tell them apart.  However neither the  green nor the purple index are significantly different to the current black index.

When inflation exceeds 3%,  the Bank of England can no longer deny a problem and must write to the Chancellor to explain it and what they are going to do. None of the indices in the chart above compel any such attention before food and energy prices create pressure during the final years of the noughties. None of these indices would have triggered an alert at 3 % during the UK house price boom which is shown at its most accelerated in 2003 –  indicated by the additional blue line on this chart. Indeed you can see house prices are actually falling (notice the scale on the right) when the indices cross the 3%  letter-writing  point.    Video update on these issues in 2018

However, the Sir Humphrey consultation document does not ask readers whether they think these problems might make these indices unfit for purpose. Instead the consultation asks a whole series of very technical questions that could be guaranteed to provoke the rival camps among statisticians that have variously been championing the green and the purple.


 Can you see the bubble ?

Indeed,when you say that the house price bubble should make some significant  presence in these figures for the early 2000s, the ONS says – well it is not a house price index. However, when you look at the US Consumer Price Index over the last decade, their house price boom is visible in that.

Very specifically the impact of the infamous US house price bubble is visible in the weights of the housing components of the US CPI.

This can be seen in the chart shown immediately below. The weight given to what they term ‘Owners equivalent rent of primary residence’  can be seen here  (in the red columns). It rises from 20%  as the US house price boom took off from 2001.  Had the price rise only been in line with either general inflation or popular incomes, this item would not have needed to be enlarged as a factor in US consumer price inflation.

But over the period 2001-2005, US average house prices rose by about a third in relation to median/average US incomes.  So this item came to play a bigger role than before in driving the US inflation indices up to levels that would provoke the US Federal Reserve to take action to address this by increasing interest rates. (It is now down to where it was in 2002 – as can be seen by scrolling down the current weights.)

Not in no UK index

The black columns are the weights that our UK Office for National Statistics wants to use in their new UK Consumer Price Index as they would be felt during the same period of our even bigger house price boom. They only go up from just over 10% to just under 11% of the index during this period.

This failure to properly pick up the housing inflation in the weights is why the ONS chart we have already displayed fails to pick up our even bigger UK house price boom in any significant way. We have previously quantified this boom from the particular standpoint of the West Midlands. Over the period 1997 to 2007, UK house prices doubled in relation to income. But any increase in the weights in the ONS’ proposal is barely visible, even if we charted the figures back to 1996.  That the weights are less than half the weights in the US index is a further flaw, because during all the period shown in our chart, house prices have been far higher in relation to income in the UK then in the US.

What should the ONS do now ?

The best thing is for the ONS to go back to the drawing board and sort out some proper weights for the new index.  To go ahead with this deeply flawed index, even as an interim measure, would be pointless given that it is basically the same as the existing CPI in most important respects. Worse, to go ahead with this index would give the public the impression that housing in the inflation index is a problem that has been solved, when it has not.

It is clear that the index the ONS is proposing, had it been available 10 years ago, would have done nothing to make the UK’s entrapment in house price inflation and huge private debt any less likely to have happened.  The doubling of UK house prices in relation to incomes was only brought to an end because interest rates around the world began to head upwards, when the US Federal Reserve began to push them up as their house price bubble began to be a problem in their index that could not be ignored. UK house price inflation was brought to a halt by the action of the US system –  not our own.

It was as if they put their brakes on, and because we had no proper controls over our system, we went straight into the back of them. How much better it would have been if we had had an index that had prompted us to damp down our house inflation before the Americans. Then we would not have ended up in this transatlantic pile up when they acted on theirs.

Andrew Lydon

LWM Regional Prosperity & Inflation Project


Video update on these issues in 2018

Could regional banking help to develop flourishing regional economies?

Regional economic strategy is now being taken more seriously. Localise West Midland’s Andrew Lydon has been examining the collection of regional prosperity and inflation indices in this and other countries for some time and has corresponded with MPs and government departments on the subject.18 months ago the Statistics Authority told the Office of National Statistics to look at setting of regional and social inflation indices as Andrew had recommended.

In the March Budget, Chancellor George Osborne announced that Government will present evidence on the case for the introduction of regional pay structures in some civil service sectors.


John Nightingale* recently wrote an article, Rebuilding Trust in the Regions, now published in the Good Banking Forum – which includes a range of leading figures from academia, finance, politics, the law, trade unions, consumer and civil society groups who are demanding real reform of the banking sector. GBF challenges the limited scope of the Independent Commission on Banking and hopes to mobilise public pressure for good banking.

John asked whether banks could take remedial action regionally, for example by varying the rate of interest or giving preference to certain sorts of loans. He realises – however – that it is currently difficult to get a clear picture of regional economic activity, in absolute terms or in terms of trends, because too few statistics are published on a regional basis.

He pointed out that other countries, such as the United States and Germany, have a tradition of regional economic management and commented: “In the past there was some balance through the informal supervision of the commercial banks by the Bank of England. But it seems that in 1997 supervision was handed over to the Financial Services Authority, which was more concerned to root out dishonesty and corruption than with economic performance.”

Asking if banks could take remedial action regionally, by varying the rate of interest or giving preference to certain sorts of loans, he also contemplates the advisability of a switch away from lending to purchase property and other fixed assets, into industry.

Could banks be persuaded to realise that helping to develop flourishing regional economies would be to their long-term advantage – and move in this direction?

In the ongoing discussion of banking reforms, John Nightingale urges that attention be given to the position of the regions, to ensure that:

  • views of stakeholders in regions are represented to banks there;
  • stakeholders have an opportunity to monitor bank activity;
  • known and thereby accountable representatives from the regions are included on national financial bodies;
  • more statistics are made publicly available on a regional basis so that all stakeholders can be better involved in the debate and consequent decisions.


His article may be read in full here.

*Canon John Nightingale: chairman of the West Midlands Jubilee Debt Campaign.