Category Archives: Bank of England

City regulators clears HBOS ex-bosses of misconduct over bank’s near-collapse

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Watchdogs say six-year investigation had determined no grounds for action against unnamed individuals

City regulators have cleared former bosses of HBOS of misconduct in the lead-up to its near-collapse in 2008, despite previously having blamed the bank’s board for its failure.

The Bank of England and Financial Conduct Authority (FCA) said on Friday that they had concluded “rigorous and forensic investigations” into unnamed former managers, after gathering more than 2m documents, interviewing former bank managers, and undertaking “substantial analysis” of the bosses’ roles and responsibilities at what was then the country’s biggest mortgage lender and savings institution.

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UK economy shrank by 0.1% in three months to June

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ONS says two bank holidays to mark Queen’s jubilee contributed to fall in output in June

Britain’s economy contracted by 0.1% in the three months to June, according to official figures that revealed the weakening outlook for the UK, which is expected to enter a recession later this year.

The dip in output in the second quarter followed 0.8% growth in the first quarter and was driven by the health sector – as Covid testing and the vaccine programme was wound down – and by retail, as household spending fell. Economists had forecast a bigger fall in output of 0.2% in the second quarter.

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Truss ‘irresponsible’ for threatening to review Bank of England remit

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Labour’s Rachel Reeves says Conservatives are ‘playing blame game’ for UK’s economic problems

Liz Truss has been accused of being “deeply irresponsible” for threatening to tinker with the Bank of England’s mandate on the brink of a recession.

The shadow chancellor, Rachel Reeves, attacked the Tory leadership frontrunner after Truss and her allies repeatedly questioned the performance of the Bank’s governor, Andrew Bailey, and said she would review the institution’s remit.

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Bank of England hikes interest rates and says inflation will hit 13%

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Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October

Vladimir Putin’s invasion of Ukraine has left Britain on course for a recession lasting more than a year and inflation above 13%, the Bank of England has warned as it raised interest rates for a sixth successive time.

Threadneedle Street said it had no choice but to increase borrowing costs by 0.5 percentage points to 1.75%, blaming Russia for cost of living pressures not seen in more than four decades and a 5% drop in living standards straddling this year and next – the biggest since records began in the 1960s.

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Liz Truss’s tax and spending plans sow consternation among economists

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Analysis: experts are lining up to warn that her policies will increase inflation and leave the UK with higher debt

Liz Truss claims her economic agenda of tax cuts and public spending will revitalise the UK economy, but it is not just her rival prime ministerial candidate Rishi Sunak arguing that the measures will be self-defeating.

Economists have lined up to warn that her £30bn package – including the reversal of this year’s national insurance rise, the suspension of green levies on power bills, and the cancellation of a sharp rise in corporation tax in 2023 – will increase inflation and leave the government with higher debt bills.

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UK inflation hits fresh 40-year high of 9.4% as fuel prices rise

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Annual rate in June up from May’s 9.1% figure and exceeds analysts’ expectations

Rising petrol and diesel prices for motorists and dearer food pushed Britain’s annual inflation rate to a fresh 40-year high of 9.4% last month.

Figures from the Office for National Statistics showed the government’s preferred measure of the cost of living – the consumer prices index – was up from May’s 9.1% figure.

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Rishi Sunak ‘wasted £11bn by paying too much interest’ on UK debt

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Labour accuse chancellor of wastefulness for failing to insure against interest rate rises

Rishi Sunak has been accused of wasting £11bn of taxpayers’ money by paying too much in interest servicing the government’s debt.

The National Institute of Economic and Social Research (NIESR) said the losses were the result of the chancellor’s failure to insure against interest rate rises on £900bn of reserves created through the quantitative easing (QE) programme.

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Boris Johnson claims planned Northern Ireland protocol law is ‘insurance’ in case talks fail – live

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Latest updates: UK prime minister meets Sinn Féin and DUP as Mary Lou McDonald suggests forming Stormont assembly is not UK government priority

This is from my colleague Jennifer Rankin in Brussels on the UK government’s mixed messaging over the Northern Ireland protocol.

Taoiseach Micheál Martin and Sinn Féin’s leader in Northern Ireland, Michelle O’Neill, have said they recognise there are “serious issues” in relation to the implementation of the Brexit protocol that Boris Johnson is planning to override in part.

They expressed serious concern about possible unilateral moves on the protocol by the British government, which would have a destabilising impact on Northern Ireland.

They recognised that there are genuine issues regarding aspects of the implementation of the protocol but these can be taken forward in the context of EU-UK discussions.

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‘Apocalyptic’ food prices will be disastrous for world’s poor, says Bank governor

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Bank of England’s Andrew Bailey blames UK’s highest inflation rate for three decades on Russia-Ukraine war

The Bank of England governor has blamed the war in Ukraine for the highest inflation in the UK for three decades and warned that “apocalyptic” food prices caused by Russia’s invasion could have a disastrous impact on the world’s poor.

Giving evidence to MPs, Andrew Bailey said while he was unhappy about the level of price rises, 80% of the inflation overshoot was caused by factors outside the Bank’s control.

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Bank of England ‘duty bound’ to trigger recession to curb inflation

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Ex-official says policymakers must shrink the UK economy to limit upward pressure on prices made worse by Brexit

Britain’s central bank policymakers are “duty bound” when they meet this week to push the UK into recession to cap rising inflation, a former Bank of England (BoE) official has said.

Adam Posen, who runs Washington-based thinktank the Peterson Institute, said that while the Bank of England would not want workers to lose their jobs, it should hike interest rates now to squeeze out inflationary pressures made worse by Brexit trade and immigration restrictions.

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‘Secret sauce of success’: levelling-up report co-author on why UK should be like Renaissance Florence

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Andy Haldane says city’s crucible-like atmosphere created ‘combustion’ for economic prosperity

The government’s new levelling-up strategy should help Britain’s left-behind towns and cities emulate Renaissance Florence in cooking up the “secret sauce” of economic success, according to its co-author Andy Haldane.

The hefty report, published on Wednesday, was mocked by some for its frequent historical references – including to 15th-century Florence under the Medici – but Haldane, a former Bank of England chief economist, is deadly serious.

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Flexible working: ‘A system set up for women to fail’

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After the pandemic more women are choosing to work from home but that choice could damage career prospects

Employees want it, employers know they have to offer it; flexible working has transformed almost every office during the pandemic and it’s here to stay.

It is a change that has been demanded for decades by groups including women, those with caring responsibilities and disabled people. But economists and employment experts are warning it could lead to more inequality at the office, particularly for working mothers.

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Oil prices climb to fresh highs, UK petrol price hits record – business live

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After Tesco’s website and app were down for most of the weekend, leaving many frustrated customers unable to shop online, HSBC’s business banking portal (called HSBCnet) had some issues this morning.

Large corporate customers only had intermittent access via the website or app for about an hour, from 9.10am, but the problem has been fixed, according to HSBC.

This is truly a dark day for drivers, and one which we hoped we wouldn’t see again after the high prices of April 2012. This will hurt many household budgets and no doubt have knock-on implications for the wider economy.

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Fears for 1 million furloughed staff with Sunak set to finally end scheme

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After the success of the chancellors’s £70bn programme, there is uncertainty about the future direction of the economy

The biggest state intervention in the UK’s labour market in peacetime comes to an end this week when the government finally winds up its furlough support.

Barring an unlikely last-minute change of heart, a wage subsidy that has been in place for 18 months and has cost £70bn will no longer be open to struggling firms.

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Cryptocurrencies could lead to ‘limitless’ losses for UK government

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Experts warn of danger of untraceable funds if companies accepting payments in cryptos go bust

The government could face “limitless” losses as a result of businesses that accept payments in untaxed and untraceable cryptocurrencies going bust, an insolvency expert has warned.

A growing number of companies, including the ethical cosmetics firm Lush and office-sharing firm WeWork, have begun taking payments for goods and services in cryptocurrencies such as bitcoin, alongside debt, credit or cash.

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Why cryptocurrencies may remain merely a bit on the side

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Wise Bank of England heads are pondering the case for a state-run digital currency this week. But do we really need one?

When Google announced that bitcoin traders would be allowed to buy advertising space on its pages from August, central banks were alerted to the next likely surge in publicity for cryptocurrencies.

The increasing activity around digital currencies has not gone unnoticed at the Bank of England, and on 7 June Threadneedle Street’s brightest will publish a consultation document, setting out how a publicly operated electronic coinage system – one that would rival bitcoin – might work.

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David Cameron kept pushing Bank and Treasury to risk £20bn to help Greensill

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Former prime minister sent string of emails to Bank officials and argued firm should be a priority for Treasury funding

David Cameron repeatedly pushed the Bank of England and the Treasury to risk up to £20bn in taxpayer cash to help Greensill Capital, just as the lender started to face “significant” financial pressure at the start of the pandemic.

The UK’s central bank was urged to provide support to Greensill, including by setting up a fund that would buy loans made by the financial services company and its competitors, in a string of emails to senior officials.

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A year of Covid crisis: a glimmer of economic hope at the end of the tunnel

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Twelve months after the pandemic struck the Guardian’s economic tracker reveals real risk of lasting damage

When Boris Johnson announced the first stay-at-home order, effectively shutting down whole sections of the economy, it was hoped the tide could be turned within 12 weeks. As many months later, lockdown measures are being relaxed for a third time and Britain still faces a lengthy road to recovery from the worst recession for 300 years.

As restrictions ease, the chief economist at the Bank of England, Andy Haldane, warned that despite the reopening of the economy, the risk of a “jobs equivalent of long Covid” remains for workers across the country.

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Is ‘hysterical’ market speculation pushing us towards another crash?

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Despite Covid, global stocks started 2021 on a high. But some analysts warn of an ‘epic’ bubble, amid fears that the flow of stimulus has created a monster

Insurrections are not usually seen by investors as buy signals. Yet even as rioters stormed the seat of US legislative government last week, stock market indices hit new highs in New York, adding another chapter to 12 months of apparent defiance of economic gravity.

Wall Street, measured by the benchmark S&P 500, was not alone in starting 2021 with a bang. London’s FTSE 100 jumped by more than 6% in the first week of the year as investors took in a heady cocktail of a President Joe Biden ready and able to spend money, cheap borrowing costs, and the hopes that vaccines will end the coronavirus lockdowns. Yet amid the exuberance a serious concern looms: are we on the cusp of another colossal crash?

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