Tuesday, Jul 25, 2006

Head of CBI calls for BoE not to raise interest rates

TimesOnline: Head of CBI warns Bank to stay its hand on interest rates

Richard Lambert former member of the monetary policy committee (MPC) called for the Bank of England to hold back on any interest rate increases. His argument is based on his belief that strong high-street spending will lose momentum. Lambert stated that an increase to interest rates would inflict a bigger blow than normal to economic activety. A reason we think it would be sensible to sit and do nothing now is that consumption is at a delicate stage, and it would be possible to have greater than normal consequences if people think this is the start of a change, Lambert said

Posted by denzil @ 09:10 AM (526 views)
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13 Comments

1. paul said...

Here come the "don't raise rates!" sob stories.

The NAEA and CML will be on next saying "the housing market recovery is very fragile".

The tragedy is that the MPC will dumbly nod their heads, do absolutely nothing, collect their cheques and bugger off for another month.

Tuesday, July 25, 2006 09:21AM Report Comment
 

2. harold said...

When in the MPC Richard Lambert was the muppet who consistently voted for lower IR, so this is to be expected. In fact, it's a surprise that he is not calling for a cut now - perhaps he doesn't want to completely blow his credibility.

Tuesday, July 25, 2006 09:37AM Report Comment
 

3. Waitingfor Hpc said...

Credibility? Has he got any? He wants the population to go further in debt to keep the boom going. Obvious view point when you represent retail firms. But this is making noise when you know the inevitable is coming.

Tuesday, July 25, 2006 09:46AM Report Comment
 

4. waitingfor hpc said...

Credibility? Has he got any? He wants the population to go further in debt to keep the boom going. Obvious view point when you represent retail firms. But this is making noise when you know the inevitable is coming.

Tuesday, July 25, 2006 09:47AM Report Comment
 

5. sebastian said...

Oh come on, lets hear it from the people who don't think the news reporting tone has nothing to do with the time of month? It's the same every month, around the MPC decision time "Oh noes, were all doomed", 10 minutes after "Yay, the economy is amazing, booming house prices, were all millionaires".

Tuesday, July 25, 2006 10:16AM Report Comment
 

6. Magnifico said...

quote:The CBI chief also took a tilt at the Government over corporate tax, arguing that it stood at unsustainable levels. Without cuts, companies would try to make profits outside Britain, he said.


If Mr. Lambert is really concerned about the British Industry he and the CBI should start talking about productivity, labour cost and pay increases.
The truth of the matter is the industry has enjoyed a long period of very low Interest Rates but has squandered the opportunity to strengthen itself through modernisation, process changes and brave decision, chosing instead to go on a spend-like-there's-no tomorrow party.
The most precious asset many British firms are left with is Real Estate and, as in the microcosmo of personal finances, use this as a feel-good reason to continue to borrow.

Tuesday, July 25, 2006 11:55AM Report Comment
 

7. denzil said...

Magnifico said:
>>The truth of the matter is the industry has enjoyed a long period of very low Interest Rates but has squandered the opportunity to strengthen itself through modernisation, process changes and brave decision, chosing instead to go on a spend-like-there's-no tomorrow party.


If we had strong research spending during this time then it would have potentially been possible to become a viable player internationally. I was looking through the "Jobs in Research" section of the New Scientist last night and was absolutly appalled at the salaries being offered. Anybody with ability would surely take their experience abroad thus starving the UK of innovation.
I have the distinct impression that the Labour party have absolutely no clue as to where the future wealth and stability of this country is coming from.

Tuesday, July 25, 2006 01:33PM Report Comment
 

8. kpjcomp said...

What worries me is that the longer the BOE leaves this and does'nt act, making people beleive they can live and prosper on credit, the worse things are going to get in this country.
House prices falling are going to be the tip of the iceberg, crime hitting record levels as unemployment rockets, jealous Ex-Householders niffed at people like us buying houses that have put them into negative equity, and still paying for in years to come, for a house they no longer own. So in one way I don't want a HPC, as living in this country is going to be murder (literally). I'd be worried when I buy my next house, constantly thinking that the previous owner would some how blame me for him/her no longer having there dream home.

On a side note, for all those living in there homes, with the feel good factor of house price rises->

Only 3 months ago I was asset rich with my 3 bedroomed detached house, but what did that mean to me? (absolutely nowt), I did'nt feel any richer than 3 years earler. I'm now renting and I'm cash rich, and how does that making me feel?. (absolutely fantastic!!), so as you can see I'm in no the rush for a HPC, but the prospect of one looming on the horizon I find worrying.

Also another OT, I've always been a Labour supporter, but now I'm really starting to feel a fool beleiving the country would be better in the hands of a Labour goverment. :(

Tuesday, July 25, 2006 02:38PM Report Comment
 

9. tyrellcorporation said...

KPJ... Being 37 I've lived through both flavours of Government and although the Conservatives were far from perfect they are on blanace the party of (my) choice. I voted NL in their first two election victories to basically 'give them a chance'. They squandered their time in power and have tried to destroy the country into the bargain...

Never again.

BOE are shi**ing themselves about the fragility of UK PLC...I don't think they'll touch IRs for ages...

Tuesday, July 25, 2006 02:54PM Report Comment
 

10. The Capitalist said...

Well said Tyrell. I'm 39 and remeber it all too well in the late 70s. History is repeating itself. Labour spend, Tories fix the public finances, get hated for it then lose power, Labour get in spend it all, and so it goes on...plus ca change.

Tuesday, July 25, 2006 04:58PM Report Comment
 

11. gruppenfuhrer said...

And what does Uncle Tom think? Has he made a call yet?

Tuesday, July 25, 2006 09:45PM Report Comment
 

12. paul said...

Good question. What is Uncle Tom's verdict?

Tuesday, July 25, 2006 11:31PM Report Comment
 

13. talking rot said...

gruppenfuhrer

good to see you again. During one of your last posts, you suggested starting to do something about the disgustingly high level of house prices - instead of merely commenting about them on this Blog. I thought it was a good idea so I've written to Gerald Howarth, MP Aldershot. If I get a response, I'll let you know but I suspect my letter will be ignored. It will fall into that void in the MP's cabinet reserved for loonies, perpetual complainers and oddballs who don't own their own property. Afterall, if you're not in the property owning class and your MP sits in a safe seat, then your views do not matter.

I have asked him to explain why he has not attacked Crash Gordon for the appalling state of the UK economy. My points included:

1. Why do I encounter so many struggling businesses when everything in the economy is rosy?

2. Why a high rate tax payer can not afford to buy a home? If a mid-30s high rate tax payer can't afford a home, what chance does a youngster facing the average wage have? What is the social cost of high house prices?

3. Why are primary homes given such a tax-favourable status yet my pension isn't?

4. What is the relevance of the CPI when I do not need to buy a DVD player on a weekly basis or hire a suit but I do need to pay for gas, petrol, water etc?

5. Why are the Tories so impotent in attacking Labour?

if I ever get a reply, I'll let you know, but I'm not holding my breath.

Wednesday, July 26, 2006 10:37PM Report Comment
 

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