Tuesday, January 25, 2011

Speaking near Jarrow, Mervyn King says its almost as bad as the 1920s

Bank of England chief Mervyn King: standard of living to plunge at fastest rate since 1920s

Speaking near Jarrow Mervyn King proclaimed to a hushed audience that British households faced the biggest squeeze in living standards since the 1920s, families will see their disposable income eaten up as they “pay the inevitable price” for the failures of others. King emphasised that workers’ take- home pay would end the year worth the same as in 2005, the most prolonged fall in living standards for more than 80 years. He then finished by saying he was unable to offer any imminent hope of a rise in interest rates in coming months and that “those who behaved prudently” would be among the biggest losers and with average take-home pay falling by 12 per cent during 2010 the Bank “neither can, nor should try to prevent further falls in lining standards.

Posted by enuii @ 10:39 PM (1628 views)
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4 thoughts on “Speaking near Jarrow, Mervyn King says its almost as bad as the 1920s

  • I reckon Mervyn’s living standard will hold up pretty well for the rest of his days.

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  • People who have behaved prudently may lose some of their savings but at least they won’t lose their houses. (Unless the govt decides to confiscate people’s houses of course, which is always a possibility but seems unlikely).

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  • Richardbushnell says:

    Since when was it Mervyn King’s job to decide what happens to the economy? I thought he was just supposed to be keeping inflation under control!

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  • Always remember that a major role of the BoE is to set public expectations… and if you look at this speech from that angle, it is a hammer blow. Prior to this King was coming under increasing pressure to increase interest rates, the papers were embedding high inflationary expectations in the public.

    Interest rate rises are only useful in that they change behaviour. King hopes to affect the same change in behaviour without the rise. Good luck to him.

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