Tuesday, September 06, 2011
Osborne's choppy recovery
Posted by David Smith at 10:30 PM
Category: Thoughts and responses

There were no numbers in George Osborne's speech tonight but an acknowledgement that in "very unsettling times for the global economy", "this is not a normal economic recovery" and "we have all had to revise down our short term expectations over recent weeks".

He insisted that banking reform would not be done in a way that damages the City of London. I found this rather interesting on monetary policy. The Bank of England may be independent but it appears, to con a phrase, we're all in this together:

"That’s why in the months and years ahead we will do everything we can to keep monetary conditions throughout the economy as growth-friendly as possible – consistent with the inflation target.

"As Andy Haldane of the Bank of England reminded us last month, the new Financial Policy Committee we have established has a vitally important mandate to ensure that financial regulation takes account of the economic cycle and does not exacerbate downturns or booms.

"The Merlin agreement is already delivering more lending to SMEs. And if there is more we can sensibly do to ensure that the benefits of low interest rates are felt throughout the economy then we will do it. Of course, with a banking system whose balance sheet is some 500% of our GDP we have to make sure that our banks are successful but safe.

"That is why we face what I have called the “British dilemma” – how to sustain a world beating international financial sector without putting our economy or our taxpayers at unacceptable risk." The speech is here.