Anthony Hilton: Bosses are sitting on their cash – or are they?

Ian McCafferty, the latest recruit to the Monetary Policy Committee, noted in his maiden speech today that whole sectors of the economy were not behaving as past experience suggested they would.

Thus large companies are awash with cash and interest rates are as low as they could be, so they ought to be investing for the future. But in fact that they are not, or do not appear to be.

So here are three reasons why things might be different. First, company bosses get their bonuses on short-term performance so are reluctant to take long-term investment risks. Second, as long as the stock market is pessimistic executives do not want to make optimistic moves in case their City critics think they have lost the plot. Third, a lot of investment these days does not involve buying big items of kit. It is computer-based, where the costs do not show up in conventional statistics. In other words, no one has a clue what is going on.