Outlook: The Old Lady's down in the dumps
Tuesday 25 August 1998
To some extent all this is just loose talk, the result of late summer boredom. Apart from trouble with the rouble, there's not much else to speculate about. What's happening with the Old Lady of Threadneedle Street makes as good a subject as any. But there is an element of truth in it all.
Indeed it would actually be quite surprising if there was not. There are any number of good reasons for the Bank's staff to feel fed up. For starters, the Bank of England has recently been ripped apart, with responsibility for banking supervision parcelled out to the new Financial Services Authority (FSA) and, with it, most of the Bank's staff.
Supervision always used to be thought of as the least glamorous bit of the Bank to work in. Actually supervision is not as dull and boring as it might seem (there are all those trips to Basle to look forward to for starters), but it is the part that would persistently get it in the neck. Supervision tends only to get publicity when there is a banking failure, which by extension is invariably regarded as a failure in regulation.
But then you never know what you've got until it's gone, do you? And now supervision is gone, everyone misses it. Those chaps in supervision weren't too bad after all; at least in the old days there were more people to talk to.
What's more, responsibility for supervision added to the Bank's prestige and authority in the City. It was a large part of the Governor's eyebrows, the Bank's ability to influence affairs more generally in the financial community, and a major part of its intelligence network.
All this was predicted by Eddie George, Governor of the Bank of England, when Gordon Brown surprised everyone with the formation of the FSA shortly after giving the Bank its independence. One minute Mr George was celebrating independence, the next he was contemplating resignation over loss of half his empire.
But this is only part of the Bank's present identity crisis. The other is that responsibility for monetary policy has been placed with a committee which is often not perceived to be wholly a part of the Bank at all, as it is half made up of outside economists. On the other hand, the Bank does very much get the blame for an unpopular policy. This is something new to the Bank, a reversal of roles. In the old days it was always possible for the Bank to say that decisions on interest rates were the Chancellor's, and better still, that if the Chancellor had followed the Governor's advice, the economy wouldn't be in such a mess. Now it's the other way round.
Worse, the Bank's Monetary Policy Committee has also been forced grudgingly to admit that it got policy wrong in the early months of the new government, and that if it had put up interest rates more rapidly then, the pain might now be over. If all this were not bad enough, there's the spectre of the European Central Bank hovering on the horizon. When and if we go into the single currency, the Bank will take on largely irrelevant subsidiary status.
So in summary, the Bank has had half its job removed, it now gets the blame for an unpopular policy, and at the end of it all is the prospect of redundancy. No wonder so many people round there are feeling down in the dumps. Who wouldn't?
Diving in at the deep end is no excuse for shirking the style stakes
- 1 Why I'm on the brink of burning my Israeli passport
- 2 Comfortable in their own skin
- 3 Japanese plant experts produce 10,000 lettuce heads a day in LED-lit indoor farm
- 4 War is war: Why I stand with Israel
- 5 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
Israel-Gaza conflict: Death toll tops 125 after overnight raids as Operation Protective Edge continues
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Ian Thorpe gay: Olympic swimmer comes out in Parkinson interview
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Gaza-Israel conflict: Pro-Palestinian demonstrators take to streets of London, Paris and New York in wave of protests
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...