Bank of England calls for more power
A report by the Bank of England has highlighted the fact that the interest rate loan will not save the UK economy in the short to medium term and indeed will need to be complemented by other powers in the longer term. A review of the UK economy over the last decade has shown that the Bank of England would have had to push UK base rates to between 6% and 19% to control what was at the time an uncontrollable surge in property-based lending in the UK. So what extra powers will the Bank of England require?
At a time when the Conservative party is looking to give the Bank of England more power, if it is successful at the next general election, the Bank of England believes a series of surcharges are required to control excessive lending from UK banking institutions. The surcharges would be triggered in the event of periods of excessive lending and would effectively reduce the financial strength and lending capabilities of the UK banking sector as a whole. This would then allow the authorities to gain more control over the flow of finance in the UK and hopefully avoid the lending bubbles we have seen over the last 10 years.
Sounds simple, but is it really that easy?
Share this..
Related stories
Is it sensible to split the UK banking sector?
For many years the strength of the UK financial sector has been the very small number of large banking institutions which had very strong balance sheets and access to massive amounts of capital from the money markets. However, the UK government and the Bank of England would now appear to be looking towards a break-up of the likes of Lloyds bank, Royal Bank of Scotland and Northern Rock in order to...
Read MoreIs the Euro set to become the most influential currency in the world?
As rumours circulate Wall Street that the Federal Reserve is set to slash interest rates by 0.5% the dollar has taken a serious hit against the Euro. In a world where currency fluctuations have never been more severe it is the Euro which appears to come out best against both sterling and the dollar. As rumours also circulate that the UK is set to join up to the Euro in the short term some people a...
Read MoreUK stocks enjoy G20 impetus
The confirmation that G20 members will continue to run with the current economic stimulus programs in place was well received by the UK stock market today which extended the ongoing rally to 4 days. The 1.8% increase in the FTSE 100 index was welcomed by many investors who had been starting to flag a little as news on the UK economy appeared to turn downwards.
There has been concern...
UK manufacturing shows surprising strength
Despite the fact that the UK manufacturing base has been decimated over the last 20 or 30 years, there are signs that the recovery in the economy has spread through into the manufacturing sector. The Chartered Institute of Purchasing and Supply's purchasing managers index rose from 51.8 in November to 54.1 in December - with a figure of over 50 indicative of growth in the sector. There was also go...
Read MoreDarling appointed chancellor
New prime minister Gordon Brown has appointed long-time political ally Alistair Darling to replace him as chancellor.Business leaders have welcomed the promotion of Mr Darling, who until yesterday had served as trade and industry secretary under the previous premier Tony Blair.The Confederation of British Industry (CBI) said the Edinburgh MP was the "right choice" to succeed fellow Scottish parlia...
Read More