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| BoE economist wants to hear about hardship in the UK - first stop Wales | BoE economist wants to hear about hardship in the UK - first stop Wales |
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| Andy Haldane, Bank of England’s chief economist, hears from families shopping around for cheap bread and stopping children going on school trips | |
| Anushka Asthana Political editor | |
| Fri 30 Jun 2017 10.31 BST | |
| First published on Thu 29 Jun 2017 19.06 BST | |
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| Andy Haldane, the Bank of England’s chief economist is in Wales, on tour. But this is not the usual speechifying trip, addressing business audiences on the dry details of monetary policy. Instead Haldane – who some regard as a potential successor to the governor of the Bank, Mark Carney – is in listening mode, on the first leg of a nationwide tour that is aiming to feed the everyday experiences of ordinary households into monetary policymaking. | Andy Haldane, the Bank of England’s chief economist is in Wales, on tour. But this is not the usual speechifying trip, addressing business audiences on the dry details of monetary policy. Instead Haldane – who some regard as a potential successor to the governor of the Bank, Mark Carney – is in listening mode, on the first leg of a nationwide tour that is aiming to feed the everyday experiences of ordinary households into monetary policymaking. |
| Britain’s poorest families, he says, are being hardest hit by the rising prices of essentials like food and fuel, and action to prevent higher inflation becoming entrenched must therefore be a priority. | Britain’s poorest families, he says, are being hardest hit by the rising prices of essentials like food and fuel, and action to prevent higher inflation becoming entrenched must therefore be a priority. |
| Haldane has met dozens of people this week who said they were struggling to cope with the rising cost of living. He heard of parents stopping their children from going on school trips in order to divert the money towards increasingly expensive basic supplies. He heard about increasing numbers of loan sharks setting up shop and about people who scour supermarkets to save a few pennies on a loaf of bread. In fact, he heard dozens of similar stories during roundtable events in Cardiff, Barry and Porth, in the Welsh valleys. | Haldane has met dozens of people this week who said they were struggling to cope with the rising cost of living. He heard of parents stopping their children from going on school trips in order to divert the money towards increasingly expensive basic supplies. He heard about increasing numbers of loan sharks setting up shop and about people who scour supermarkets to save a few pennies on a loaf of bread. In fact, he heard dozens of similar stories during roundtable events in Cardiff, Barry and Porth, in the Welsh valleys. |
| “Prices in the shops have gone up pretty rapidly, particularly for some essentials like food and fuel,” said Haldane. “Adjusting for inflation, most people’s pay is probably falling rather than going up and that is causing a particular pinch for people further down the income spectrum.” | “Prices in the shops have gone up pretty rapidly, particularly for some essentials like food and fuel,” said Haldane. “Adjusting for inflation, most people’s pay is probably falling rather than going up and that is causing a particular pinch for people further down the income spectrum.” |
| The economist, who sits on the Bank’s monetary policy committee that decides when interest rates will have to be raised to put a lid on inflation, said it is important to remember that rising prices have the biggest impact on the poorest. | The economist, who sits on the Bank’s monetary policy committee that decides when interest rates will have to be raised to put a lid on inflation, said it is important to remember that rising prices have the biggest impact on the poorest. |
| “It hits hardest those on the lowest incomes and those whose incomes are fixed in money terms, for example those on benefits or on amounts close to the minimum wage.” | “It hits hardest those on the lowest incomes and those whose incomes are fixed in money terms, for example those on benefits or on amounts close to the minimum wage.” |
| In a clear hint that a rise in interest rates could be looming, he added: “The reason we absolutely are sitting up and paying attention now to rises in the cost of living – inflation is up to almost 3% – is not just because that is in breach of our target but because that is having big and serious consequences for those on the lowest incomes in society and that came across loud and clear today.” | In a clear hint that a rise in interest rates could be looming, he added: “The reason we absolutely are sitting up and paying attention now to rises in the cost of living – inflation is up to almost 3% – is not just because that is in breach of our target but because that is having big and serious consequences for those on the lowest incomes in society and that came across loud and clear today.” |
| The Bank of England economist’s day trip to Wales marked the start of a series of visits, in collaboration with Citizens UK, that aims to expand the Bank’s previous outreach programme with business figures to ordinary people, including those on low incomes or benefits and the self-employed. | The Bank of England economist’s day trip to Wales marked the start of a series of visits, in collaboration with Citizens UK, that aims to expand the Bank’s previous outreach programme with business figures to ordinary people, including those on low incomes or benefits and the self-employed. |
| The eventual aim is for Haldane and other senior colleagues from Threadneedle Street to visit every county in the country – and to feed back what they are told into “deliberations on monetary policy and interest rates”. | The eventual aim is for Haldane and other senior colleagues from Threadneedle Street to visit every county in the country – and to feed back what they are told into “deliberations on monetary policy and interest rates”. |
| Haldane is clear about what he is hearing: “First and foremost we need to set our interest rate policy to prevent those higher inflation rates becoming entrenched.” | Haldane is clear about what he is hearing: “First and foremost we need to set our interest rate policy to prevent those higher inflation rates becoming entrenched.” |
| His comments came after Haldane hinted that he considered opposingCarney at this month’s meeting of the MPC. The eventual vote was 5-3 in favour of leaving rates at their record low of 0.25% – the stance that Carney backed – but the result was closer than had been expected and Haldane has now made it clear he could soon change sides. . | His comments came after Haldane hinted that he considered opposingCarney at this month’s meeting of the MPC. The eventual vote was 5-3 in favour of leaving rates at their record low of 0.25% – the stance that Carney backed – but the result was closer than had been expected and Haldane has now made it clear he could soon change sides. . |
| Just 24 hours after Carney said the state of the economy and the uncertainty caused by Brexit meant borrowing costs should not change, the chief economist said they should go up before the end of the year. | Just 24 hours after Carney said the state of the economy and the uncertainty caused by Brexit meant borrowing costs should not change, the chief economist said they should go up before the end of the year. |
| He used a speech to say the balance of risks had shifted so that the dangers of moving too late on interest rates outweighed those of raising them too soon. On Wednesday, when Haldane was in Wales, Carney also acknowledged that continued growth would eventually lead to higher rates. | He used a speech to say the balance of risks had shifted so that the dangers of moving too late on interest rates outweighed those of raising them too soon. On Wednesday, when Haldane was in Wales, Carney also acknowledged that continued growth would eventually lead to higher rates. |
| Back in Wales, some of those who turned out to speak to the Bank’s top economist expressed their worries about rising mortgage rates. But a larger number of people, many of whom were not homeowners, stressed the problems caused by spiralling prices. | Back in Wales, some of those who turned out to speak to the Bank’s top economist expressed their worries about rising mortgage rates. But a larger number of people, many of whom were not homeowners, stressed the problems caused by spiralling prices. |
| At a community centre in Ely in western Cardiff – on the edge of Wales’s largest housing estate – 53-year-old Tracy described shopping around in order to try to save 10 pence on a loaf of bread. “People are going without fuel, gas and electric, food,” she said. | At a community centre in Ely in western Cardiff – on the edge of Wales’s largest housing estate – 53-year-old Tracy described shopping around in order to try to save 10 pence on a loaf of bread. “People are going without fuel, gas and electric, food,” she said. |
| When Haldane asked her whether people were “scrimping or saving or trying to borrow” to deal with their situations, she claimed that loan sharks were on the rise. | When Haldane asked her whether people were “scrimping or saving or trying to borrow” to deal with their situations, she claimed that loan sharks were on the rise. |
| Gloria, 82, said she was worried about energy bills hitting older people who struggled to switch to cheaper providers. She had brought with her a letter from an energy supplier outlining a 6% increase in gas prices, 11.1% for electricity, and 8.5% for those on a dual fuel deal. | Gloria, 82, said she was worried about energy bills hitting older people who struggled to switch to cheaper providers. She had brought with her a letter from an energy supplier outlining a 6% increase in gas prices, 11.1% for electricity, and 8.5% for those on a dual fuel deal. |
| Three sixth-formers said they feared university loans, and two 25-year-old graduates said friends had left the area because of falling real wages. | Three sixth-formers said they feared university loans, and two 25-year-old graduates said friends had left the area because of falling real wages. |
| Alan, who was approaching retirement, said that he had been involved with research that had revealed people’s “coping strategies”. | Alan, who was approaching retirement, said that he had been involved with research that had revealed people’s “coping strategies”. |
| “First there is multiple debt, with people who have exhausted all avenues turning to illegal sources. Then there is ‘self-imposed austerity’,” he said. “For example not sending children on school trips.” The same concerns were raised in Porth and at another event in Barry, where a number of entrepreneurs said they were also struggling. | “First there is multiple debt, with people who have exhausted all avenues turning to illegal sources. Then there is ‘self-imposed austerity’,” he said. “For example not sending children on school trips.” The same concerns were raised in Porth and at another event in Barry, where a number of entrepreneurs said they were also struggling. |
| Shop owner Fay, said she was self-employed but needed multiple jobs to cope with the financial demands of her family life. “Our incomes haven’t increased but our costs have gone up. I never thought I’d be a government statistic but I am now a ‘jam’,” she said – referring to Theresa May’s “just about managing” group. | Shop owner Fay, said she was self-employed but needed multiple jobs to cope with the financial demands of her family life. “Our incomes haven’t increased but our costs have gone up. I never thought I’d be a government statistic but I am now a ‘jam’,” she said – referring to Theresa May’s “just about managing” group. |
| “We have nothing left. People are not spending in shops. The self-employed can’t pay themselves the living wage.”Susan, who runs the local food bank, said the number of people “in crisis” turning to her group for help had been on the rise again over the past year after falling back in 2015-16. She blamed “stagnating wages”, saying people were talking about having to choose between heating or eating. | “We have nothing left. People are not spending in shops. The self-employed can’t pay themselves the living wage.”Susan, who runs the local food bank, said the number of people “in crisis” turning to her group for help had been on the rise again over the past year after falling back in 2015-16. She blamed “stagnating wages”, saying people were talking about having to choose between heating or eating. |
| Speaking afterwards, Haldane said the phrase of “self-imposed austerity” had stuck with him. It was, he said “people cutting back on investing in themselves or in their family. That was a worrying thing to hear. How generalised that is it is tough to know but ... that will be a big point for me to take away and reflect on.” | Speaking afterwards, Haldane said the phrase of “self-imposed austerity” had stuck with him. It was, he said “people cutting back on investing in themselves or in their family. That was a worrying thing to hear. How generalised that is it is tough to know but ... that will be a big point for me to take away and reflect on.” |
| Bank of England | |
| Economic growth (GDP) | |
| Economics | |
| Mark Carney | |
| Wales | |
| Austerity | |
| news | |
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