Donald Macintyre's Sketch: I feel your pain, Mark Carney (who earns £600,000) tells the TUC
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Version 0 of 1. Given that Mark Carney was once tipped as a possible Canadian Liberal Party leader – and there are those who think he might have a crack at it in the future – it’s intriguing to figure out whether there’s an inner politician under his economist’s skin. At times, certainly, the Bank of England Governor’s address to the TUC sounded more like a university lecture. Happily, he didn’t actually read out the copious footnotes attached to the printed version of the speech, let alone the appendix, with such rabble-rousing gems as “Firms pay a real wage of W. As a result, they demand labour up to the point at which the real wage equals its marginal product, or, in log-linear terms: w=y-n.” But then speaking from a rostrum adorned with this year’s TUC slogan “££££ Britain needs a pay rise” Carney didn’t want to over-excite his audience. He wasn’t expecting a standing ovation when he predicted that the “real wage growth” British workers “deserve” would – at last – begin “in the middle of next year”, or that “by the end of our (three-year) forecast, we see 4 per cent nominal pay growth on average across the economy”. And he didn’t get one, particularly since interest rates will probably go up first, whereas the TUC would prefer it to be the other way round. Central bankers, of course, don’t say things like: “We’ll probably put up interest rates early next year.” They say: “Our latest forecasts show that, if interest rates were to follow the path expected by markets – that is, beginning to increase by the spring and thereafter rising very gradually – inflation would settle at around 2 per cent by the end of the forecast and a further 1.2 million jobs would have been created.” That said, Carney had some deft political touches – at least with a small p. He irresistibly endeared himself at the outset to most of his trade union audience – and got two rounds of applause – by announcing not only that its 3,600 employees were paid “at least the living wage” but that its “contracted service staff” were too. His printed text referred to the TUC “conference” but he changed it – correctly – to “congress”. And he answered the inevitable referendum question by observing that an Anglo-Scottish currency union would be “incompatible with sovereignty”. He warmly praised “the labour force and the trade unions” who, by “sharing the burden” of the crash, deserved “great credit” for preventing the emergence of a “lost generation” of unemployed workers. And in so far as a banker on £600,000 a year can, he felt their pain. As the price for the growth of 1 million jobs, and a recovery which had “exceeded all expectations”, workers had suffered the biggest fall – a tenth – in real incomes since the “early 1920s”. In allowing only a “limited” interest rate rise, the Bank would show “sensitivity” to household debt. So could Carney ever stop being a pure “technocrat” – his word yesterday as he emphatically dismissed a suggestion that an interest rate decision would ever be influenced by the electoral cycle – and enter politics? Or fulfil an outlandish notion first canvassed by a columnist in Canada’s National Post when he got his present job, and even reach for the top in British politics? There is a Canadian precedent after all, albeit a Conservative which Carney probably isn’t. Step forward Andrew Bonar Law, born in New Brunswick. |