Morning:
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WHAT Gordon Brown giveth, he taketh away. His first move on entering 11 Downing Street in May 1997 was to give the Bank of England the task of setting interest rates. The Monetary Policy Committee has been one of the few unalloyed successes of his 12 years in charge of the economy, but this week he sent a clear signal that its independence is numbered.
Technically, the MPC will still set interest rates, but with a rate cut tomorrow "a stone cold certainty", according to Howard Archer of Global Insight, the bank rate may soon get as close to zero as makes no difference. At that point, the last weapon in the monetary armoury is "quantitative easing" - the term given to printing money and using it to pay the bills.
This is not as daft as it sounds, at a time when inflation is melting and there is a danger that the broad money supply will start to shrink. If this is allowed to happen, the recession could spiral into a slump, with catastrophic consequences.
Anticipating this quantitative easing, the Bank had lobbied for the job of deciding how much money to print, and what to buy, but Alistair Darling has made it clear this week that it would be done "with the Treasury and Bank working hand in hand". Monetary policy would pass from the MPC to the Bank and Treasury officials, effectively handing back control to the Chancellor.
Long and painful experience has taught us that when chancellors control interest rates, decisions to raise them are put off to the point where much larger rises are needed, which is why the creation of the MPC was so warmly welcomed in 1997. We also know how difficult it is to persuade ministers to stay out of the argument. This move will make the MPC redundant.
It looks as though the Brownian urge to interfere and control has got the better of him once again.
Reader views (5)
No one voted for Brown. He is an unelected politician wreaking havoc on the economy. There should be a coup and an election before Britain sinks without a trace.
- Krista, Geneva, Switzerland
Freak? yes Control? no.
- Jacqueline, Hampstead, London
Anyone who even vaguely thinks Brown is a good thing is indeed Barking!
- Yvette Moyse, London, UK
Pa 'Gollum' Brown was and still is the 'Secret Chancellor' of the UK. His fingerprints are over all ZaNULab-Pf policies everywhere. He is a bit like Mr Putin in Russia - still 'In Charge of Everything'.
With Pa Broone, it is a classic case of - "If a Jobs worh doing, do it yourself!" In his case he is reluctant to delegate to anyone. Alistair Darling is just a figurhead, a 'Mouth Piece' for Browns economic idiocy. Of course it will be Mr Darling who will recive the brickbats for the current woes, event though Gollum Broone was Chancellor for 10 years before 'Baldrick' Darling took over.
I like that epithet - 'Brownian Economics', the man with the 'Brown Arms'. Everything he touches turns to the 'Brown Stuff!' (the nasty brown stuff, that is!)
- Uncle Vanya, East Anlgia Area UK
Tory stooge slags off Brown.No surprise there then.
- Colin, barking england
