Cardiff Breakfast Club 24th May – Paul Fisher, Bank of England

Posted: May 24, 2013 in Business/Cardiff News, Cardiff Breakfast Club, Events
Tags: , , , ,

Breakfast ClubPaul Fisher, Executive Director for Markets and a member of the Bank of England’s Monetary Policy Committee (MPC), addressed the Cardiff Breakfast Club this morning.

Paul joined the Bank of England in 1990, holding a number of senior positions before becoming Executive Director for Markets in March 2009. He discussed the impact of ‘groundbreaking’ institutional changes the Bank of England introduced last month and gave an outlook for the UK economy, including the role that monetary policy can play going forward.

These ‘historic’ new arrangements include the return of banking supervision. While Paul stressed that supervision ‘cannot guarantee that banks and building societies won’t fail’, changes to the supervision procedure have been made to ‘exploit synergies’ between all parties involved, to ensure a better job is done.

Turning to the economy, Paul stated that this has been a ‘disappointing’ and ‘extraordinarily flat’ period, with only 5 of the 21 quarters since 2008 showing growth. Paul estimated that Britain is ‘between two-thirds and three-quarters of the way through’ the post-recession recovery period, and was keen to stress that no ‘crash bang boom wallop’ recovery is likely any time soon.

Paul Fisher, Bank of England, was this morning's Breakfast Club speaker.

Paul Fisher, Bank of England, was this morning’s Breakfast Club speaker.

This can however be seen as a ‘glass half full or glass half empty’ situation. While short term growth is likely to remain subdued for the next few years, the situation after such a deep recession ‘could be profoundly worse’. Paul is fairly hopeful that ‘gentle’ growth will resume this year, and is pleased to see firms and households expanding once more.

Spending will remain muted as households continue to save more than before the crisis, with individuals also working longer and for lower wages. The financial sector has been impacted by banks and building societies looking to sell off their commercial property portfolio. The corporate sector presents a ‘mixed picture’; SMEs are struggling to access the credit they want, but larger companies could help the situation by investing rather than continuing to save.

Paul also discussed the consistently low interest rates that frustrate savers, explaining that we cannot expect safe, real returns from the market until the economy is growing again. Once we get back to reasonable growth rates, savers will be see better rates of interest.

Paul was supportive of the efforts monetary policy has made to sustain the economy’s return to growth. There are ‘strict limits to what monetary policy can achieve’ in the current situation, but progress is being made. Changes will take time to work through. The Bank of England will continue to play its part in stimulating economic recovery, but we should not expect a ‘boom’ any time soon.

 

The next Cardiff Breakfast Club meeting will be held on the 14th June with guest speaker Russell Goodway, Cardiff Council. This event is kindly sponsored by Cardiff Metropolitan University. For information please contact Sally Taylor on 02920 549597 or at sally@petersenspr.com. 

 

 

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