That loud whirring noise you heard coming from the direction of Davos recently was made by the governor of the Bank of England furiously back-pedalling on his “forward guidance” proposal that interest rates should not rise until unemployment fell to seven per cent.
Unemployment is now 7.1 per cent and is expected to fall to Mark Carney’s magic seven per cent level within the next few months – not three years, as the BoE forecasted when it launched its crystal ball-gazing “forward guidance” routine.
Just as I feared (and predicted here), instead of allowing those of us who care about things like using our own money to build a decent pension pot, pay school fees and meet our care charges in our old age to look forward to a period of gradually rising interest rates, Mr Carney is instead moving his own goalposts.
That’s not how he’d describe it, of course.
Speaking at the World Economic Forum in Davos, Mr Carney said he felt that with the unemployment threshold for raising bank rate from its prolonged and misery-inducing historic low of 0.5 per cent fast approaching it was instead time for forward guidance to “evolve”.
Perhaps if he’d come down from the rarefied heights of Davos to the West Midlands to talk to some real people, they could explain to him just how badly monetary policy is hurting them in the real world.
Seven per cent unemployment was only ever meant to be the point at which the monetary policy committee would perhaps, might, maybe consider raising interest rates, he explained.
Except, obviously, it won’t. So why say it would?
Other, more important factors, such as “prevailing economic conditions…wider measures of slack and inflationary pressures” would have to be taken into account before we can look forward to getting a half decent yield on our cash savings and pensions again.
Mr Carney came to us from Canada with the reputation of a heavyweight central banker. I fear he looks more like a show pony whose first trick has failed.
Were he serious he would surely offset the needs of a wider economy, albeit one awash with debt, against the social and personal damage that nugatory interest rates are wreaking.
Fresh evidence of the death of the savings culture was provided recently by Age UK which estimates that nearly six million people over the age of 50 believe there is no longer any point in saving for their old age.
The reason the majority of them (about 3.2 million) gave for their financial apathy was the belief that any nest egg they did manage to accumulate would be taken off them if and when they needed to go into care.
Indeed, it is believed that more than a million families have been forced to sell their homes in order to meet care bills in the past five years.
The fact that the coalition provides the clarity of a pea-soup fog whenever it sets out one of its many Never Never Land social policies, such as the one relating to health care for old people, only makes matters worse.
As does the slow motion wrecking by governments, banks and insurance companies of our once robust and worthwhile private pension schemes.
The removal of the incentive to save, not just for retirement but for the purchase of life’s luxuries, and its replacement with debt and the live for today approach to life is building into a social calamity that will result in many millions of British people living out their lives in poverty and despair – unless it is corrected, and fast.
The good news is that even in today’s adverse financial atmosphere, it is possible to make provision for the future. But with so much now at stake the help of a qualified and unbiased financial adviser, one who is independent of the finance companies so desperate to sell their expensive under-performing products to a gullible public, is more necessary than ever.
If you want to talk, without commitment, about your financial planning, call The Whitehall Partnership today on 0845 43 49 250 and arrange a free introductory meeting.