'Mistakes, rookie errors'- Former BoE chief economist Andy Haldane slams Rachel Reeves's budget: MAGGIE PAGANO
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The verdict was devastating: ‘There’s been mistakes, rookie errors. The black hole announcement sucked the confidence from business and consumers.
The Budget compounded that felony. It’s not been the sort of thing we need to get the animal spirits in the country going and, therefore, the country growing.’
The criticism of Labour’s economic strategy is all the more powerful coming from Andy Haldane, the former chief economist of the Bank of England, who knows a thing or two about what’s happening in the weeds of the country.
More pertinently, Haldane also knows the impact that his excoriating critique of Rachel Reeves will have on economic sentiment and the financial markets.
He’s never been one to mince words – his speeches while at the Bank were not only entertaining but as sharp as a razor and always on the money.
Luckily, Haldane – potentially the best governor of the Bank we never had – hasn’t lost his touch one jot.
In fact, the once chief executive of the Royal Society of Arts seems to be running in top gear as his LBC radio interview yesterday showed so vividly.
You could almost hear the sucking of cheeks when saying: ‘It’s been a disappointing almost 12 months. I think everyone would say that.
'Business would plainly say that. The City would say that. Citizens would say that. I think back benches would say that.’
And so say all of us. When asked if Reeves is doing enough to encourage growth, Haldane replied starkly: ‘Not even close.’
His precise words are worth repeating: ‘To be clear, by growth I don’t mean something as arid as GDP. I mean people’s living standards, people’s sense of things getting better in their community.’
Yet Haldane holds out some crumbs of comfort if Reeves changes tack, particularly now the economy is slightly perkier.
The many policy mistakes – such as the winter fuel allowance – should be corrected to avoid making a bad situation worse.
Even the latest small rise in defence spending won’t have much impact; a few jobs outside of the South East but not enough to get growth going.
Yet if the Government were to increase defence spending to 3 per cent – if not 3.5 per cent – Haldane says, then Reeves could find the money to do so as the growth dividend from such a rocket boost would pay for the extra borrowing.
Surprisingly, Haldane doesn’t diss Nigel Farage’s latest economic forecasts.
He agrees with the Reform UK leader’s plans to remove the two-child cap on benefits and new policies to attract more foreign capital and talent to the country – fundamental to growth.
Counterintuitively, he wants politicians to go bigger, bolder and come up with a credible plan with money and words behind it.
‘Go big and go bold or go home.’
Quite. He criticises them all, arguing that initiative after initiative over decades have all been sub-scale and failed to trigger growth.
How right he is. And unusually for an economist, he’s ahead of the curve.
Back in June 2021, he predicted that inflation was rising fast – less than a week after the Bank dismissed inflation as transitory. More recently, he’s been in favour of faster interest rate cuts.
What are Farage and Kemi Badenoch waiting for? They should be racing against each other to persuade Haldane to help come up with such a plan.
In return, they could dangle the top job at the Old Lady.
Machin’s worth it
There are two sorts of companies: those that have suffered a cyber attack and those that don’t know they have suffered a cyber attack. That’s the reality.
Which is why any suggestion that Stuart Machin, chief executive of Marks & Spencer, doesn’t deserve his latest £7.1million pay package because of the recent cyber-hack is way off beam.
Machin’s pay deal – which includes fixed pay and pensions of less than £1million – is based mainly on long-term bonuses, and most of it won’t be paid out for at least two years.
It also relates to the year before the attack paralysed M&S’s online sales.
Over that time, shares rose by a fifth and the retailer continued to up its game. He deserves every penny.
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