Andrew Clare

Articles from Andrew Clare

• EASY DOESN'T DO IT: FIRING BLANKS

  A week ago the Bank of England’s Monetary Policy Committee chose not to extend their programme of quantitative easing. For those of you that were uncertain, quantitative easing (QE) is the central bank euphemism for the policy of printing money. In essence it was a policy born of desperation: with economic growth collapsing, once interest rates had been cut to (near) zero, it was the only option still open to the UK’s central bank. Now that the policy has ended it might be reasonable to assume that it has been a success. However, I have real doubts about the impact of the UK& ... ..read more

• TAXING TIMES FOR EUROZONE EMPLOYERS

  Last week we got the shocking news that Spanish unemployment is close to one in four. According to official figures at the end of March there were 5,639,500 unemployed people in Spain, representing 24.4% of the registered working population. These figures are very hard to digest. Anyone from Britain that remembers the early eighties when UK unemployment reached one in ten, will recall that it felt at times like the fabric of British society was collapsing completely. The Spanish unemployment rate today is far, far worse and it is frankly a wonder that Spain is not experiencing violent and ... ..read more

• IT COULD BE WORSE

  Last week we learned that the UK has fallen into a second recession. Growth over the first three months of this year was -0.2% which followed a contraction of -0.3% in the last quarter of 2011. Two or more consecutive quarters of contraction is the ‘official’ definition of a recession. To misquote Oscar Wilde – to fall into one recession is unfortunate, but to fall into a second is sheer carelessness. The arrival of the dreaded double-dip, has spurred on the bad news hungry media to make dire comparisons with the UK economy in the 1930s. Some economists have estimated t ... ..read more

• THE DREADED JAPAN-STYLE SCENARIO

  Last week the UK’s Chancellor, George Osborne, unveiled his latest budget. Never has so much media attention been focussed on an event of such economic insignificance … well, not since last year’s budget anyway! The brutal truth is that while the UK’s coalition government insist on sticking to ‘plan A’, that is their deficit reduction plan, the Chancellor has almost no room for fiscal manoeuvre. And besides, I suspect that deep down this Chancellor believes that fiddling about with the tax system is not the answer to the UK’s problems anyway &nda ... ..read more

• DISCOUNTING A DISAPPOINTMENT

  In a recent report by the National Association of Pension Funds (NAPF) it was estimated that the Bank of England’s QE programme had caused the aggregate Defined Benefit pension fund deficit to rise by approximately £90bn. Of course it was not the intention of the Bank of England to impoverish the elderly – that is normally the preserve of Chancellors – however the NAPF argued that the Bank’s gilt purchasing programme had pushed the yields on gilts lower than they would otherwise have been. Falling gilt yields, and yields on other related instruments, causes t ... ..read more

• WISELY BREAKING EVEN

  Physicists got all excited recently when they found evidence to suggest that neutrinos – sub atomic particles – could travel faster than the speed of light. Based upon most of the reputable theory and empirical evidence at the time, this was assumed to be impossible. Anyway, now it turns out that the boffins at CERN that discovered this anomaly may have wired up their machinery incorrectly. I don’t know about you, but I know whenever I am trying to measure the speed of sub-atomic particles, I always double check that I’ve got the right fuse in the plug. It sounds l ... ..read more

• WHAT'S THE NAME OF THE GAME: TARGET 2.0

  Soon after the Bank of England was made operationally responsible for the UK’s monetary policy in 1997, the Old Lady of Threadneedle Street went on a charm offensive around the country to convince business leaders, trade unionists and a sceptical Daily Mail public that she could be trusted with the job of setting interest rates to achieve a medium-term inflation target of 2.50%. They even organised a competition called Target 2.5 (later re-titled ‘Target 2.0’, when the Chancellor changed the inflation target to 2.0%, thus underlining the fact that the Bank of England was ... ..read more

• WHO BELIEVES IN THE PENSION FAIRY?

  One of the biggest problems facing Britain, and other developed economies today is that too many of its grown-ups believe in the pension fairy – a magical creature that will provide them with a pension for life, a pension that will allow them to maintain their pre-retirement lifestyle, no matter how long they live for. A disproportionate number of these delusional grown-ups work in the public sector. But there is no such thing as the pension fairy. The funds needed to provide us with a pension in our old age will come from a combination of three sources, none of them magical: you, ... ..read more