ALEX BRUMMER: The bank should jump out of recession

Bank of England analysts believe the Monetary Policy Committee will be on its hands next week when it decides on interest rates for the last time this year.

If, as governor Andrew Bailey says, the Bank is data-driven, it will have little choice but to surprise the markets and cut rates at least a quarter of a percent.

Post-economic momentum coming into the summer has fizzled. Output fell by 0.1 percent in October for the second straight month. New data shows manufacturing, consumer services and manufacturing are all headed in the wrong direction.

People don’t want to put too much effort into Rachel Reeves and the Labor Government. The rise in October came ahead of a £40bn tax hike, which has angered pro-Labour business leaders.

Prospects have been dampened by the withering attacks on the Tory legacy. Reeves’ accusation of the worst economic legacy since World War II is as dubious as his CV. Starmer could not resist joining the doomsday, standing in the Downing Street garden in the summer saying that things will get worse before they get better, and warning of the hard bank.

It was a self-fulfilling prophecy. By the time Labor released its gloomy forecast, growth had stabilized and inflation was under control. Preparing the country for a tax-collecting budget seems wise, and prejudices against the former are accepted. The problem is, horses are scared.

Business and consumer confidence are strong, new orders have dried up, and the labor market is strong. Deputy Prime Minister Angela Rayner’s planning changes are likely to deliver the promised infrastructure and housing transformation. But even some ministers – Health Secretary Wes Streeting comes to mind – are not convinced the 1.5m target for new homes can be met this Parliament.

The Budget has eased the uncertainty caused by the speech, but has done nothing to improve the trading environment. All we’ve heard from the Treasury is that the rise in National Insurance is bad.

Reeves argued before the CBI that there was no other option.

There are many. Motorists didn’t like it much, but they would have cried out for green speech, if the price of oil hadn’t been frozen. I mean a man with a gas car!

The Bank’s minutes keep reminding us that its job is to stick to the 2 percent inflation rate. We know in the post-Covid era that this was forgotten, and the Bank paid price in name. The strict tightening of the fiscal policy requires refinancing to avoid an unnecessary recession, so that the housing market is not distorted by high debt payments.

Waiting consumes work and life.

Emergency mail

Sadly for the second year in a row, Royal Mail has been fined by regulator Ofcom for failing to meet delivery targets. Performance was appalling last financial year, with only 74.7 per cent of first class letters delivered next day. The second class did better with 92.7 per cent attendance in three days against the 98.5 per cent target.

The results are shameful and speak to poor management, lack of efficiency and poor labor relations. The letter column is on a downward slide, making it easier to reach the targets. Books have dropped from 20 billion letters a year to 7 billion, and are falling to 4 billion.

None of this inspires the status of ‘Czech Sphinx’ Daniel Kretinsky. Loading the company with debt and locking it in uneconomic union activities will only lead to job losses and low investment. Customers are better. But it will not be given by the foreign power.

Bittersweet

Octogenarian Stefano Pessina was considered the genius of medicine. In 2019 he explored taking Walgreens Boots Alliance private with a $90 billion (£72 billion) valuation. Five years later, the group is vulnerable to $36 billion (£29 billion) in debt, lease payments and legal claims over prescription opioids. A $9 billion (£7.1 billion) rescue bid, by Sycamore’s buyout group, is on the cards.

Come on, go easy.