Broadcaster, geopolitics/economics and finance expert Dr Roger Gewolb, head of the Campaign for Fair Finance ™, and Fairmoney.com comments on this week’s big economic data dumps and the gloomy recession news. Since the first Bank of England interest rate hike, Roger Gewolb, economist Catherine McBride, and other independent experts have urged the Bank to reduce interest rates immediately and introduce reforms through his Campaign for Fair Finance™. More recently, his call has been echoed by ex-Lloyds Bank economists at the Institute of Economic Affairs, and many others.
One of the first experts to predict a recession, Dr Roger Gewolb says; “The latest economic data reinforces the need for immediate action to counter the current economic challenges. Based on the data, the Bank must take action by cutting interest rates at the next monetary policy committee meeting on 21st March. I recommend a reduction from the current rate of 5.25% to at least 5%. This move is essential to support economic growth and stability, and I urge the Bank to act decisively”.
Dr Gewolb explains; “Inflation in the UK is due to rising costs for manufacturers and service providers, known as cost-push inflation. The Bank tends to follow US rates for fear that UK investors may transfer their funds to other regions, as they would receive better returns on bonds. This could result in the pound losing value against the US dollar and euro, leading to an increase in import prices and worsening inflation. However, the US experiences demand-pull, consumer-led inflation, which can effectively be addressed by adjusting interest rates. Additionally, it does not face the issue of rising energy prices as it is energy self-sufficient. Compared to other major economies, the US did not impose a uniform lockdown during the pandemic, giving it some flexibility to grow.”
“The BoE can avoid damage to the pound by coordinating policies with leading central banks to cut rates together. This would help the uncertainty surrounding economic prospects amidst high interest rates, and sluggish consumer demand, which has now affected yet another big British retail chain. The Body Shop has now gone into administration. Today’s technical recession data suggests it may only be a blip, but the country’s problems run deeper than just small adjustments to interest or tax rates. Experts forecast that the economy could experience two decades of stagnation, with a decline in GDP per capita every quarter. The government must implement policies that promote growth to improve the country’s economic situation and the standard of living for its citizens”.
Echoing Former Bank of England Deputy Governor for Monetary Policy Charlie Bean – who has this week called on the central bank to reform its quantitative easing (money printing) programme to lessen the cost burden on taxpayers during the unwinding process – Gewolb says; “Bean is right, and the Quantitative Easing (QE) applied in response to the pandemic was also very different from that applied following the 2008 crash. After the QE of the 2008 crisis, inflation did not rise to the same level it is now because the extra money did not bleed into the general economy but remained within the banking system, creating more than a trillion dollars and pumping it into the UK economy through QE, the central bank added fuel to the fire and made things much worse”.
Finally, Dr. Gewolb added: “We are in the midst of a financial crisis that is simply not being talked about, and our government and opposition politicians seem to be totally ignorant of its existence. I am talking about the millions of Britons who have used up their savings and have to rely on borrowings, but are confronted with banks and other lenders who will not lend to them. These people are turning, in frighteningly increasing numbers, to expensive payday lenders buy now pay later schemes, and most worrying, scores of illegal unlicensed lenders who do not necessarily observe the rules set by the Financial Conduct Authority, and can easily be preyed upon. I would think that our government would be acutely sensitive to this crisis, and in the midst of doing something about it, rather than it not being mentioned at all.”
Dr Roger Gewolb is a broadcaster and geopolitics/economics and money expert. He has advised the Bank of England, the UK Treasury and the UK Ministry of Finance.
- Hugo Lloyd