Bank of England hints economic pain felt by many to be a long, drawn-out affair
Higher for longer.
The Bank of England may have lifted interest rates by less than a lot of people had been expecting up until recently – up by a quarter percentage point rather than a half – but for those with mortgages, the most striking thing from the trove of analysis they’ve published today isn’t about today but about tomorrow.
Because there are heavy hints dropped throughout the Bank’s Monetary Policy Report that it expects borrowing costs to stay high for a lot longer than many had anticipated.
Only a few months ago financial markets were betting that the Bank Rate – the official borrowing level set at Threadneedle Street – would be down to 4% by 2024 and 3.7% by 2025. Far higher than the post-financial crisis period but a fall all the same.
Now, those same markets think rates will still be at 5.9% in 2024 and at 5% by 2025. And rather than challenging those assumptions, the Bank has come as close as possible to reinforcing them.
This institution doesn’t provide explicit guidance about where it’s expecting interest rates to go; it prefers to drop hints. And the hint in the minutes alongside the decision today was about as heavy as you could get.
“The [Monetary Policy Committee] would ensure that Bank Rate was sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with its remit.”
Higher for longer, in other words.
Why? Another clue is to be found elsewhere in the Bank’s forecasts today. It’s worth quoting at length: “Sharp increases in energy food and other import prices over the past two years have had second-round effects on domestic prices and wages.
“These second-round effects are likely to take longer to unwind than they did to emerge and the Monetary Policy Committee has placed weight in its recent forecasts on the risk that they might persist for longer.
“The committee now judges that some of this risk may have begun to crystallise.”
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‘Interest rates are not going down anytime soon’
It fears, in other words, that the inflation cat is now out of the bag. And thus getting price rises to come down may involve considerably more work on its part than it previously anticipated. Higher for longer.
Which of course means pain for many households – especially those with mortgages and those renting (most landlords also have mortgages).
And unlike previous eras where most households were on floating rate mortgages and thus that pain was very quickly felt in their pockets, today that pain is being drip fed into the economy as two and five year fixed-rate mortgages gradually expire and are replaced with far more expensive monthly payments.
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Again, that means the impact of these interest rate increases is going to be a long, drawn-out affair. And you can see the implications in the Bank’s economic forecast. The economy isn’t likely to face a recession, at least according to its central projection.
But it will essentially flatline – depressed by these higher rates – for three years, not showing meaningful growth until 2026.
It is a depressing prospect. Perhaps the best thing to hope for is that the Bank is wrong. This has happened before – indeed it’s already submitting to an independent inquiry into how it failed to foresee the recent spike in inflation, led by former Federal Reserve chairman Ben Bernanke.
It’s not altogether implausible that they fail to foresee a more meaningful economic recovery.
Metropolitan Police is to stop investigating “non-crime hate incidents” to “reduce ambiguity” after prosecutors dropped a case against Graham Linehan.
Linehan, 57, will face no further action after being arrested over his social media posts about transgender people.
The Father Ted and IT Crowd creator said his lawyers had been told the case wouldn’t proceed. The Crown Prosecution Service confirmed the move.
Linehan, 57, was arrested on suspicion of inciting violence when he landed at Heathrow from his home in the US on 1 September.
The incident drew criticism of the police and government from some politicians and free-speech campaigners.
Met Police said today it would stop investigating “non-crime hate incidents” to “reduce ambiguity” and “provide clearer direction for officers”.
Posting on X, Linehan announced : “After a successful hearing to get my bail conditions lifted (one which the police officer in charge of the case didn’t even bother to attend) the Crown Prosecution Service has dropped the case.
“With the aid of the Free Speech Union, I still aim to hold the police accountable for what is only the latest attempt to silence and suppress gender critical voices on behalf of dangerous and disturbed men.”
The union said it had hired a “top flight team of lawyers to sue the Met for wrongful arrest, among other things”.
“The police need to be taught a lesson that they cannot allow themselves to be continually manipulated by woke activists,” it added.
A Crown Prosecution Service spokesperson confirmed it had reviewed the case file and decided “no further action” would be taken.
Linehan said he had to be taken to hospital on the day of his arrest. Pic: PA
In one of his posts, Linehan wrote: “If a trans-identified male is in a female-only space, he is committing a violent, abusive act. Make a scene, call the cops and if all else fails, punch him in the balls.”
Another was a photo of a trans-rights protest, with the comment “a photo you can smell”, and a follow-up post saying: “I hate them. Misogynists and homophobes. F*** em”.
A Met Police statement after the case was dropped acknowledged “concern” around Linehan’s arrest.
It added: “The commissioner has been clear he doesn’t believe officers should be policing toxic culture war debates, with current laws and rules on inciting violence online leaving them in an impossible position.
“As a result, the Met will no longer investigate non-crime hate incidents.
“We believe this will provide clearer direction for officers, reduce ambiguity and enable them to focus on matters that meet the threshold for criminal investigations.”
Linehan said on his blog that he was arrested by five armed officers and had to go to A&E after his blood pressure reached “stroke territory” during his interrogation.
Police said the officers’ guns were never drawn and were only present as Linehan was detained by the aviation unit, which routinely carries firearms.
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JK Rowling, who’s regularly shared her views on women’s rights in relation to transgender rights, was among those who had criticised the arrest, calling it “utterly deplorable”.
Reform’s Nigel Farage, shadow justice secretary Robert Jenrick, and ex-foreign secretary Sir James Cleverly also hit out at the treatment of Linehan.
UK
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The son of former England footballer Stuart Pearce has died in a crash, his family has said.
Harley Pearce, from Marlborough in Wiltshire, was driving a tractor near Witcombe, Gloucestershire, on Thursday, when he was involved in a collision, police said.
The 21-year-old farming worker died at the scene, on the A417 Old Birdlip Hill in Witcombe, around five miles from Gloucester.
No other vehicles were involved, Gloucestershire Constabulary said. Emergency services were called to the scene of the incident at about 2.30pm on October 16.
Stuart Pearce at last year’s FA Cup Final at Wembley. Pic: PA
Harley Pearce was 21 and worked in farming, according to reports.
‘Our shining star’
In a tribute posted on Facebook, Harley sister, Chelsea Pearce, said the family was “truly shocked and utterly heartbroken at the loss of our cherished son and devoted brother, Harley”.
He was, the family said, was a soul “who left an unforgettable imprint on all who knew him”.
“He was a golden boy with an infectious smile, and this shocking tragedy will leave a huge hole in the hearts of those who were fortunate enough to have known him.”
He had “a quiet, understated strength and deep kindness”.
The family said they were “so proud of the young man he had become, exhibiting a wonderful work ethic and entrepreneurial spirit in the farming industry.
“He will always be our shining star. Rest in Peace, our beautiful son and brother. You will never, ever be forgotten.”
What have police said?
Harley ran his own company, Harley Pearce Agricultural Service, talkSPORT said.
Gloucestershire Constabulary said on Thursday: “The driver of the tractor, a man in his 20s and from Wiltshire, was pronounced dead at the scene.
“His next of kin are aware and being supported by specially trained officers.”
The force is appealing for any witnesses or anyone with dashcam footage to contact them.
‘Tragic news’
Harley’s father, Stuart Pearce, played 78 times for England and was part of the Three Lions squads which reached the semi-finals of the 1990 World Cup and Euro 96, the FA said on its website.
He was later the head coach of the England Under-21s.
During a long club career, he made more than 400 appearances for Nottingham Forest, many of them as captain, during a 12-year spell at the City Ground.
He later managed the club, as well as another former club, Manchester City.
Pearce currently works as a pundit on talkSPORT, which said on its website that Harley and Chelsea were the two children he had with his ex-wife Liz.
Presenter Jim White said during a broadcast on Monday that “everybody here on this show and at talkSPORT sends our heartfelt condolences to the family of Stuart Pearce after that tragic news we’ve just heard”.
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Several of the clubs he played for posted tributes on X, including Forest, who said they were “deeply saddened”.
The club said: “The thoughts of everyone connected with Nottingham Forest are with Stuart and his family at this truly difficult time.”
West Ham United said: “We are saddened to hear of Harley Pearce’s passing.
“Everyone at the Club sends their deepest condolences to Stuart and his family at this tragic time.”
Manchester City said: “Everyone at Manchester City sends their love and thoughts to Stuart and his family at this very difficult time.”
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