GMB Question To Governor Of Bank Of England At TUC Congress Exposed No Recovery When Unemployment Fell To 7%
Monetary Policy Committee saw too many without a job, or on zero hours contracts, or in false self-employment, or looking for more hours and a lack of productivity growth in the economy says GMB.
At the TUC Congress in Liverpool on Tuesday 9th September during a Q&A a GMB delegate asked Mark Carney, Governor of the Bark of England a question on interest rates as follows:
Cath Murphy (GMB Scotland): You said that when the unemployment rate fell below 7% interest rates would rise as part of an economic strategy on inflation. You did not follow that through. Is this because of the impact that a rise in interest rates would have on millions of working people, or is it something to do with the pressures politically not to support interest rates this side of an election?
Mark Carney replied as follows: Just on interest rates and politics, which is the way I would term it, the first thing to say is that we are absolutely indifferent to the political cycle, to who is in government, who might be in government and who was in government. We are given a specific mandate. It is, basically, unchanged since 1997 to achieve that 2% inflation target, and we manage monetary policy in order to achieve that. If we need to raise interests rates before, or lower them for that matter, a vote, an election or referendum, we will do what is necessary in order to achieve that target. We are technocrats and we do what is necessary.
If you don’t mind, I just want to clarify one thing. I think most people are clear on this, but our commitment was not to raise interest rates at least until unemployment got to 7%, because we wanted to secure that recovery. What we said that once the unemployment rate got to 7% we would then look around, take stock and decide where monetary policy needed to go. When we looked around and took stock, we saw a lot more people who wanted to work than had jobs, we saw a lot of people working part-time who wanted to work full-time, we saw a lot of people who were working as self-employed who wanted to be in regular employment and we saw a lot of people on zero-hours contracts. We saw a lot of flexibility and additional capacity in the labour market. It did not make sense to raise interest rates was our judgment then, and it has been absolutely vindicated by the performance of the economy since.
Paul Kenny, GMB General Secretary, commented on the reply as follows: “It was a brilliant question from GMB’s Cath Murphy which exposed the Governor.
He admitted that when the unemployment rate fell to 7% the Monetary Policy Committee looked at the real economy and saw that there were too many people without a job, too many people on zero hours contracts, too many people in false self-employment who didn’t want to be there, too many people in part time jobs looking for more hours and a lack of productivity growth in the economy.
The Monetary Policy Committee concluded that there had been no recovery that would justify an interest rate rise and realised that the spin was exposed.
The Governor admitted that the people in jobs had paid the price. He agreed that Britain needs a pay rise. Where GMB part company with the Governor is that British companies are cash rich, sitting on the biggest pile of cash they have had for years. These companies can well afford a pay rise for their workers before a rise in interest rates.”
Contact: Kamaljeet Jandu on 07956 237 178 or Lisa Johnson 07900 392 228 or GMB Press Office: 07921 289880 or 07974 2