So far the attempts made at repairing the UK economy have been a little hit and miss. Positive data releases have inevitably been dogged by negative releases, and at times the words ‘recovery’ and ‘deterioration’ have seemed interchangeable.
Despite the patchy results and the barrage of criticism he’s attracted, Chancellor of the Exchequer George Osborne has determinedly stuck with his policies. Now the head of the Financial Services Authority is arguing that a more unconventional approach could potentially yield the desired outcome.
During his last Mansion House speech Lord Turner urged ‘a willingness to employ still more innovative and unconventional policies’.
Lord Turner stated that the crisis which rocked the financial world in 2008 wasn’t a ‘bolt from the blue’ but ‘arose from poor supervision, from bad rules and structures, from dangerous cultures – and the errors were made by regulators, economists, central bankers and public policy makers, as well as bankers themselves.’
But, according to Lord Turner (a favourite candidate to take over from Mervyn King as Bank of England Governor) the current approach for tackling the crisis could impinge UK economic growth for years to come. He stressed that rather than kick-starting a stagnating economy the methods employed for reducing government, private and business debt could have serious, long term repercussions.
He was quoted as saying: ‘If we do not carefully design policy in response, the deflationary impact on economic growth could extend for many years ahead’.
Lord Turner also commented that although some progress had been made much more could be done to secure the financial system, particularly on the part of the regulators.
Furthermore, despite acknowledging the necessity of the BoE’s latest round of quantitative easing Lord Turner expressed concerns over the continuing effectiveness of the policy. He stated: ‘Quantitative Easing alone may be subject to declining marginal impact.’
Although Lord Turner failed to offer any specific details as to what these ‘unconventional policies’ might be he did mention that ‘there are increasing signs that many banking industry leaders recognise the need for major change’.
As of 11:20 am
The Pound to Euro exchange rate is currently trading at 1.2367
The Pound to US Dollar exchange rate is currently trading at 1.6057
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The Euro to US Dollar exchange rate is currently trading at 1.2979
The Euro to Pound exchange rate is currently trading at 0.8082
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