ALEX BRUMMER: Forecasts that blight trust from Bank of England

Not long ago, central bankers made decisions behind closed doors, and a specialized cabal of Fed and Bank of England watchers made their living predicting future moves.

During that time, it would take six weeks for the minutes of the US Federal Reserve’s open markets committee meetings to shed light on interest rate decisions.

At the Bank of England (before independence in 1997), it was the governor’s eyebrow, and the nods and winks of the Treasury, that decided matters.

Gordon Brown put an end to the ‘Ken and Eddie show’ of the 1990s, when Chancellor Ken Clarke and Governor Eddie George, amid magnanimity, tried to agree on how much we should pay for our mortgages.

Major changes have taken place in the last few decades. Central bankers focus on clear communication to avoid surprises. The mystery is gone and Fed Chair Jay Powell and Bank Governor Andrew Bailey emerge from their temples to reveal the secrets to assembled economic reporters, TV cameras and social media.

One of the messages that emerged from Thursday’s deliberations was that the UK is expected to slide into the longest recession in a century.

Still, the Bank went on to say it didn’t really believe in longer-term market forecasts for interest rates, so activity couldn’t be that weak after all.

Nobody expects the Bank to massage its forecasts. But we should not underestimate the damage that can be done by bleak forecasts. Business investment in the UK is terrible right now. And it certainly won’t be helped by the governor spreading gloom. Nor will it profit from Downing Street leaks about how companies and shareholders can look forward to higher taxes on earnings and dividends.

By now, it could be assumed that the combination of rising energy costs and consumer prices, along with rising mortgage bills, would have put economic activity on track.

But despite the despondency, there are current indicators that the country is refusing to be traumatized.

Construction is recovering with the S&P purchasing managers index hitting a five-month high in November, boosted by housing construction. Relentless bleak projections are impacting new orders, which are falling back to pandemic levels.

Elsewhere, car sales rose for the third consecutive month in October, even as the comparable month in 2021 was offset by supply bottlenecks.

The November 3 bulletin from the Office for National Statistics suggests consumers are determined to defy consensus.

Retail visitor numbers are up, online job openings are up sharply from the pre-pandemic average, gas prices are 74 per cent lower than the same week of 2021 and UK flights are creeping up to 87 percent of the level of 2019. Despite a gloomy story, optimism prevails.

His Master Voice

China-based insurer Ping An is becoming increasingly fierce in its battle to shake up the UK’s largest bank, HSBC.

It still wants a spin-off from the Asian company, demanding more aggressive cost-cutting and complaining that top management lacks Asian experience.

HSBC rejects criticism from its 8.3% shareholder, pointing to cost savings and a higher return on equity.

HSBC chairman Mark Tucker, with a wealth of experience in China from his time at AIA, could do worse than turn his fire on Ping An.

Despite the fact that the insurer is listed in Shanghai and Hong Kong, the ownership structure of the insurer is unclear.

But as with all Chinese companies, Beijing exerts enormous control over public statements.

Who is really pulling the strings?

Dragon’s Nest

Amid the disappointment over the win at Warner Bros Discovery, the bright spot is the Game Of Thrones prequel House Of The Dragon.

The lavish series premiered with much fanfare by Sky in London’s Leicester Square in August.

Most of the production was at Leavesden Studios in Hertfordshire with filming on location in Cornwall.

The show is broadcast by Sky Atlantic in the UK and HBO in the US.

Another minor critically acclaimed triumph for the UK’s burgeoning film and creative sector.