'A very small recession'
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
Andrew Bailey, the governor of the Bank of England, has appeared in-front of MPs on the treasury select committee this morning. The appearance comes at an interesting moment for Bailey and the UK economy. Firstly, the UK has officially entered a recession according to official data published by the Office for National Statistics last week. Secondly, Andy Haldane, the former chief economist of the Bank of England, gave an interesting interview on Monday. Haldane said this:
“It’s one thing to have missed inflation on the way up, which happened, it’s quite another to then have crushed the economy on the way down. That double blow to credibility is one – if I were a central banker, in my old job – I would be looking to avoid.”
These comments from Haldane are a notable warning to the Bank about leaving it too late to cut interest rates from their current level of 5.25 per cent. As a reminder, Haldane was the one member of the Bank’s monetary policy committee who warned about inflation and pushed for an increase in interest rates before inflation spiralled out of control in 2022 and 2023.
Haldane made these latest comments in an interview with Bloomberg, which you can read here
Unsurprisingly, Bailey was asked by MPs today about the recession and his view on interest rates.
On the recession, Bailey was actually quite upbeat about the economy, pointing to the jobs market and low unemployment. He said:
“We’ve had this period of rapid disinflation, we’ve had restrictive monetary policy, but in all the measures we use the economy appears to be at full employment.
“That is a very good story. We don’t want unemployment rising rapidly. It has happened in the past when we’ve taken these sorts of actions.
“I would just say against a lot of talk of what we think is going to be a very small recession, we think the economy is already actually showing distinct signs of an upturn.”
On interest rates, Bailey said it was “not unreasonable” to expect there would be cuts this year but added: “We’re not there yet.”
You watch Bailey’s appearance in-front of MPs here and read more about his comments here
Podcast…
The latest episode of our Business Leader podcast looks at the story behind how Simon Arora and his brothers Bobby and Robin turned B&M from a small discount chain in the north of England into one of the biggest retailers in the UK. In part one, we speak to Simon Arora about how he found B&M, the strategy behind building the business, and how it nearly all ended after less than a year.
You can listen to the episode via Substack here, Spotify here or Apple here
Other stories that matter…
1. Barclays is to cut £2 billion in costs, raising concerns about job losses. Shares in the bank have risen more than 5 per cent this morning after boss CS Venkatakrishnan said that Barclays would increase payouts to investors by £10 billion over the next three years. Venkatakrishnan was also bullish about the outlook for the UK. “We are very optimistic about the UK as a place in which to do business, and from which to do business,” he said. More from The Guardian here
2. Sheffield Forgemasters has developed technology that means it can now weld small nuclear reactors, which could be rolled out across the UK as a new source of energy. More from TheBusinessDesk here
3. The government could allow farmers to open farm shops or other rural businesses on their land without seeking planning permission. Story by The Times here
4. The Japanese billionaire who inspired dollar stores in the US and pound shops in the UK has died at the age of 80. Hirotake Yano founded the Japanese chain Daiso, which now has more than 4,000 shops. More here
5. A myth about modern technology has been dispelled - closing apps which are running in the background on your iPhone or Android device is a waste of time. It does not make your phone run any faster or save any battery life. In fact, it uses up battery life to shut the apps down. More from Quartz here
And finally…
The latest series of True Detective has just finished on HBO and Sky in the UK. I watched all six episodes and, frankly, I don’t really know what to make of it. It’s difficult to discuss the show without any spoilers, but I can say that the reviews have been remarkably varied. Forbes called the season finale “truly embarrassing”, while The Telegraph gave it five stars and said: “Macho crime drama gets a neat, feminist stab in the back”.
You should watch the show to make up your own mind. Jodie Foster stars in the leading role as a police detective in Alaska. There are definitely some Clarice Starling/Silence of the Lambs vibes to the show. You can find all four seasons of True Detective here
Thanks for reading. If you enjoy Off to Lunch then please share it with others and spread the word. If this newsletter was shared with you then please sign-up below to get Off to Lunch sent directly to your inbox
Best
Graham