As everyone is waiting for tomorrow’s rates announcements, it’s worth taking stock of UK Plc.

So, UK inflation is still not under control. And rates have to go up. Again. And they will stay higher for longer.

And moreover, UK growth is forecasted to be the lowest in the G7. And isn’t that due to those pesky rate increases, that stifle growth and investment?

Yes, yes, yes and no.

UK rates are high. Because the UK is in a bad place. But it isn’t caused by the rates. And having the rates be 50bps higher or lower won’t be what makes the difference in the long run.

(at most, it will help to manage inflation)

Creating Wealth

So what creates wealth?

Businesses do! And by European standards, the UK has a uniquely flexible and dynamic economy. That’s amazing. But it’s not enough.

We also need:

• A well-educated workforce
• An efficient and digitally proficient government
• Good trading arrangements with our main trading partners
• An economy and an immigration policy that attracts the best and the brights to the UK

If I look at the four points above, it’s hard to see which one of them has improved over the past decade.

And if we want to improve the growth of UK Plc, that’s what we need to change.

Back to the bank (and back to basics)

Strong and independent institutions are important. And the Bank of England is important. But the most important economic decisions are in Downing – not Threadneedle – street.

These decisions won’t have an overnight impact. They take a long time to implement, and even longer before we see the benefit.

So we better leave the Bank of England to the technical work of setting rates. And then get started on the real work of rebuilding the UK economy.