How many Delphic pronouncements from members of the monetary policy committee (MPC) does it take to change expectations? Martin Weale is the latest soothsayer to claim that Mark Carney's forward guidance will make little difference to the real economy (MPC member attacks Carney's flagship policy, 12 December). True. But Carney's view that the MPC is unlikely to raise interest rates at least until unemployment has fallen to 7% is a nudge in the right direction. Nothing more, nothing less.
However, Carney's message has been reinforced by another MPC member, Spencer Dale (No early end to low interest rates, says Bank economist, 14 December). Tiptoeing round this issue is not very helpful. We all know that uncertainties surrounding the future path of the real economy are huge – the old model (for what it was worth) is bust. All we can expect is that at the next MPC they will spin the wheel of fortune, make their decisions, and – like the rest of us – hope for the best. We wish them luck – but after the gigantic cock-up of 2008 and its aftermath, it will take a lot of MPC speeches to change the expectations of Christmas drinkers in the Dog and Duck.
Keith Cuthbertson Professor of finance
Dr Dirk Nitzsche Associate professor of finance
Cass Business School
• Your article (Bank warning over danger of interest rate rises, 20 December) highlights the logical flaw that runs through the current neoliberal settlement. In a casualised economy, with a pool of unemployed to replace unpliable employees and trade union action all but illegal, there is no mechanism beyond the altruism of employers to share the benefits of a growing economy more equally. With homes treated as assets and asset prices rising, while real wages have stagnated for over a decade, it is impossible for individual employees to maintain their level of disposable income – and this is ignoring ever-rising food, transport and energy prices.
So far, so neoliberal dream. However, the systemic effect of this is unsustainable in a democracy. A consumer capitalist model without consumers in a position to consume renders vast swaths of the economy unsustainable without ever-growing consumer debt, debt which is becoming ever harder to maintain – surely the underlying reason for Wonga et al.
These levels of inequality of opportunity have only previously been sustainable in societies, such as the Victorian or developing world, where the population is denied a political voice. This is surely one of the key drivers of political "apathy". There is no political party which offers any solution to square this circle.
Andy Crump
Harpenden, Hertfordshire
• Not all that meets the eye, these jobs figures (Bank of England has a poor record of forecasts, 19 December). In the three months to October unemployment fell by "almost 100,000", yet 250,000 entered employment in the same period. So where did the extra 150,000 jobtakers come from? Various explanations occur: migrants entering from abroad, returners to the labour market such as parents reducing childcare commitments, or maybe many people took more than one part-time job. But a discrepancy of 150,000 suggests a more disturbing explanation: the real unemployment total is much higher than that shown in government records. Before the Bank of England bases any interest rate and related decisions on such opaque statistics, it would be prudent to identify how many people are really unemployed.
Bryn Jones
University of Bath
• George Osborne would have us believe that controlling public debt is a matter of balancing the books. But it is facile to believe a government can be treated like a household, as can be seen from the ONS's table "Long Run of Fiscal Indicators As a Percentage of GDP". The data puts things in perspective and data reveals not only that governments rarely enjoy a budget surplus but also that having a deficit does not hold back growth and makes little difference to the national debt.
It is instructive to look at the period of the last Conservative governments (in case some might think of it as a golden age of unassailable fiscal probity that bears out Osborne's claims). Between 1979 and 1997, the Thatcher and Major governments were in surplus only twice, and overall there was a net deficit: cumulatively some 35.3% of GDP – which is a lot. Nevertheless the economy grew by 57%.
Meanwhile the "national debt" (the outstanding amount of public sector debt) fell from 47.2% to 42.1% of GDP, and fluctuated widely in between.
Just fixating on debt figures and ignoring the real economy is foolish and highly misleading.
Professor Dennis Leech
University of Warwick
