Next year promises a return to low growth, rising inflation and painful decisions about what to buy in the weekly shop as disposable incomes are squeezed. Not since 2012 will the British have felt the strictures that come with a faltering economy – should the forecasts come to pass.
In previous decades the public might reasonably have asked the government how it planned to rectify the situation. Not now. And not since 2010, when George Osborne effectively handed over the job of managing the economy and keeping growth healthy to the Bank of England.
So it should come as no surprise to Mark Carney, the Bank’s governor, that he faces some stiff questions about the success of his policies and what he plans to do next.
On Tuesday, members of the Lords economic affairs committee will be the latest to demand that he explain when the extraordinary measures adopted at the time of the 2008 financial crash – and since – will be scaled back and normal service resumed. Eight years after the City’s finest were put back on their feet, and three years into a solid recovery, the economy must be able to thrive without Threadneedle Street’s helping hand.
Until the past few weeks, any criticism of the Bank’s formula for recovery – printing vast amounts of electronic money and cutting interest rates to a record low – was met with the united backing of ministers, opposition parties and all but a handful of Tory backbenchers.
Everyone in government knows the Bank’s cut in the base rate to 0.5% in the aftermath of the crash and injection of £375bn into the financial system to reduce borrowing costs is what allowed Osborne to apply a tourniquet to public spending. Without access to artificially low mortgage and loan rates from high street banks, middle-income families would almost certainly have revolted against austerity.
The Brexit vote and the prospect of economic hardship next year have wrecked that consensus. Tories are concerned that a public backlash could wreck any prospect of a coherent plan for leaving the EU (a plan that remains as devoid of structure as the blank canvases offered up as art in the 1960s by the American Robert Rauschenberg). If they needed a sign of the public’s rumbling unease, the Witney byelection, where the Tory majority was cut by four-fifths, offered a constellation of warning lights.