Bailey sets alarm bells ringing while barely mentioning the B-word | John Crace

T.he noises coming out of No 10 ahead of the prime minister’s visit to Northern Ireland had been rather more conciliatory. Obviously, there was no admission from Boris Johnson that he had actually negotiated and signed the deal involving the NI protocol, but that was always going to be a step too far. There’s only so much reality the Convict can take at any one time. And the bigger the truth, the harder he finds it to accept.

But at least Johnson had this time bothered to get someone with a working knowledge of some of the sensitivities endemic to Northern Ireland to write the 2,000-word opinion piece on his behalf for the Belfast Telegraph. Normally, he’d have just scribbled something off the top of his head di lui in about 30 minutes. This time there was an awareness he needed to produce something that in some way acknowledged the presence of both the nationalists and the unionists. Not to mention the EU.

Allowing Liz Truss to sound off about unilaterally deciding to trigger article 16 and torpedo the protocol – initiating legislation to break the law was a new level of idiocy even for a paid-up member of the wankocracy – hadn’t gone down well in mainland Europe or Ireland. So now the Convict had been sure to keep things vague. Let’s forget he’d ever mentioned article 16 and just hope that somehow a compromise fudge might emerge. After all, with the economy tanking and inflation predicted to rise above 10% by the end of the year, now was probably not the time to start a trade war with your biggest and nearest trading partner.

Just how screwed the UK economy really was soon became apparent at a meeting of the Treasury select committee where Andrew Bailey, the governor of the Bank of England, deputy governor Dave Ramsden, and Michael Saunders and Jonathan Haskel, two economist wonks on the monetary policy committee, were giving evidence. The committee chair, Mel Stride, got things rolling by asking why the Bank of England had got its inflation forecasts so hopelessly wrong and whether it should have taken more action on increasing interest rates to ease the pressure.

Bailey is a man who epitomises dullness. Someone not even his close friends and family of him find it easy to stay awake for. He speaks with the golden voice of a man who chews half a dozen Mogadon before he leaves the house in the morning. So for him to sound even slightly panicky is enough to send alarm bells ringing. It was like this, he said. At least 80% of the underlying causes of inflation he had no control over. He could only sit back and let the rise in energy prices and the war in Ukraine do its worst. He was powerless. Accept the things he cannot change.

Yes, but … Stride was not happy with this at all. He needed more certainty. He needed to know that the Bank of England had a clue what it was doing. Bailey looked him in the eye before slowly replying. You could summon all the hindsight you wanted but even then you could drag in a couple of punters who knew nothing about economics from the street and they probably wouldn’t do any worse than the MPC.

It wasn’t just that 80% of the economy was a lawless jungle, far removed from any pathetic monetary levers he might try to use. It was also that he didn’t really have much of a clue about the 20% he would normally have some chance of controlling in times of less magical thinking. There was Covid in China. He had no idea how that was going to play out.

And he had no idea why so many people had left the labor force. It could be that they all had long Covid. Or it could just be that hundreds of thousands had reckoned everything was so shit under the Tories that once lockdown ended they couldn’t be arsed to go back to work. Far better to put their feet up and take their chances at home. Might as well die happy.

“I don’t want to panic you,” Bailey said. But he clearly did, because he then went on to point out there would soon be a food crisis. Wheat prices had gone up 25% in a matter of months. We were all going to starve. And the least we could all do is to not ask for a pay rise. That way the least well-off would be the first to go. Call it natural selection. And all the more nosh for him. Though he was at pains to point out he too had taken a wage freeze. Somehow he’d struggle by on £ 575,000 a year.

Labor’s Rushanara Ali wondered how the MPC felt about being scapegoated by Liam Fox and other rightwing Tories for not having done more to combat inflation. Bailey shrugged. He could live with it. If the Tories really wanted to undermine the Bank’s independence and let the chancellor have a go, then they could be his guest of him. Though nothing Rishi Sunak had done on the cost of living crisis should have given them any reason to think he had any answers. The man was even more useless than him.

The session meandered on for the best part of two hours with everyone in a state of denial. No one really wanted to acknowledge just how fucked the economy was and that no one had a clue what to do about it. Just hope things would return to normal at some point in the future and hope that some of us would be alive to see it. Don’t talk about the 80%. Or the 20% for that matter. Try to think of a happy place. And definitely don’t mention Brexit.

The Tory MP Kevin Hollinrake tried to get Bailey to quantify the Brexit effect. “La, la, la,” said Bailey, putting his fingers in his ears. He wasn’t going to talk about Brexit. It was too difficult to disentangle from Covid. But it might have had some effect? Yes, no, maybe. Ramsden, the deputy guv’nor, eventually put Bailey out of his misery of him. Brexit was going to cause a 3.75% hit to GDP in the long term. But they’d already said that a long time ago and it was too painful to repeat. There was an embarrassed silence. Ramsden looked around guiltily. As though he’d messed himself.

One of the biggest acts of self-harm and even the Bank of England and the Treasury select committee can barely bring themselves to mention it. Truly, we are screwed.

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