Reuters - Video

Edition: U.S. | U.K. | IN | CN | JP

Business

Long, hot summer for UK - and BoE

Thursday, July 17, 2014 - 02:23

With Britain sweltering in a summer heatwave, things are warming up in the UK political arena, too, ahead of next year's election. And for the economy, prompting a new round of debate over how the Bank of England should respond. David Pollard reports.

▲ Hide Transcript

View Transcript

Heatwave Britain. Hard to believe maybe, but with temperatures nudging 30 degrees celsius, the UK's been hotter than Hawaii. Not only the weather's warming up. The economy too - latest numbers showing employment at a record high. And the jobless rate - a key marker for the Bank of England's rate-setters - falling on the previous month. Inflation surged to a five-month high in June. And London property prices have been rising a record amount. Time then, for the Bank of England to hike rates? Darren Sinden of Titan Investments. (SOUNDBITE) (English) TRADER AT TITAN INVESTMENT, DARREN SINDEN, SAYING: ''We've always thought that rates might have to go up sooner rather than later. I think it was interesting to see Mr. Carney say that the outlook for rates in the medium term hasn't changed. I think most people now are sort of realistically expecting a rate rise either at the end of this year or the very early part of 2015 and I think probably, you know, we would subscribe to that view.'' And indeed, Bank of England Governor Mark Carney was at pains this week to avoid pinpointing a timing of a first hike. His forward guidance policy - carefully charting a course between an improving data outlook and the risks that still remain in the economy - is aimed, he said, at signalling rate changes over the medium term. One potential cloud on the horizon: wages growth. Or lack of it: pay rose at its feeblest rate in five years in May - still a worry for Carney - and potentially complicating his rates outlook. And, no doubt, for Prime Minister David Cameron, who put some heat under the political debate with a government reshuffle this week. Out went Education Secretary Michael Gove - increasingly unpopular with teaching unions - in came a number of Eurosceptics and women to appeal to voters in next May's national election. It may have little effect. (SOUNDBITE) (English) TRADER AT TITAN INVESTMENT, DARREN SINDEN, SAYING: ''The public are not stupid. They will see that probably more as a PR exercise more than anything else. I think policy is really what people want. We have got ten months to go before the election. I doubt the government could achieve very much over that time frame. Perhaps they'll come up with some vote winners for the election manifesto, but I don't them it's enough to guarantee them re-election by any means.'' Finance Minister George Osborne kept his job - that's seen as a vote of confidence in his stewardship of the economy. But the UK has a new foreign minister: Philip Hammond, a prominent Eurosceptic who may attract rather less enthusiasm in Brussels.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Long, hot summer for UK - and BoE

Thursday, July 17, 2014 - 02:23