Mark Carney no longer seems reliable, with misplaced enthusiasm for rising rates | Business

TThe governor of the Bank of England, Mark Carney, must be among the most popular policy makers in Britain. Since taking office in 2013, the Canadian has often seemed to be the only adult in public life who can remain calm in times of crisis. His recent observation that businesses and financial markets need to recognize the risks of climate change has made him a cherished child of the environmental movement.

It is therefore odd that he risks jeopardizing his reputation as a strong monetary policy guardian – and that he has only nine months left before he leaves office – with the warning that interest rates are going to soon increase and at a faster pace than expected. , without a solid foundation for his prediction.

Carney, remember, acquired the label "unreliable boyfriend" as a result of a series of conflicting messages.

MP Pat McFadden said in 2014 that the Bank's economic forecasts were confusing businesses and consumers. "We had a lot of different signals," he said. "I mean, it seems to me that the bank behaves a bit like some sort of unreliable boyfriend."

Carney was pissed off by the brand, but he managed to get rid of it thanks to sustained performance in recent years. The problem is that after regaining his reputation following the vote on Brexit, Carney and the Monetary Policy Committee he chairs are about to throw it away and confuse the spirit from the country.

Admittedly, the forecasts have not changed much. Instead of an increase of a quarter point over the next two years, there could be two.

The reason why the cost of borrowing has risen from 0.75% currently to 1.25% is the prospect of inflation exceeding 2% in 2021 and the need for more interest rates. raised to calm the game.

But where does inflation come from right now? Not the basic inflation basket that eliminates volatile prices for energy and food. The latest figures show that the upward pressure comes entirely from rising gasoline prices. The downward pressure comes from sharp reductions in the cost of new cars and air fares.

The Bank 's latest quarterly report on the economy indicates that, for the future, the United Kingdom is returning to the ever – growing workforce, largely because of the lack of money. external immigration and austerity measures forcing applicants to look for work – will increase demand and keep up price pressure.

The bank, however, announced a similar change last August, increasing rates to 0.75%. Inflation, however, dropped from 2.3% to 1.8% in January, prompting Carney to begin its first turnaround in the Bank's February report – when growth forecasts were under control. Suddenly, the world had become dark and a possible recession in China and the United States was needed.

Three months later, everything seems to be stronger again, and as a result, an acceleration in the pace of rising interest rates is back on the agenda.

However, the recovery of economic activity in the United States, the Eurozone and China is due solely to the fact that their respective central banks have promised to dismantle their plans to raise interest rates. ;interest.

Carney wants us to believe that Britain can resist this trend despite its own domestic problems, which, according to many economists, will persist long after the Brexit resolution. The Federal Reserve has undergone a tremendous upheaval in its reputation for political flip-flop in a few months. It would be a shame for the UK central bank to do the same.

Some brbad that you can not afford to get rid of

It turned out that Philip Hammond was not a penny pincher after all. The Chancellor confirmed last week that the 1 and 2-piece coins (as well as the favorite of the criminals, the £ 50 note) are no longer under threat and will remain so for years to come.

It was the right call. And not just for sentimental reasons related to nostalgia and an opaque sense of British identity.

The Treasury originally argued that, given the growing popularity of contactless payments, it made no economic sense to spend millions to produce coins and notes that were not widely used. It has been claimed that about 60% of the copper coins are generally used in a single transaction before being stored in a jar or jetty.

However, official statistics and dry economic statements were not limited to a host of more emotional arguments that were difficult to challenge. Charities would be losers because these spares are often deposited in collection boxes; stores would not be able to apply prices ending in 99p; and buyers would suffer the consequences, retailers simply rounding prices up to the nearest pound.

To be honest, though, that might have played a decisive role. But what could have tipped the decision in favor of copper preservation was a report published in March this year warning that millions of British adults would struggle to cope in a society without money. While many city dwellers are used to paying with a wave of cards or smartphones, the Access to Cash Review magazine says that a "significant number" of people – about 2.2 million – used cash for all their transactions daily.

Natalie Ceeney, who chaired the review, was right when she suggested that by getting rid of our cheapest pieces, the government would have given the impression that it did not care about cash. If coppers no longer make economic sense, at what point do parts 5p and 10p become unviable?

Spotify will have to change its tone

Spotify's 100 million paying subscribers – a historic event reached last week – reflect the role played by the 13-year-old online broadcast company in revitalizing the music industry in the digital age.

In the United Kingdom, in 2018, CD record companies as the foundation of profits generated for the first time more than half of their revenue from streaming music services. their fastest rate for more than two decades.

However, Spotify is also a victim of its own success. The three biggest record companies in the world, Universal, Sony and Warner Music, control the rights of the vast majority of Spotify's tens of millions of songs. More than half of the revenue generated by the 217 million users of Spotify worldwide (117 million listeners at its ad-supported level) go to royalties to labels, artists and songwriters. Whenever licensing agreements with major labels need to be renewed, Spotify has been reduced to nothing.

The company has a market value of $ 25 billion, but has recorded a loss of 142 million euros in the first quarter of this year and is not expected to make its expenses in 2021. Its founder, Daniel Ek, is trying to Leverage by reducing its total dependence. on music and ramification in podcasting.

In recent months, Spotify has spent 358 million euros on three companies – Parcast, Gimlet and Anchor – as part of a $ 500 million acquisition budget this year. Ek estimates that in the future, non-music content will account for 20% of Spotify's total viewing and he wants to own, not just license, content.

The competition should intensify with the announcement by Google and Amazon of the launch of free versions of their music services, although Spotify is twice as large as its next competitor, Apple Music. But the pressure is certainly mounting on Spotify's position as the most popular music streaming service in the world.