To my mind Robert Peston, the BBC’s business editor, is a print journalist. His words are better in print than when he speaks them in that odd halting way of his. No better example of this is there in his blog post today – Why are companies not borrowing? Here’s a snippet,
“For me, that drop in the price of interbank lending – the fall in the rate charged by banks for borrowing from each other – tells an important story.
It implies that a good deal of all that money created by the Bank of England in its quantitative easing programme – perhaps too much – is staying within the banking system, rather than stimulating activity in the real economy.
Why? Well, the Bank of England’s fear is that banks are being too averse to risk, that they don’t want to lend even to businesses that are fundamentally viable.”
My worry is that all we’ll get in the way of headlines is that things are getting better, so no need to worry. Meanwhile, businesses and entreprenuers are short of investment funds. Remove risk from investment and you remove growth. No growth means stagnation, which in the current climate might lead to stagflation.
I guess you wouldn’t know it from my posts on the economy, but I’m an optimist. It’s optimism that’s needed in the banks, who’ve managed to get their sticky hands on all that Bank of England ‘funny money’. What we need is for them to start putting it to work in the productive economy.