The following article appeared in The Daily Mail on Tuesday 28 September 2010. I fail to see how a problem that was caused by too much spending -- and therefore too much debt -- can be fixed by even more spending and therefore even more debt. Are they stupid, or plain evil?
The Daily Mail by Becky Barrow
28 September 2010
The Bank of England’s deputy governor yesterday urged the country to go on a shopping spree to boost the fragile economy.
In an extraordinary move, Charles Bean said he wanted to see Britons ‘not saving more, but spending more’.
His remarks will surprise many at a time when record numbers are facing insolvency, the majority of workers do not have a pension and millions do not have a penny in any other savings.
But Mr Bean, who enjoys a basic annual salary of just over £250,000, said a culture of spending, not saving, was desperately needed to help the economy to recover.
For example, they should be spending money on the high street or home renovations to help businesses, rather than siphoning this money into a nest egg for the future.
Speaking to Channel 4 News, he said: ‘What we’re trying to do by our policy [low interest rates] is encourage more spending. Ideally, we’d like to see that in the form of more business spending but part of the mechanism that might encourage that is having more household spending. So, in the short-term, we want to see households not saving more, but spending more.’
As interest rates have plunged, millions of homeowners with a variable rate mortgage, such as a tracker, have seen their monthly repayments slashed.
Rather than save this money, the Bank hopes many will spend it on anything from a haircut to a new bathroom.
In reality, many people have been so spooked by the past few years that they have become far more prudent.
It comes as Britain’s debt mountain, including mortgages and credit cards, is £1,456billion, close to a record high.
Andrew Hagger, from the financial comparison website Moneynet, said: ‘Suggesting that the public should embark on a spending spree gives out completely the wrong message, particularly when so many people have no savings, no pension provision and are already struggling to make ends meet.
‘While extra spending may give the high street a temporary quick fix, the longer-term consequences could mean irreparable damage to household budgets for years to come.’
Mark Sands, national head of bankruptcy at the accountants RSM Tenon, said he was ‘stunned’ by the comments.
He predicts a record 140,000 people will be plunged into insolvency this year and said: ‘The vast majority of people became insolvent because they borrowed for something that they could have done without.’
Former Downing Street pensions adviser Ros Altmann condemned Mr Bean’s comments, warning that they would undermine retirement savings.
She said: ‘Does he not understand how dangerous it is to undermine pensions and savers?
‘The Bank of England should be controlling inflation, not damaging prudent savers.Instead it has created inflation and taken away savings income. Policymakers are only looking short-term, which is dreadfully dangerous.’
However, during the interview with Channel 4 News, Mr Bean went on to make clear that he does think that saving is a good idea overall. He said there is ‘a lot to be said for encouraging people’ to save, such as putting aside money for a deposit for a home.
Mr Bean, 52, who is a member of the Bank’s interest-rate-setting committee and can look forward to an annual pension currently worth £70,700, said: ‘One of the most important issues that faces us is to ensure households save enough to provide for retirement, especially as people are living longer.’
The Consumer Credit Counselling Service advises people to have at least six months’ worth of their salary in a savings pot in the event of an emergency.
It seems the advice of Mr. Bean (and is that not an appropriate appellation for the Deputy Governor of the Bank of England?) enjoys warm support from readers. Here is a selection of comments:
Charlie Bean looks really evil. He looks like he doesn't care about anyone. He is totally selfish and hopes everyone spends all their money to get the economy boosted and he can be left with all his money so he remains rolling in it. What a hateful man.
- A lady, England, 28/9/2010 22:05
I am not going to spend. I am on benefits and I am waiting until I get a job to do any spending.
- A lady, England, 28/9/2010 21:50
It'll be an arctic day in Hell before I take financial advice from a goon like this. I hope he gets the sack and ends up living in a cardboard box under the arches, along with the rest of the former high-flyers.
- Philip, Bankrupted Britain, 28/9/2010 20:59
Perhaps he should ask all the city bonus takers to spend their cash first!!!!!!
- eric, belfast, 28/9/2010 19:57
haha iam saving thxs, you lot spend your money , i'll clean up after.
- LUKE, london, 28/9/2010 19:32