Belfast Telegraph

Making borrowing easier a boost for all

With all this good economic news it's difficult to remember what all the fuss was about.

PMI's are flying, GDP is blossoming and confidence is beginning to return to give us a blokey swagger where a timid shuffle was once the norm.

What's more, the guv'nor is making it a bit easier for us to borrow money. The new boss at the Bank of England lived up to his billing by giving us so-called forward guidance on interest rates, something he was wont to do at the Bank of Canada and something practised by the Federal Reserve in the biggest economy in the world.

Mark Carney said he'd wouldn't raise interest rates until the UK unemployment rate falls below 7%, something that many of the most strategic brains in the country thought wasn't going to happen until 2016.

That was a signal to go out and borrow money like there's no tomorrow, safe in the knowledge that interest rates were going nowhere.

But that was a few weeks ago.

Since then the green shoots have had a bit of a growth spurt, one of such pace that Mr Carney might need to think about bringing the lawn mower out again sooner than he expected.

Markets, it's claimed by the investment banking arm of Investec, believe the economic recovery is gathering pace and Mr Carney may be forced to raise rates as soon as 2015 or even as early as 2014. That's not because the unemployment rate is expected to fall quickly from its current 7.7% but that the inflation rate could take off.

If that happened he'd have a little tolerance to play with but in the end would have to lift rates in countering-rising prices. That slightly dampens the security blanket which Mr Carney's initial plan had given us all, but doesn't do away with it completely.

While we can't borrow with the same certainty that rates would remain low for the next three years, we are still buffeted by forward guidance which gives us a year at least of all-time low rates.

That's much more certainty than we've had in the last six years and makes the job of forward planning much easier.

And when Mr Carney is forced to open the interest rate sluice gate then we can take comfort from the fact we'll be operating in a more healthy economic environment.

The only worry for Northern Ireland lies in the fact that the rest of the UK, London and the south east in particular, could stage a recovery before we're ready.

With an unemployment rate below the UK average you could say the trend is pointing the other way, but with a huge swath of the economically inactive our headline jobs figures may paint a rosier picture than reality.

Still, having to worry about the effects a blooming economy has on policy is a nice one to have.

Just don't overlook us, Mr Carney.

Belfast Telegraph

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