Goodbye and good riddance

Andrew Sentance's comments on interest rates are without any basis. Thank goodness he is leaving the

There were two big stories today relating to external members of the MPC. The first was by Andrew Sentance who, in an interview with the Flintshire Leader, argued that, "If you have interest rates too low for too long, the problem we have is it becomes more difficult to raise interest rates more sharply in the future." There is no basis for such claims. Why would it be harder to raise rates in the future because you had lower rates in the past?

Sentance's presence on the committee has apparently made it much harder for others to get their views across. He has been a damaging influence on the MPC. He failed to see the recession in the first place and has repeatedly suggested that it was all over when it wasn't. He seems to have little concern for unemployment and is hung up with some economic theory of the past that nobody takes seriously any longer, according to which all that matters is inflation. The main economic problem is not inflation and what happens in manufacturing isn't a good guideline to what happens in the rest of the economy. Even his boss, Mervyn King, thinks that, with the fiscal contraction going on, raising rates now would be a "futile gesture" that would have to be quickly reversed. Thank goodness that Sentance has only two more meetings left.

The second story was by my good friend Adam Posen, who has been voting for more QE because of his fears that inflation will be below the target in 2012. He is a Japan expert and knows about these things and needs to be taken seriously. Just because he is in a minority of one, it doesn't mean he isn't right; in all likelihood he is. In a Guardian story, he reports having had sleepless nights over his decision to break with the consensus. "I would take it deeply and personally, which is why I have laid awake at night thinking about it." My own experience at the MPC suggests that it is really hard to plough a different furrow from the tyranny of the consensus.

He has even gone as far as to say that he would not seek a second term if it turns out that he isn't right. I don't think there is much chance of that.

"If I have made the wrong call, not only will I switch my vote, I would not pursue a second term. They should have somebody who gets it right and not me. I am accountable for my performance. I'm holding my nerve because it is the right thing to do."

Posen was also sceptical about the suggestion that the government's deficit reduction plan could help growth by boosting confidence in financial markets, leading to a fall in long-term interest rates and higher investment. That hasn't happened, as consumer confidence has collapsed, UK growth has slowed and unemployment and inflation have risen. Adam is a man worth listening to. I suspect that, in a year or so, we will find his comments to be prophetic.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

Felipe Araujo
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Hull revisited: What happens when a Brexit stronghold becomes City of Culture?

We report from Hull, to find out if you can replace the kind of nostalgia that led to a Leave vote with cultural investment.

At 75 metres long, the offshore wind turbine blade erected across Queen Victoria Square, in the heart of Hull, is a sculpture intended to mark a new chapter in the city’s history. For the next 12 months, Hull, a city of more than a quarter of a million people in the northeast of England, will be the UK’s City of Culture.

The 28-tonne blade hails from the local Siemens plant. The German technology company employs around 1,000 people in the area, making it Hull’s biggest single employer.

Seen up close in this context – laid dormant in the middle of a town square instead of spinning up in the air generating energy – the structure is meant to remind passersby of a giant sea creature. It is also, I’m told, an allusion to Hull’s rich maritime history.


All photos: Felipe Araujo

Nostalgia is a big thing in this part of the country. At one point, Hull was the UK’s third largest port but technology and privatisation drastically changed that. The battle over cod fishing with Iceland in the waters of the North Sea 40 years ago has also dealt a major blow to a region with a long and proud trawling tradition.

People here still talk about a bygone era when the fishing industry provided jobs for everyone and there was enough money to go around.

Fast forward to 2017, and the country’s new capital of culture is the same city that voted 67 per cent in favour of leaving the EU last June. Its new-found prestige, it seems, is not enough to erase years of neglect by a political class “too busy for commoners like us”, as one resident puts it.

“More than a message to Brussels, it [the Brexit vote] was a message to Westminster,” Paul Leeson-Taylor, a filmmaker born and bred in Hull, tells me. “For the first time in a long time people in Hull felt like they had the chance to change something, and they took it.”

But while speaking to people on the high street and hanging out with locals at the Community Boxing Club in Orchard Park, one of the city’s most deprived areas, there is one word that consistently popped up in conversation – more than any specific policy from Westminster or the much-hated rules “dictated” by Brussels. Foreigners.

According to official figures, Hull’s population is 89.1 per cent white British. Still, immigration is big on people’s minds here.

During my two-day stay in the city, I find myself being the only black person in most places I visit – I’m certainly the only black guy at the boxing club. So when someone begins a sentence with “I’m not racist but…”, I know a tirade on immigrants is about to ensue.

“There are just too many of them,” Nick Beach, an estate agent whose Polish clientele is a big part of his business, tells me as he is about to teach a boxing class to local children. Beach was born in Shepherd’s Bush, in West London, but has been living in Hull for the last 20 years.

“When I go down there these days and go into Westfield shopping centre, it is very rare you get an English person serving you now,” he says. “I just find it disappointing that you go into your capital city and you are a minority there.”

These are the much-discussed “left behind”, a white working-class community that has gained particular prominence in a time of Brexit and Donald Trump. Under economic pressure and facing social change, they want to have their say in running a country they claim to no longer recognise.

For Professor Simon Lee, a senior politics lecturer at the University of Hull, immigration is only a superficial layer when it comes to explaining the resentment I witness here. For him, the loss of the empire 70 years ago is still something that as a country Britain hasn’t come to terms with.

“The reason for us to be together as a United Kingdom has gone, so what is the project?”

As destiny would have it, a foreign company will now play a major role on Hull’s economic future, at least in the short term. In the wake of the Brexit vote, there were widespread fears Siemens would pull out of the region and take its factory elsewhere. With the massive blade looming large in the background, Jason Speedy, director of the blade factory in Hull, assures me that isn’t the case.

“The Brexit decision has made no difference. We have made our investment decision, so Siemens, together with the Association of British Ports, has put in £310m. It’s all full steam ahead.”

As Hull becomes the country’s cultural hub for the next few months, the hope is that its residents stop looking back and start looking forward.

For Professor Lee, though, until there is a complete change in the power structures that run the country, the north-south divide will remain – with or without the EU. “The way you kill nostalgia is to have something new,” he said. “The reason why people here are nostalgic is because there is nothing to replace it with.”

Felipe Araujo is a freelance journalist based in London. He writes about race, culture and sports. He covered the Rio Olympics and Paralympics on the ground for the New Statesman. He tweets @felipethejourno.