Tag Archives: Banking

What should we think about negative interest rates? What kind of Alice-in-Wonderland world are we living in when companies and households are paid to borrow and charged if they save?

Seemingly crazy, negative interest rates are spreading nonetheless. Implemented by central banks in Europe, Japan and elsewhere, they now apply in countries accounting for a quarter of the global economy. Should we be worried? Could we see negative rates in Britain?

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The British economy showed a glimmer of improvement last week. The UK’s composite PMI index, a measure of business confidence as reported in surveys from large and small firms, rose from 51.1 in February to 51.4 in March. With readings above 50 indicating business leaders think their sector is growing, this looks a decent result.

The detailed figures show, though, that the UK is failing to “re-balance” away from fickle consumption to towards solid investment-led growth. The Manufacturing PMI index edged up from to 48.3 last month, this key sector continuing to contract. The Construction PMI sub-index was even more moribund, inching forward to just 47.2.
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