With Britain forging ahead it's a good time to cut Mark Carney some slack

Yes, the economy is growing, but wage growth is still muted, meaning the Bank can afford to keep rates low with minimal risk of pushing up inflation. For some, this meant Carney and co were performing an about-turn. Is he hawkish or dovish, they demanded?

But let’s reflect for a moment on the facts: Britain is at present the strongest-growing G7 economy, and with the harsh winter damping America’s growth prospects, it should continue at the top for the rest of the year. Employment growth is at record levels and business investment has returned. Yes, there are headwinds, but the trajectory is upwards.

So, to use the same lexicon as the Bank, perhaps it’s time to give the Governor a bit of “slack”. After all, the glowing performance of the economy since Carney came into office is not a bad record to have, and if the economy continues to perform as it has done, we should still see a rate rise before the end of the year.

Banks won’t help savers to their own cost

How times have changed: five years ago, banks were desperate to persuade savers to entrust them with their nest eggs. Savings rates of 3pc to 4pc were available even though the Bank Rate had been slashed to 0.5pc. Banks needed savers to help them rebuild their financial strength, but today that need has lessened.

The arrival next month of “Nisas”, or new Isas, in which savers can hold up to £15,000 and transfer old stocks and shares Isas into cash deposits, will change the dynamic still further. In the short-term, the banks may see another opportunity to cut Isa rates; meanwhile, savers are holding back – £5.3bn was deposited with high street banks from March to May, compared with £9bn a year earlier. Savers are also using current accounts, which pay up to 5pc to those changing their main account, rather than traditional savings accounts.

Next week, some held-back deposits should arrive as a wall of money for the banks to lap up. With money arriving so easily, those hoping for new bumper rates from the banks will be disappointed. Long-term, the BBA said Chancellor George Osborne’s “Budget for Savers” will lead to improvements in savings rates. But the reality is that, for now, the gap between mortgage rates and savings rates – “the margin” – is far lower than before the crisis.

Will a rate rise change anything? The banks are expected to give a little more to savers but increase mortgage rates further to improve those paper-thin margins. In short, don’t hold your breath.

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