If there is one piece of good news people should be proud of, then it is how resilient the economy has been despite all the uncertainty being triggered by those pessimistic about Brexit. Voting to leave the EU has not provoked another recession or World War Three. Growth remains steady and chief economists like Richard Jeffrey of Cazenove Capital said quitting the trading bloc will lead to a surge in investment.
The Bank of England is so anxious about Brexit that they are using it as an opportunity to deflect the media and politicians from the underlying cause of the next possible recession: alarming levels of consumer debt.
The logic of institutions like the Bank of England is that when a recession, like the one of 2008, unfolds, they should slash interest rates to encourage consumer spending. This is to ensure the economy remains afloat. The then Labour government assured people in 2008-09 that this measure, alongside quantitative easing, would be temporary. But since 'the Great Recession' technically ended in 2013 and growth started to rise, interest rates have remained low.
Mark Carney used Brexit as an excuse
The current Governor of the Bank of England, Mark Carney, used Brexit as an excuse to cut interest rates to an all-time low of 0.25 per cent. More recently, they have confirmed that they will retain that rate.
This is not spectacular news for the economy. Whilst many would have welcomed a 0.5 per cent interest rate in 2009, many consumers should fear the current 0.25 per cent figure.
Low interest rates may lead to an increase in spending, but it also results in people accumulating more debts. Credit card bills are likely to rise as people borrow more.
It also discourages savers. This has partly caused the prices of houses and cars to rise sharply. That is why so many consumers have resorted to taking out finance deals to buy a vehicle, because the price of an average car is beyond what many can afford these days.
Because the Bank is not encouraging people to save, they may have no savings to weather them through another recession.
This is due to the Bank's fear that increasing interest rates will cause people to spend less. The Federal Reserve increased the US interest rate and their economy is expanding.
The Bank of England has got its priorities wrong
The Bank of England has got its priorities wrong. If they fail to discourage rising levels of debt, their decision to keep interest rates low for too long will haunt them in years to come. Britain was fortunate enough to experience prolonged growth in between 1992-2008. There is no guarantee it will endure for that long this time. The Bank cannot blame Brexit for that. The experts failed to predict the 2008 Recession and since then, their statements have become meaningless.
