View more on these topics

CML conference: Top economist blames Bank of England for HBOS failure

One of the UK’s top economists has blamed the Bank of England for the HBOS share price crash in September.

At the Council of Mortgage Lender’s annual conference in London today, School of Economics Professor of European Political Economy Willem Buiter said HBOS’ demise is due to the BofE’s decision to give a closing date for the Special Liquidity Scheme.

He said: “The SLS was a remarkably good idea – swapping treasury bills for illiquid mortgage-backed securities. But then it stopped.

“A terrible mistake was announcing that the SLS will be closed to new business from October 20 – this was effectively the death sentence for HBOS, because the SLS was really the HBOS financing facility. What you do when you announce a closing of a facility is you create a focal point for speculators co-ordinate on.

He said the BofE recognised this and gave an extension to the SLS closing date, but Buiter thinks this made things worse. But he said it was too late for HBOS.

“It was a tragic error,” he says.

Buiter also predicted a grim 2009 for the UK economy. As well as predicting the need for a base rate of 0 per cent in the near future, he reckoned a long wait before UK households will stop feeling the pinch.

He said: “Compared to Iceland the UK is ready to handle a recession, but it is one of the most vulnerable economies in the world. It has the most highly indebted household sector of any industrial country.

“Household deleveraging – which is anther way of saying household reduction in borrowing – will be with us for years to come. Financial institutions can deleverage in a hurry, households can really only deleverage slowly.”



Salve for the sole trader

Sometimes even a tough Lancashire lad like myself has to admit to being very worried.

We need parity of clarity

It is no easy task to try to digest the 220 pages of last week’s retail distribution review announcement. I assure you that Aifa will be publishing more detailed analysis in the coming weeks but here is my starter for 10.

Recording sickness absence cover - thumbnail

White paper — recording sickness absence

The latest figures from the Department for Work and Pensions illustrate that sickness absence is still a major cost to businesses, with an annual bill for sick pay and associated costs to employers of £9bn. This paper from Jelf Employee Benefits looks at the importance of recording sickness absence for any employee health strategy and how this can be carried out in an efficient manner to reduce absence, improve employee engagement and drive up profits.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm