View more on these topics

Turner warns of deflationary dangers in dual deleveraging

FSA chairman Lord Turner has warned of the deflationary dangers of global economies having to deleverage their public and private debt at the same time.

In a speech in Frankfurt this week, Turner warned “we are far from out of this crisis”, setting out the huge deleveraging challenge to be faced. “It is far deeper and more difficult to escape than many of us thought,” he added.

Turner told delegates that meeting this challenge would require a combination of debt servicing, debt-writedown and forms of controlled debt monetisation. He warned that with both private and public sectors forced to deleverage simultaneously, there was the risk of “self-reinforcing downward deflationary spirals”.

Out of the options to achieve deleveraging – real growth, debt servicing, debt restructuring or inflation – Turner said everyone is in favour of real growth. But he warned this would be difficult to achieve, given the current economic conditions. To deal with the eurozone crisis, he said the central bank must be free to use all possible levers, including quantitative easing. But he warned this is impossible where there is subsidiary sovereign debt – debt issued by a political authority which does not issue its own currency – as it would lead to national debt indiscipline.

He suggested radical reform of the eurozone. He said: “The eurozone architecture needs to combine tight political and market discipline of subsidiary sovereign debt with the creation of Eurobonds and with an acceptance that the ECB can conduct quantitative easing operations at the eurozone aggregate level.”


Directors call for auto-enrolment delay

The Institute of Directors is calling on the Government to postpone the introduction of automatic enrolment until 2014 due to concerns over high opt-outs and costs to businesses. Policymakers are under growing pressure to push back the current timetable, which will see the UK’s largest employers offering staff a pension scheme from October, 2012. All […]

CML says quality won’t be in danger

The Council of Mortgage Lenders says the mortgage indemnity scheme will not compromise the quality of lenders’ mortgage books. Housebuilders and the Government will absorb 3.5 per cent and 5.5 per cent of any losses respectively if the borrower, who must put down a 5 per cent deposit, defaults and the house price has fallen. […]

Out of Context

“When the person who runs your company walks down the office saying, ’Where will I find gringo, you know you have taken Movember too far.”

Vestra Wealth appoints Cofunds as fund custodian

As revealed by Money Marketing last week, Vestra Wealth has signed a deal with Cofunds that will see institutional assets move onto the platform.   The Cofunds’ institutional service will provide specialist fund dealing, settlement and sub-custodian services to Vestra Wealth. Vestra Wealth head of operations Neil Greenwood says: “Cofunds will introduce significant operational efficiencies […]


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