Andy Haldane is demob happy. He’s ready to get on the road, first to his holiday home on the Kentish coast and then to France and Italy before finishing off the year in the southern hemisphere to catch the cricket.
His six-month break has been a long time coming – it’s about five to ten years too late, Haldane, 57, laughs. It’s the first extended time off he has had since joining the Bank of England as a graduate trainee, rising to become chief economist and something of a rock star in the dry world of central banking.
His provocative speeches made world headlines as he shot down much of the orthodoxy of the financial system, drawing on evolutionary biology, and even coming out for the Occupy movement after the 2008 crash.
Then in a surprise – some would say premature – move he left the Bank in the pandemic to lead the Royal Society of Arts, as well as to give him room to shoot the breeze, free from ‘central bank shackles’ and engage in broader policy-making. Which he did, advising the Tories on Levelling Up, and he still sits on the Treasury’s Economic Advisory Council.
Now he’s off again. We met at his office at the Royal Society of Arts, where the bookshelves are already empty and his desk is clear.
This time he’s taking the break to ‘cleanse his brain’ to work out what to do next after 32 years in the saddle. He says: ‘I like change, and I love ambiguity – it creates opportunity.’
Missed opportunity: Many in the City, across the political divide, say Andy Haldane is the smartest Governor we never had, and should have been appointed instead of Andrew Bailey
But there’s no ambiguity about Haldane’s long list of ways to get Britain back on its feet. For a start, if he were still on the Bank’s Monetary Policy Committee, he would have voted for a cut at its last meeting.
More pertinently, Haldane would have voted for base rate cuts going back to the start of last year, well before the MPC’s first cut in August.
‘That was too late. It would have been less painful if rates had been lower. The economy has been crabbing sideways for at least three years, and lower rates would have cut households some slack.’
He accepts most MPC members voted against a cut due to fears the Middle Eastern conflict will fuel inflation, saying: ‘It’s tricky. When you have missed out on the upside, there can be a bit of scarring.’
Scarring for the MPC or economy? ‘Both,’ he replies, grimacing.
‘Some members of the MPC are not looking closely enough at the quantitative data. It’s clear the labour market is shedding jobs. We can’t miss getting it right again.’
Famously, Haldane is one of a handful of economists who did not miss out on the upside. He warned that the inflation genie was escaping the bottle in late 2020, calling for rate rises when his peers dubbed rising prices post-Covid and post-Ukraine ‘transitory’.
His prescience is just one reason why so many in the City, across the political divide, say Haldane is the smartest Governor we never had, and should have been appointed instead of Andrew Bailey.
What does he say? ‘I loved the job I was doing. I didn’t want to be Governor,’ he answers, politely.
Leaving the Bank has certainly allowed him to fire more missiles from the sidelines, most recently criticising Rachel Reeves’ Budget as full of ‘mistakes, rookie errors’.
He blames her policies – especially the increase in employers’ National Insurance, and harping on about the black hole left behind by the Tories – for sucking the confidence out of British business.
The Chancellor’s non-dom policy – already driving the wealthiest out of the country – should be refined or reversed, because it will lead to net fiscal losses for the Treasury, he says. So too would Reform UK’s Britannia card idea, which is too lax. A ‘better balancing point’ needs to be struck.
What drives him to distraction is the lack of serious soul-searching on the big issues, such as tax or welfare spending. He says: ‘The poor level of debate at Westminster, in think-tanks, the civil service, academia and elsewhere is deeply depressing. Politics doesn’t seem to be growing great thinkers like the late Nigel Lawson, the last great tax reformer, any more.’
Instead, politicians should go ‘big, bold, plural and at scale’. He adds: ‘We need to supercharge supply-side reforms. There must be greater incentives for entrepreneurship and businesses.’
Reconfiguring the ‘onerous’ tax code is not enough. Scrapping stamp duty on housing would help. He says: ‘It glues up the housing and jobs market – we have the lowest level of people moving jobs since the financial crisis. We are taxing mobility, and so preventing living standards from rising.’
Why, he asks, do we give capital investment exemptions on machinery but not on training people? And why is debt favoured over equity? How mad is that?
‘Shiny billion-pound projects like new nuclear power stations or railways are great but if we don’t have the skilled workforce, what’s the point? Why do so many of our universities not have graduate apprenticeship schemes?’
Apprenticeships are down by a third, he adds, so the apprentice levy needs to be made workable with business urged to play a bigger role. And change is possible.
‘Look at the amazing job Jesse Norman MP is doing at Hereford with his New Model Institute for Technology & Engineering and the launch in Manchester of a new technical baccalaureate.’ Spending on skills is falling: the latest international league tables show the UK’s expenditure on training is in the relegation zone.
‘How can it be that we have a million ‘Neets’ – those aged 16 to 24 not in education, employment or training? It’s an economic blight, but also a personal blight.’ His solution? Scrap GCSEs, exams designed for the late Victorian age.
‘If a third of youngsters are emerging functionally illiterate and innumerate from school, then something is very wrong. We need a broader-based system of education based on hands and hearts, and creativity, where we smash the ceiling internationally.’
Britain’s ‘economically inactive’ – the nine million people of working age who are not in work – must be helped back into the workplace.
‘The impact on their mental health, families and communities is enormous,’ he says. ‘We need to scrap Jobcentres. That’s where people used to go for benefits.’
Yet, Haldane remains an optimist. The reset button for growth, he says, could come from higher spending on defence and security, which could prove ‘jobs-rich, skills-rich across the country’.
‘The country would understand that,’ he says. ‘The bond markets would understand that.’
After all, growth is the great redeemer for bond markets, he says. ‘They know tomorrow’s growth pays for today’s borrowing. But it requires politicians to go big and be bold. If not, forget it.’
Is he worried that bond yields – the interest the Government pays on its debt – are back up to levels last seen during the Liz Truss era?
The Truss period, he points out, coincided with bond yields shooting up around the world after an anomalous 20-year period of low inflation and low interest rates.
‘The global cost of money has gone up. Reality has been reasserted in the markets. We are back up to the UK batting average.’
Haldane may be footloose but still has a clutch of ‘passion’ projects: he’s the new chancellor of Sheffield University, where he read economics, and chairs the Glasshouse International Music Centre in Gateshead – homage to his spiritual roots in Sunderland, where he was born, and his family’s brass band tradition.
Will he be looking for a new desk job after his break?
‘Who knows? I might love daytime TV and dog-walking,’ he says with the biggest of laughs.
‘Or, come December, I might decide to manufacture cider by the champagne method.’
And when the Governor’s job comes up again in three years’ time, would he be interested?
He smiles. Judging by the look in his eye, of course he would.
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