Andrew Bailey, governor of the Bank of England, admitted yesterday his latest base rate increase would cause “pain” across the UK. Cue today’s meeting at 11 Downing Street between Jeremy Hunt, the chancellor, and lenders whom he wants to help stressed borrowers. Banks and building societies will be encouraged to cut mortgagees some slack when they have trouble making payments (as they did during Covid), but this won’t be compulsory and the government is not offering homeowners any tax-funded support. Bailey’s hair shirt has to hurt: it will only curb inflation if it changes patterns of behaviour formed by a decade of ultra-cheap money. Labour has made clear it agrees. It would require lenders to ease up on distressed borrowers rather than ask those lenders politely, but the shadow chancellor isn’t promising handouts in the event she replaces Hunt. Both are banking on bank profits to job bankers’ consciences. For instance: HSBC’s first-quarter profits this year, at £4.3 billion, were up 90 per cent on the same time last year. Such are the rewards of keeping a comfortable gap between interest paid to savers and earned from borrowers. Maybe HSBC can spare some change.
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