WHY have you come to the North-East?
“It is important as a central banker to supplement the hard data you are given by talking to real businesses and real people and hear what are their concerns and what they are seeing on the ground.
“You have to get out across the country. We are one year into a recovery, but it is an uneven recovery. Our job is to help turn this into a strong, sustainable and balanced expansion.
This is not about getting back to where we were in 2008, our aspirations are much higher.
“The point is that if a recovery is only based in the South-East it is neither sustainable nor balanced. It has to include the North- East.”
What impression will you take away with you about the health of the North-East economy?
“I have got a very good perspective of what is happening in manufacturing, which is particularly important in this region. Manufacturing productivity growth is very strong here, which is almost unique in the UK.
“I have heard a very positive tone from the businesses I have spoken to today in terms of demand, investment and hiring expectations, and some concerns, which didn’t surprise me, given the skilled nature of manufacturing here, that there are skills shortages and mismatches.
“We need apprenticeships and trade schemes to fix that.
“There appears to be less concern – I’m not saying that there is none – about getting access to finance since a year ago.
“But generally, people up here have been very positive about the advantages of the North-East economy.”
Isn’t there a danger that an interest rate increase will kill off recovery in the North-East economy before it has had a chance to take root?
“We are here to make policy for the UK as a whole. It is not just about what is happening in the South-East. It’s a big part of the economy, but it is not decisive in our setting rates.
“We do pay attention to what is happening in regions such as the North-East where unemployment is about ten per cent, although 44,000 jobs have been created over the past year and there has been a shift to private sector employment.”
Can the North-East manufacturing industry play a key role in helping to build the sustainable recovery you talk about?
“Without question. It provides an important diversity to the economy. You can see with the number of businesses here, whether it’s Nissan, suppliers to the oil and gas industry, renewable energy or the wider supply chain – it all provides resilience that will support the recovery.”
Would you rule out raising interest rates this side of General Election next spring?
“No, absolutely not. We will set policy as appropriate to meet our core responsibility to meet the two per cent inflation target. We haven’t set timing conditions on when that will be.
“In part, because we don’t have to. Also, there is still slack in the labour market, you can see that here and right across the country.
We need to use up more of that slack before we raise rates.
“We have been as explicit as we can about the nature of adjustments to interest rates, but we cannot be specific. But we are absolutely clear that it will happen independent of the political cycle. We will take the decision when we need to.
“When you raise interest rates it is a welcome sign. I share my colleague Charlie Bean’s view that it is confirmation the economy is recovering after some very difficult years.
“I’m not sure we will get a lot of cards or letters to thank us, but we will do it when it needs to happen.”
Have bankers worn sackcloth for long enough, or does more need to be done, such as curbs on bankers’ bonuses, to repair their damaged public image?
“I’m not sure bankers need to wear sackcloth, but nor should they jump back into wearing Gucci suits.
“First, it is important to make the banking system safe and resilient. We have made progress there, but there is more work to be done.
“What we have to do is to end the concept of banks being too big to fail so the taxpayer is left sitting behind private organisations.
We are looking to make real progress on that under the Australian presidency of the G20.
“The second thing is I think there needs to be an improvement in terms of banker conduct.
Some institutions have made real progress but it need to be industry-wide.
“Banking needs to be treated more as a profession.
We also need to improve infrastructure, both in how markets are organised and the codes of conduct behind markets.”
Can you envisage a scenario where the Bank of England will set interest rates for an independent Scotland?
“These are decisions for politicians. The main political parties have ruled out a formal currency union between England and an independent Scotland.
“There is nothing to stop anybody in the world choosing to adopt sterling as their currency, but that means they are accepting the monetary policy of another country.
“Today, we take into account the situation and prospects of Scotland, just as we take into account the North-East when setting policy.
We wouldn’t do that unless they were part of a formal currency union.”
Is the job of Bank of England Governor tougher than you expected? For example, were you surprised by the rough ride you got on forward guidance?
“It’s been more interesting than I expected and I’d like to think it’s more rewarding.
“We need to look at forward guidance in terms of outcomes.
“We have got the strongest growth of any of the advanced economies, we have the strongest job growth and we have inflation on target for the first time in five years.
“If you look at the net output, we are very happy to be criticised if we are part of something that is delivering the results people want on the ground.
“It is important for your readers to hear that we are looking to secure this recovery, which comes less than a year after fears of a triple-dip recession.”