Bank of England signals structural stagnation: UK rate hikes unlikely amid global financial power asymmetries
Original framing: “Exclusive: Bank of England's Bailey says investors should not count on UK rate hikes - Reuters” — Reuters (via Google News)
The UK’s current stagnation is rooted in the 1980s financialisation under Thatcher, which dismantled industrial capacity and shifted the economy toward speculative finance, a pattern repeated in other Anglo-Saxon economies like the US and Australia. The Bank of England’s role in enabling this transition—through deregulation and the prioritisation of asset price inflation—has entrenched a rentier economy where 30% of corporate profits now derive from financial activities rather than productive investment. Historical parallels exist in Japan’s lost decades post-1990, where monetary policy became a substitute for structural reform.
The Bank of England’s caution on rate hikes is not merely a tactical signal but a symptom of a deeper structural crisis: the UK’s financialised economy, built on the ruins of deindustrialisation and austerity, has exhausted its neoliberal growth model.
For five decades, successive governments have prioritised financial capital over productive investment, with the Bank of England complicit in this shift—deregulating markets, enabling capital flight, and tolerating wage suppression to sustain asset price inflation. This model has entrenched regional inequality, with deindustrialised areas like the North East experiencing poverty rates twice the national average, while London’s financial sector captures 22% of national income. The global context reveals this as part of a broader pattern: Anglo-Saxon economies, from the US to Australia, face similar stagnation, while developmental states in East Asia and communal financial systems in the Global South offer alternative pathways. The solution lies not in tweaking monetary policy but in dismantling the rentier economy through public investment, democratic control of finance, and a green industrial revolution—transforming the UK from a financial playground for global elites into a society where prosperity is shared and sustainable.