The government needs to ensure economic that growth continues without driving up inflation. Historically this has been achieved just through interest rates. 

But this is becoming increasingly difficult for the Bank of England as recent months have shown. Base rate has little impact on what consumers pay for borrowing when High Street banks are nervous, so the BofE is virtually powerless. Even April's rate cut failed to weaken sterling against the euro - which should have happened, because lower interest rates make a currency less attractive buyers.

A weakening pound would make our exports cheaper for overseas buyers and therefore more competitive in the wider world. It also increases the cost of imports which could help redress the balance of payments and even reduce the growth in consumer debt.

Have your say
Unfortunately, there are no simple answers, but we are interested to hear what you have to say about what the Bank should be doing to bolster the economy without driving up inflation. Why not comment below?

You should always take professional independent advice before making any decision relating to your personal finances. Please contact Robert Bruce Associates for assistance.