The purpose of creating the Monetary Policy Committee was to ensure that the widest range of views possible were obtained to make rate changing decisions both considered and realistic.

Over the years that the MPC has been in operation, by and large, it has worked as expected and the balance of members has worked to ensure that monetary policy reflects its mandate.

The majority of the committee are made up of officials from the Bank of England; the Governor and his deputies, and the Chief Economist. Over the years, there has been a balance struck among the external members between hawks and doves.

The meeting being held this week will highlight those different ideals as monetary policy is approaching a level of neutrality that has not been in place for more than a decade as policy has been accommodative since the financial crisis.

Rates have remained at historically low levels, but now for a variety of reasons, some avoidable and some unavoidable, inflation is rising, and the economy is faltering.

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The Government is about to announce the largest shake-up in the regulation of banking and finance since Big Bang more than thirty years ago.

One of Mrs Thatcher’s flagship policies, Big Bang, was designed to radically change the way in which trading was done by opening financial markets for all. It heralded the arrival of electronic trading in stock and shares.

Banks took full advantage of the new, liberalized markets, but their thirst for profits created several dangerous practices which led either directly or indirectly to the financial crisis which started with the collapse of Lehman Brothers in 2008 and ended in 2012.

The most significant new measures that will be announced are the abandoning of the requirement for banks to keep totally separate their commercial banking business from their far riskier investment banking operations.

This effectively means that rather than risking their own capital to increase profits based on investment decisions, they will be free to use their customers' funds. It is expected that there will be a limit to the percentage of their clients’ funds that can be used to reduce the risk, and it is likely that the Bank of England will be given new oversight powers to regulate the markets.

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The UK economy is more significantly affected by the current downturn in activity, since businesses don’t have access to long-established markets that they are able to access during tough times that their overseas competitors do.

Brexit saw the UK Government close the door on several time-honoured relationships with traditional allies, and that is filtering down to businesses who need access to those associations to help them when times are hard.

One ally that remains constant, although it is not, currently, prioritizing a new trade deal, is the U.S. An agreement has been reached for the U.S.to continue to maintain high levels of liquified natural gas which will guarantee supplies throughout a winter which is shaping up to be both long and tough.

The two nations have agreed an energy partnership to enable the UK to reduce its reliance on Russian energy and accelerate the push to net-zero.

Although the U.S. has a similar arrangement with the European Union, the UK was in danger of being left out in the cold, both figuratively and literally, since it was not part of the negotiations held between Brussels and Washington since Brexit.

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One of the keys to the potential depth of the recession that may have already begun is the weakness of the housing market and how much average house prices will fall across the entire country.

Every sector of the economy feeds into the housing market; employment, productivity, output, manufacturing, import of goods and lending. It is a key barometer of the health, or otherwise, of the economy.

The latest data shows that although prices are continuing to rise, the size of the increase, reported monthly, is falling. Last month it fell from 8.6% to 7.4%.

That fall is likely to fall into negative territory as activity slows, and interest rates continue to rise. In normal circumstances, the Central Bank would be loosening monetary policy to encourage activity in the market. As interest rates fall, those considering moving house or even remortgaging the property they occupy presently, are more likely to enter the market.

In the current situation, the Bank of England is continuing to tighten monetary policy by hiking interest rates, this is usually done to flatten demand and slow activity, but with the economy failing, and inflation rising it is in a difficult situation.

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The Confederation of British Industry, nicknamed the Bosses Union, yesterday condemned the Government for the lack of support industry has received while Brexit regulations have caused chaos for businesses trying to continue to do business in Europe.

It called the Conservatives ten years in power the lost decade, as it predicted that the economy would shrink by 0.4% in 2023.

Inflation is likely to continue to rise and investment by businesses in their own development, already down, would dry up entirely.

This grim outlook has been attributed to a decade of missed opportunities, the most telling of which has undoubtedly been the UK’s departure from the safety net that is the European Union.

Stagflation has arrived in the UK economy, with rising inflation, an economy that is contracting and already in recession, low productivity, and business investment.

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MPC member Swati Dhingra spoke recently of her view that although inflation still needs to be taken seriously by the Bank of England, it is not yet at the stage when a prices/wages spiral has begun.

Several sectors are threatening industrial action, but even their demands are for wage increases that are close to but not in excess of the rate of inflation.

In his Autumn statement, the Chancellor, Jeremy Hunt, confirmed that the triple lock on state pensions and certain means tested benefits would increase in line with the rate of inflation. The indicator used to measure the increase is headline CPI from September.

If inflation has begun to fall by April, when the increase takes place, it will inevitably add to the overall rate of inflation.

Dhingra is the newest member of the MPC, having joined in September. She certainly has a different attitude to monetary policy to the member she replaced. Michael Saunders was a confirmed hawk, often voting for interest rate increases in excess of the rate that was eventually agreed.

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The Conservative Party has been in Government, either solely or in coalition, for well over a decade but have failed in to bring their values to bear on the economy of the country due to a single decision brought about in 2014 by then Prime Minister Cameron’s fear of the rise of the UK Independence Party and the rabble-rousing about the effect of their single policy, which was to cause the UK to leave the European Union.

Their leader, Nigel Farage, has long since departed the UK political scene, but the havoc he wrought, lives on. As recently as yesterday, Brexit was being blamed for the current instability in the economy, which will probably last a generation.

Having taken over a decade to get into the current mess, the Government has no more than two years to turn it around. Unfortunately, they have neither the expertise nor political nous to do so.

The eighty seat majority that was gained in 2019 has been squandered by an incredible degree of arrogance, coupled with failure to deal effectively with either Brexit or the aftermath of the Coronavirus Pandemic. T

The Bank of England’s Governor who took over from the highly effective Mark Carney around the time that the Pandemic was beginning to take hold has been unable to get to grips with the level of inflation that has brought in its wake, a level of industrial unrest not seen in this country since the eighties, and a recession that is likely to see the economy shrink by at least four per cent over the next five quarters as well as lose the Conservatives the next election.

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Catherine Mann has been a member of the Bank of England’s Monetary Policy Committee for over a year now and has begun to flex her hawkish muscles. Over the past few meetings, she has voted for interest rates rises more than what has eventually been agreed.

Yesterday, she spoke of her fear that the Central Bank is losing its fight to bring down inflation to its 2% target. She spoke of her concern that the target that is set by the Government could become unattainable as the global moves into a new phase as the era of accommodative interest rates ended.

She sees that inflation is now becoming embedded in the UK economy, with the increasing level of industrial action threatening both fiscal and monetary stability.

There has been a significant increase in the level of inflation in the services sector. Pre-Covid, inflation in this area of the economy was running at well below 2%. It is now above 3%.

Mann was at the forefront of the call to initially front-load rate increases to get ahead of the threat of rising inflation. This was not considered a workable proposition since it could drive the economy into recession. Mann believed at the time that this was a risk worth taking, but her colleagues disagreed.

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There are growing fears that the UK political system is rapidly becoming outdated and unfit for purpose. The Conservative Party have been in power for more than a decade despite a catalogue of missteps, the largest of all being their ownership of the Brexit debate.

In the lead up to the vote on the UK’s membership of the European Union, both sides of the argument, with the opposition powerless to intercede due mainly to their failure to agree a policy on the subject. Once the decision to leave was taken, they seem to have gravitated towards the remain cause, simply because it hampers Government decision-making.

There has been very little movement on the Government's pledge that the country would seek game changing trade deals with several nations, including the U.S. and China. Yesterday, Rishi Sunak spoke of his commitment to building on the UK’s reputation in several growing areas and highlighted the country’s success in developing the Coronavirus vaccine.

However, he also admitted that the golden age of the relationship with China has ended, and any deals will need to be done on a purely commercial basis. The country has failed to take any decisive advantage of its freedom to make deals with nations outside the EU, while its relationship with its largest trading partner has been virtually consigned to the dustbin.

Sunak can bemoan the number of crises that have occurred since Brexit, but the fact is that the Government rushed into leaving without laying the groundwork for its departure first.

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Bank of England Governor, Andrew Bailey, has sought urgent talks with the Chancellor and Treasury officials to discuss his concerns about new regulations that the Government is proposing that will give it veto powers over post-Brexit Financial rules proposed by independent authorities including the Central Bank.

Bailey believes that the new powers will undermine the Bank’s independence, since it will no longer be able to have the final say on several regulatory issues.

Brexit has become headline news again as the Government strives for every possible advantage in its fight against an economic slowdown.

Rumours that the Government has been considering proposing a Swiss-style arrangement with Brussels that would allow access to the EU's single market have been roundly criticized by leave campaigners and denied by the Prime Minister.

The fact is that in modern globalized markets, countries must seek partnerships. Isolation from its largest market while it tries to forge new supplies will leave the UK years behind and open to further disadvantage.