Moving parts at the Bank: Now’s the time to cut rates and restore consumer confidence, says ALEX BRUMMER

As a former Bank of England insider, it should come as no surprise that Rachel Reeves held her first meeting with Andrew Bailey while the embers of the election campaign were still burning.

The new Chancellor has been coy about her intentions for the Bank and fiscal policy. Her eyes have been glued on housing and growth.

When Gordon Brown arrived at the Treasury in 1997, he lost no time in setting the Bank of England free from government and conducting a raid on pension funds, which still rankles today.

Caution is the watchword for Reeves who wants no truck with instability. 

She is asking for a quickie audit of the public finances and economy before the Commons packs up for the summer. 

She is giving the Office for Budget Responsibility the time it needs to assess any plans she might have ahead of an early autumn budget.

As for the Bank, she is proposing to leave current arrangements with the Treasury unchanged. 

That means thoughts that she might end the practice of paying the commercial banks the full Bank rate of 5.25 per cent on overnight deposits have been swept away. 

One understands Reeves’ caution. The last thing needed, as she pursues a growth agenda, is a fight with bond vigilantes who brought down Liz Truss.

The main target for the bond markets at present is France, amid a prolonged period of political squabbling and confusion following weekend assembly elections.

The ratings agencies may yet have their say and bond markets remain nervy. The possibility of an unhinged big spending, low taxation Marine Le Pen National Rally government has been dodged.

The best that Keir Starmer and Reeves can hope for to restore consumer confidence and the housing market is an early cut in Bank rate. Votes and attitudes on the interest rate setting Monetary Policy Committee (MPC) have been moving in that direction, but there are still hold-outs. 

Economic guru Jonathan Haskel, who will attend his last session in August, is still not ready to join those in favour of a reduction. 

He argues that in spite of headline inflation coming down to 2 per cent, wage-price shocks mean that keeping to target may be tricky.

The departure of Haskel does provide Reeves with a chance to bring change to the MPC. Her past suggests she would like to see more diversity of backgrounds. 

That could mean better representation of what Labour likes to call ‘working people’, industry and financial market players. The latter would have to exchange rich picking for public service.

Reeves’ mandatory targets for housebuilding may possibly help growth. But nothing would restore confidence in construction and home owning more speedily than a rate cut. 

Lowering borrowing rates for business, consumers and people with, or wanting, mortgages would provide an early boost to prospects.

Taking the fizz

If Labour wants to start rebuilding equity culture in Britain, it cannot afford to sit on the sidelines as London equity markets are denuded. 

The latest company to surrender is soft-drinks champion Britvic, which is doing well as an independent enterprise by embracing opportunities for non-alcoholic beverages and by expanding into emerging markets such as Brazil.

There is not much of a public interest case to be built against Carlsberg’s £3.3billion bid. The deal is not the Czech billionaire Daniel Kretinsky swallowing Royal Mail owner International Distributions Services.

Share price reactions tell their own story. Britvic stock is up on an allegedly 35 per cent premium. 

Scrape away the ‘London discount’, and Britvic and its growth potential are being sold on the cheap. 

Brokers such as Peel Hunt believe there is room for a better offer. The Britvic sell-out is another case of a board showing a lack of willpower.

Carlsberg shares are also up, in spite of the brewer axing a share buyback. The Danish group, which is seeking to burnish its reputation as a long term player in Britain, is pledging its shareholders £100million in cost cuts. 

We can’t tell where the axe will fall, but Britvic and Marston’s – which has sold its minority brewing stake to Carlsberg in a separate deal – need to prepare for some possible pain.

Losing control of corporate destiny is rarely good for UK plc.