The UK could be stuck with low interest rates “almost indefinitely”, ex head of the Financial Services Authority Adair Turner told the BBC today.
The UK could be stuck with low interest rates “almost indefinitely”, ex chair of the Financial Services Authority Adair Turner told the BBC today.
The Bank of England’s Monetary Policy Committee was unanimous in holding the base rate at 0.5% this month. The rate has remained at the historic low since March 2009.
Lord Turner (pictured) said: "Interest rates in the UK may not go up beyond 2% by 2020."
Yesterday analysts from The Economist Intelligence Unit went further, predicting the interest rate being held at 0.5% until 2020.
The new year has seen global stock markets slide with China leading the downturn, falling oil prices and a lack of inflation.
The former FSA boss also made dire predictions on the state of peer-to-peer lending.
He added: "The losses which will emerge from peer-to-peer lending over the next five to 10 years will make the bankers look like lending geniuses.”
John Goodall, chief executive of peer-to-peer lender Landbay, derided Turner’s prediction.
He said: "To presume that all platforms use automated underwriting processes is incorrect and misleading. The peer-to-peer industry is both broad and diverse, and to paint it with a single brush stroke as dangerous is ultimately unhelpful for consumers.
“To write off peer-to-peer lending now is to ignore the same innovation which has permanently transformed the global hotel accommodation and taxi industries.”
He added: “Lord Turner’s comments on one hand are spot-on, low interest rates are here to stay and this is not helpful for the millions of people looking for an opportunity to make their money work harder.”
Christian Faes, co-founder and chief executive of LendInvest, was less diplomatic.
He said: “I don't think we can trust the person who presided over the worst financial meltdown in history to tell us who are or aren't lending geniuses.
“His comments also do the FCA a disservice. Having just returned from meeting P2P companies in China, I've seen the real P2P wild west in action. The FCA is doing the right thing by regulating our industry. It might cause a shakeout, but this is a good thing and will leave the lenders that remain stronger, more confident and more credible.
“These comments are self-serving and timed to drum up more sales of Lord Turner's book on Amazon. Surely he is conflicted too, given that he's now regulator-turned-banker himself.”