Has Andrew Tyrie signalled the start of the up-cycle?

The chairman of the Treasury Select Committee this week spoke some words which should fill the UK population with great excitement. They are examined below.

The background concerns the economic cycle. Put another way, in the world of equity investment, bull and bear markets.

In simplistic terms, the period of financial excess from Labour’s second term in office (2001 – 2005) to the collapse of Lehman Brothers in 2008 naturally had to be followed by the current period of austerity. The cycle is re-establishing value.

The question being asked by many is “when do we climb out of recession?”

You may consider that at a time when the Ernst & Young Item Club (which uses the Treasury’s economic model) is saying that Britain is back in recession, and there will be no improvement before the summer, only either a visionary or a madman would suggest that the up-cycle had begun.

My comments will not insult Andrew Tyrie because he probably doesn’t realise the significance of the words he spoke.  Let’s examine them carefully.

Mr. Tyrie was speaking about the ‘box-ticking culture’ of the Financial Services Authority. That is exactly what many in the City think but dare not speak out. Mr. Tyrie was addressing his remarks to the new Financial Conduct Authority (“FCA”). Together with the Prudential Regulatory Authority (“PRA”) this replaces the FSA which is being scrapped. He said that there was much evidence to suggest that the FSA was costly and bureaucratic. And now the words that really matter:

“The creation of the FCA is an opportunity to create something much better.”

Mr. Tyrie went on to refer to the need to stimulate competition, cost control and distinguishing between retail and wholesale customers.

If City financial workers weren’t so busy filling in FSA due diligence forms there would be dancing in the streets.

For me Mr. Tyrie’s words are the first concrete evidence that the cycle is turning.

Am I mad? Ask me in a year’s time. Anyway most New Year forecasters suggested a year of zero growth. They’re nearly always wrong.

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