Ghosts of crashes past still haunt this consumer Christmas

The narrative of economic recovery seems to promise a seasonal retail bonanza. But, as the Bank of England recognises, things are not as festive as they appear

Britain's retailers are hanging out the tinsel and looking forward to a bumper Christmas, with unemployment down, living standards finally climbing and house prices on the rise. But if everything is set fair for a festive blowout, why does the Bank of England still think it's too soon to raise interest rates?

Part of the answer is that, as governor Mark Carney made clear at his quarterly inflation report briefing last week, the shaky state of global economies, including China's, means they have to balance the strength of domestic demand against over headwinds from overseas. But it's more than that: the Bank is acutely conscious that the recovery remains fragile, unbalanced and vulnerable to external shocks.

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