Sarah Breeden outside the Opera House in Manchester on her visit to the the city to meet local businesses(Image: Alistair Houghton)
From a Saturday job selling jewellery at the Arndale to a day job saving the economy, Stockport‘s Sarah Breeden now helps set your interest rates. Sarah went from Romiley to Cambridge and on to the Bank of England, where her three-decade career saw her take charge of the response to the Northern Rock crisis, when desperate savers were queuing outside branches, as well as helping to manage the impact of Brexit.
She’s now the Bank’s Deputy Governor for Financial Stability and is one of the members of the Monetary Policy Decision, which meets every few weeks to decide on what the country’s interest rate should be. Worried about your mortgage rates? It’s Sarah and her colleagues you need to speak to.
Interest rates have been high in recent years as the bank looks to battle high inflation, which has caused the cost of living crisis that has hurt so many of us. But inflation has now slowed, and is expected to fall further, meaning there is hope interest rates will soon be cut again.
The latest MPC meeting was just days ago. Sarah voted to cut rates, saying she thought it would help boost companies across the country and that the news on inflation was positive. This time she was outvoted, as the committee voted 5-4 to keep the headline Bank Rate at 3.75%. But she says it is likely the rate will come down within months as long as there are no major shocks.
MPC members regularly to get out of the Bank’s imposing Threadneedle Street home in the City of London to meet businesses and to get a clear picture of how local economies across the UK are doing. That’s why she was in Manchester this week, where she talked to the M.E.N about her journey from Stockport to the City.
Stockport family and ‘making a difference’
Sarah grew up in Romiley and went to Bredbury Comprehensive, now Werneth School. From there she went to Newnham College, Cambridge, to study economics.
She said: “Both of my parents worked in local government. Making a difference rather than making money is an important part of my values and who I am.
“So with a degree in economics and a desire to point it to making a difference in public policy, I rocked up at the Bank of England 34 years ago now.”
Sarah has been at the Bank ever since – though as she points out, “in that time I’ve done 16 different roles. I’ve been off on maternity leave twice. I’ve taken a year out to go back to study. I did a Masters in finance, so I’ve had a huge amount of variety in my time there.”
She recalled: “One of the most fabulous things about working at the Bank of England is seeing your job and the impact that it has on ordinary people and businesses. That’s hugely rewarding to be able to see that you were involved in the rescue of Northern Rock, you helped manage the fallout from the financial crisis, that you were there when the UK took the decision to leave the European Union, that you were a part of the operation after the mini-budget event and dysfunction in the gilt market… to know you were a part of that is hugely rewarding.”
Northern Rock: Solving the crisis
For most people, the great financial crisis began in earnest when Northern Rock suffered the first run on a British bank since 1866, with queues appearing outside branches as savers tried to withdraw their money.
Northern Rock was a landmark financial institution in the North and Britain’s fifth-biggest mortgage lender, but it had to seek emergency support from the Bank of England, The bank had depended on wholesale funding markets internationally to fund its operations, but those markets dried up after the collapse of the sub-prime mortgage market in America.
Sarah led the Bank’s response to the crisis, and says the lessons from that time have stayed with her.
Customers wait in line to remove their savings from a branch of The Northern Rock bank in 2007(Image: Peter Macdiarmid/Getty Images)
“We pulled a team together,” she said. “We worked with the team up in Newcastle. I spent a lot of time up in Newcastle working with the staff at Northern Rock. And we worked with our colleagues in the Treasury and in the Financial Services Authority, which was the regulator at the time.
“And what we aimed to do was ensure that people could continue to use Northern Rock, that they were able to access their money. Obviously it ended up with the UK nationalising that bank.
“What it really underlined to me was how we needed to build resilience in advance of shocks so that next time wholesale funding markets are under stress, the UK banks can carry on serving their customers, businesses and households without the UK taxpayer being on the hook.”
From 2015 to 2019, Sarah supervised the Bank’s international work, meaning she also played a key role in the bank’s response to the Brexit vote and in the work afterwards to make sure the UK was ready for its departure from the EU. The UK’s vote may have come as a surprise to many, but Sarah said the Bank was well prepared to prevent any “dysfunction in financial markets”.
Sarah said: “We’d done a lot of preparation working with financial institutions in advance of that and they were ready and we were ready. And so the results of the vote were announced, market prices adjusted, but there was no financial crash or crisis on the back of it.”
What’s it like making the interest rate decisions?
Eight times a year, the MPC meets to decide what should happen to interest rates. The next day, at midday, the decision is announced. Every decision is eagerly awaited, and every set of minutes is pored over by financiers and savers as they try to get a clear picture of what’s happening to the economy – and what’s likely to happen next.
Being on that committee is a big responsibility, and one members take very seriously. Sarah explained that members sit round a table at the bank, alongside Bank staff and the Bank’s agents who are its “eyes and ears” across the country, to drill down into what’’ happening to people and businesses. And they also carry out “scenario analysis” – looking not just at what is happening, but what might happen in the future.
“There’s an active debate,” Sarah said. “We try and ask follow-up questions to understand when the agents say activity is lacklustre – is that lacklustre across the board, what’s the story for investment, how about consumer-facing industries? So we challenge our staff to try and get under the details of the analysis that’s been presented.
“And then we debate and we say to each other, ‘you’re worried about inflation persistence. Why is that? Are you not worried about what might happen to consumption?’ So a really active debate.”
The minutes of the meeting now include a summary of what every member said, and what analysis they considered. All of that helps determine the cost of your mortgage.
Sarah Breeden during a Bank of England Monetary Policy Report press conference in London in 2023
Sarah said: “That is so important because if we can explain what we’re doing and why, market participants can know as new data comes in how we are going to react and therefore what the future path of bank rate might be.
“And that’s super important because many people these days have fixed rate mortgages. It’s not what bank rate is today that matters, it’s what two years’ rates are in the market, which is an average of what bank rate is going to be as we look ahead.
“So us being very clear with the market and with the public about how we’re thinking about the economy is really important.”
Given the pressure, are the discussions good-natured?
“Very much so, very much so,” Sarah smiled. “It’s a robust discussion, but it is constructive, good-natured. And I think what the new communications try to do is share a bit of that with the public so that people can see that the really important decisions that we’re making – that matter for businesses and households – are being thought through and addressed in a rigorous way. I think that’s really important for our legitimacy.”
Sarah said that at the last meeting she argued the MPC should “take our foot off the monetary brake a little bit” to encourage growth, as the signs were clear that inflation was heading back to the Bank’s target of 2%. And while she lost the argument this time round she said, as reported on BusinessLive: “If we continue to have the economy develop as we expected and if there are no shocks – to be clear those are two big ifs… I think it’s reasonable to expect there to be a cut over the next couple of meetings.”
How to follow in Sarah’s footsteps
The Bank of England is an intimidating place to start work. “When anybody first goes into the Bank of England, it’s a very imposing building,” Sarah said. “All central banks around the world are, and so there’s a sense of awe as you go in.”
Sarah and her colleagues are aware that a career at the bank and in finance can seem intimidating, especially to people outside London. So the Bank is growing its presence outside the capital, particularly in Leeds, where it hopes to grow from 200 to 500 staff.
“That bunch of people in Leeds is a horizontal slice of the Bank of England,” she said. “We’re not saying ‘put tech up there’ or ‘put the payments folk up there’. You can have a career at the Bank of England, doing as many roles as I have done, in Leeds now. I think that’s really important and a really great initiative.”
And Sarah wants more people from Manchester to think about following in her footsteps to join the Bank.
The Bank of England’s home in Threadneedle Street, London(Image: Peter Dazeley/Getty Images)
“We are absolutely supportive of ensuring the Bank of England gets a wide range of backgrounds into it,” she saidd. “We’re not just economists, we’re scientists, we’re linguists, we’re mathematicians, we’re people who’ve worked in industry and have come in, we’re people who have worked in financial services and who’ve come into the Bank of England… and that diversity is a real strength in financial services, that diversity’s a real strength in technology.
“What’s also important is that we are not seen to be there just for financial services. We’re there as the Bank of England to deliver economic stability, price stability, financial stability for every citizen of the United Kingdom and for every business that operates here, And that’s why we really value coming around to Manchester, talking to businesses… we get many different industries around the table to understand what they’re seeing and how they’re feeling about the economy.”
Manchester values ‘contributing to the public good’
Those regular meetings with UK businesses also give Sarah an occasional opportunity to come back to her home turf.
“I love it,” she smiled, “I really do.
“I walked from Manchester Piccadilly to our hotel last night and said, ‘this is the walk I used to do every Saturday for my Saturday job as I got the train in from Romiley, I walked down to the Arndale to go and be a Saturday sales assistant in a jeweller’s there’. And it just makes me smile to be back.
“There’s parts of it that are just hard to recognise… but the people don’t change, the Manchester values of friendliness, warmth, willingness to contribute to the public good by talking to us so that we can do our jobs better. That’s part and parcel of being a Mancunian and that came through today.
“And obviously it’s lovely to be back and hearing the Stone Roses and The Smiths. I think I will always be a fan of the Manchester indie scene.”