Recently, in our Quarterly Global Business Confidence Survey and our electronic voting sessions that we run in most of our conferences around the world, we’ve been asking the question, “Which central bank will be the first to raise interest rates in 2010? The US Fed, the Bank of England or the European Central Bank? Or, indeed, will none of them do so?”

The hot money has always been on the US Fed, with some clever betting on “None of the above”. Back in March at our Dubai conference, one of our panellists expanded the range of options to include the G8, explaining that in his view the first central bank to raise rates would be the Bank of Canada.

And so it came to be. At the beginning of June, the Bank of Canada raised rates by 25 basis points to 0.5%. (Australia has been notching up interest rates for months, from a low of 3% to 4.5% now, but Australia isn’t in the G8. And Canada must be the first country to actually scrape rates off the floor.) Of course, Canada managed to come through the financial crisis relatively unscathed (apart, of course, from the impact on trade and commodity prices) thanks to the regulation of the domestic banking industry which meant that no lender had to be bailed out by the government (though The Economist did recently run an article suggesting that this binge-free financial system may have come at the cost of over-regulation and reduced competition).

Here in the UK, Canada is in the news again this week because Britain’s new coalition government is looking at what Canada achieved in the 1990s when it slashed government expenditure after the country was branded a “third world banana republic” by no less than The Wall Street Journal. (This lesson in fiscal rectitude was dented a little when it was revealed that Canada – a country with about 31,752 lakes – spent a few millions building a “fake lake” as part of its preparations for hosting the next G8 and G20 Summits later this month.) Interestingly, however, one economist of our acquaintance believes that the UK’s finances aren’t actually as bad as prime minister David Cameron is making them out to be, but simply using the spectre of a national debt burden that would cost £1bn a week in interest payments alone as the excuse the Conservatives need to roll back the boundaries of the state. Be that as it may, Canada seems to be flavour of the month with many lessons it can offer the rest of the world. 

But if you think all eyes are on Canada now, just wait until September. We will be launching our inaugural annual Canadian conference in Toronto on 13-14 September. You can find out all about the two-day conference programme by clicking here - and we’ll keep you in touch with developments.

Pass the maple syrup, please.
 

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