Record high inflation was caused by the Bank of England keeping interest rates too low for too long, according to its former head.

Lord Mervyn King said inflation has now been tamed, but criticised all central banks for failing to act fast enough initially.

Speaking to BBC Radio Four’s Broadcasting House ahead of the Budget next month, he also said there are “bound to be some changes” to fiscal rules.

He criticised the previous government’s national insurance cut and said Labour should reverse it.

Asked if the Bank of England kept rates “too low for too long”, Lord King said: “Yes, and that’s why we had inflation.”

“But they raised interest rates like all other central banks – it wasn’t just the Bank of England – and inflation is now back under control,” he added.

The crossbench peer added that interest rates were now “in the right ballpark”.

At its most recent meeting in September, the Bank chose to keep the base rate – which determines mortgage rates, credit card rates, and savings rates – at 5%.

The next meeting will happen in November.

On the topic of the Budget, Lord King predicted “a number of half measures” because the government has committed itself both to public sector investment and to spending limits.

As such, he expected the government may chose to tweak those restrictions.

“There’s bound to be some change to the fiscal rules,” he said.

“The ratio of national debt to national income is the right metric by which to judge whether we’re on a sustainable path, but to judge it by reference to a forecast five years ahead – a rolling five-year horizon – doesn’t make any sense.

“The right thing to do would be to commit to having the ratio of debt to national income falling by the end of this Parliament, a fixed date.”

Lord King was also critical of the Labour for committing to the Conservatives’ national insurance cut.

“I don’t understand why the previous government cut national insurance contributions,” he said.

“I think that was irresponsible, and I think it’s equally irresponsible for the then opposition, now government, to promise not to reverse that.”

AN UNUSUAL water attraction in the UK has been likened to a theme park ride by visitors – and it’s the only one of its kind in the world.

The Falkirk Wheel is a rotating boat lift that carries barges and boats between the Forth and Clyde Canal and the Union Canal.

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Located in Falkirk, Scotland, it is the only one of its kind in the world, making it a tourist attraction in its own right.

After first opening in 2002, it has become one of Scotland’s busiest tourist attractions, with 500,000 visitors every year.

Travel website Secret Scotland described it as an “exceptional” example of engineering, writing: “The Falkirk Wheel boat lift is an exceptional feat of modern engineering that connects the Forth & Clyde and Union Canals.”

Meanwhile, Scottish Canals described the Union Canal as “a route to remember” on their website.

They added: “From the iconic Falkirk Wheel to the historic heart of Scotland‘s capital city, discover boat trips, inspiring trails and amazing heritage.”

The rotating wheel takes around five minutes to lift boats from one canal onto the other.

Barges can be hired and taken down both canals, with Edinburgh at the end of one and Glasgow at the end of the other.

Although visitors won’t need to hire a barge to give the Falkirk Wheel a go, with tours onboard two boats from the Scottish Canals Trust are also in operation.

The Original Tour lasts 50 minutes and includes two turns on the Falkirk Wheel.

Visitors will depart from the Falkirk Wheel Basin where they’ll enter the lower gondola of the wheel before sailing through the sky to join the Union Canal 35 metres above the basin.

Boat tours will then continue along the aqueduct, heading through Roughcastle Tunnel before reaching the mouth of the Union Canal where boats will turn back to the start.

Tours last 50 minutes, with tickets costing £17.40 for a full-paying adult and £9.60 for children.

The Falkirk Wheel has been praised by visitors on TripAdvisor, with a 4.5/5 star rating from over 4,000 reviews.

One person wrote: “The area has been turned into a children’s theme park ride”.

While a third person wrote: “It’s more like a theme park attraction than a boat lift”.

There are plenty of other attractions at the Falkirk Wheel, including a splash zone with a huge stone map and mini canal lock gates.

A fleet of little paddle boats lets younger visitors experience the water in the boating pond.

Older children can take to the water on bumper boats, each of which come equipped with a squirt gun.

Other activities include paddle boarding and water zorbing and canoeing on the water trail.

Nearby, there’s also Helix Park where a huge set of two Kelpie statues can be found.

Kelpies are mythical shape-shifting horse spirits that were said to drag humans to their deaths in the water.

The statues were designed by Andy Scott, and they’re the largest equine statues in the world.

Spanning more than 350 hectares, there are plenty of other features inside the huge park, including an adventure zone and splash play area for kids, with fountains spraying from the ground and huge climbing structures.

Meanwhile walking and cycling routes “meander through lush greenery and enchanting woodlands” according to the park’s website.

The paths in and around the park connect 16 communities via 26 kilometres worth of trail, all of which can be explored.

Entry to Helix Park is free, making it ideal for families.

Five new water attractions opening in the UK

1. Therme Manchester will have 25 swimming pools, 25 water slides and an indoor beach.
2. Modern Surf Manchester will be a surfing lagoon offering lessons to both beginners and experts.
3. Chessington World of Adventures Waterpark is set to have wave, infinity and spa pools as well as waterslides and cabanas.
4. The Cove Resort, Southport is likely to have a water lagoon and a thermal spa with steam rooms and saunas.
5. The Seahive, Deal plans to be the “surfing wellness resort” in the UK.

Meanwhile, Dundee has been named Scotland’s most underrated city thanks to its ties to the Beano and the Dandy.

And we’ve recently revealed our favourite spots for a September break.

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CUSTOMERS of a 70-year-old family business are devastated as the shop has closed its doors for good.

Woolsey Cycles, a bicycle shop in Acton, London, served its final customers yesterday (September 28), having been operating since 1955.

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The shop was known for its personal touch and was beloved in the area.

It was run by Malcolm Woolsey and his father Roger, relations of Donald Woolsey, who originally bought the shop.

Malcolm announced the news of the sad closure on Facebook in July.

He said: “After three generations of our family and the shop owner before that, the time has sadly come to move on to pastures new.

“We would like to thank our customers, both old and new, for their continued support over the years.”

He went on to give a heartfelt thanks to the shop‘s longest serving employee, saying: “We would like to thank our staff members that have come and gone over the years, but mainly to David.

“He has been working in the business for 27 years and at times running it.

“During Malcolm’s two prolonged sick leave periods, David ran the shop single-handedly and without him involved we’re not sure how we would’ve coped.”

He added: “We have seen many changes over the years, both in life and in bikes with many memories made and laughs over the years, many of which we can thank our ongoing customers for.

“The occasional gifts we get show the true appreciation from you and means so much to us. The shows of kindness and support during the pandemic were especially well received.”

The post was flooded with comments from disappointed customers mourning its loss.

One read: “Very sorry to hear this – David and Malcolm were always incredibly helpful and offered the best advice on bikes.”

Another said: “You’ve always been brilliant and will be much missed. Much luck for whatever comes next.”

A third person wrote: “70 years of serving the local area around Acton, end of an era Malcolm.”

Yesterday, a poem was uploaded to the shop’s Facebook page, titled “THE END OF AN ERA”.

It began: “The end of an era, and of our time, each moment has changed us, and will help us climb.”

The family has not yet explained the reasoning for the closure, which may be related to the uptick in online bike sales.

The news comes as several other shops have also closed their doors to customers.

This week, a B&M branch in Warrington announced its closure, while a Poundland store in Berkshire also closed just a year after opening.

High streets across the UK have suffered from decline over the past decade.

Since 2018, 6,000 retail outlets have brought down the shutters, according to the British Retail Consortium.

The trade association’s chief executive Helen Dickinson OBE blamed the closures on “crippling” business rates and the impact of coronavirus lockdowns.

Within hours of Israel launching strikes to assassinate Hassan Nasrallah, large posters appeared across Tehran declaring “Hizbollah is Alive”.

Iranian state media initially said Nasrallah, the Lebanese militant group’s leader, was “in a safe place”, but there was a conspicuous silence from regime officials. It was as if the Islamic republic’s leaders were not ready to acknowledge the loss of Tehran’s most important regional ally.

Israel’s assassination of Nasrallah on Friday delivered not just a catastrophic blow to Hizbollah, but a devastating hit to its main patron: Iran. For more than three decades, Tehran looked to Nasrallah and his movement as the key pillar in its regional security and deterrent strategy — the frontline in its long shadow war with Israel.

An Iranian official said Ayatollah Ali Khamenei, Iran’s supreme leader and ultimate decision maker, considered Nasrallah a “son”.

“It’s a major blow to Iran, both tactically and strategically — the loss of such a figure who has had the absolute trust of the supreme leader,” the official said. “It doesn’t mean that Hizbollah is done . . . but it means it will take a long time to establish trust. Other leaders [in Hizbollah] were not as close as he was to the supreme leader. In the short term it’s a big, big blow to the whole resistance.”

Rebuilding Hizbollah’s leadership and operational strength will pose myriad challenges for Tehran, particularly as Israel’s operations have laid bare how deeply its intelligence services have penetrated both Lebanon and Iran.

Iranian analysts said the republic would not abandon its strategy of using proxy forces across the region, despite the setback. Iran has relied on regional militant groups since its 1980s war with Iraq, realising it lacked the conventional firepower to defend against its foes, including Israel and the US.

These forces — dubbed the axis of resistance — remain essential to Iran’s ability to project power beyond its borders, which is based in part on the belief that it can hurt its enemies without being drawn into direct conflict.

After enduring the worst two weeks in Hizbollah’s history, the instinct in Tehran has so far been to regroup rather than lash out. The Iranian official said Iran wanted to allay any perception it had been weakened, and instead show that “everything is under control”.

“Tehran views this as yet another difficult episode in a broader struggle that must continue,” said Mohammad Ali Abtahi, a former reformist vice-president. “Iran and Hizbollah may pause their actions for now to avoid escalating the conflict, but this should not be seen as a long-term retreat nor a change of strategy.”

Iran has nurtured Hizbollah as a proxy force in Lebanon since the 1980s, when Israel occupied the Arab state, and came to regard it as the most successful of its regional ventures.

The group served as a model for other Iran-backed Shia militias in Iraq and Syria, and the Houthis in Yemen, and also helped train them. Tehran’s Quds force, the wing of the elite Revolutionary Guards responsible for overseas operations, works hand-in-hand with the militants, providing arms, funds and training.

A senior guards commander, Abbas Nilforoushan, was killed along with Nasrallah when Israel bombs flattened at least six residential buildings in a southern suburb of Beirut.

That has heightened concerns in Israel that Iran could seek to retaliate, both for the assassination of Nasrallah and one of its own officers.

US national security spokesman John Kirby on Sunday expressed concern about a potential Iranian response, saying rhetoric coming out of Iran “certainly suggests they’re going to try to do something”.

But so far, there have been no vows of revenge from Iranian leaders. Instead, Tehran’s main message has been that while Hizbollah has taken a damaging hit, it remains a significant force.

“Hizbollah has lost a unique leader, but the foundations that he laid in Lebanon and provided for other resistance centres will not disappear with his loss, instead they will further strengthen, thanks to his, and other martyrs’ blood,” Khamenei said.

Tehran has over the past year made clear it does not want direct conflict with Israel, even as hostilities have escalated, wary of being drawn into what Iranian officials describe “as a trap”.

For years, Iran sought to keep its conflict with Israel in the shadows. But that delicate balance has been upended by the regional hostilities that erupted in the wake of Hamas’s October 7 attack. Iran-backed militants attacked Israel, while Israeli forces have repeatedly struck Iranian commanders in Syria.

In April, Tehran took the unprecedented step of launching more than 300 missiles and drones at Israel after Israeli forces attacked Iran’s consulate in Damascus, killing several senior Iranian commanders.

It was the first direct attack on Israel from Iranian soil. Regime leaders hoped it would set a new level of deterrence, although it was widely telegraphed to limit the damage and avoid further escalation, Iranian analysts say.

But Israel has appeared undeterred.

In July, Hamas political leader Ismail Haniyeh was assassinated in Tehran by a suspected Israeli attack just hours after he attended the inauguration of Iran’s President Masoud Pezeshkian — a humiliating security breach for the republic.

Despite vows of retaliation, Iran has yet to respond, underscoring the challenges it faces sustaining its deterrence strategy.

“We’ve reached a stage where neither missiles or drones nor proxy forces can effectively deter Israel, which enjoys cutting-edge technology and unwavering US financial support,” said a senior Iranian reformist politician.

“Iran appears reluctant to engage in direct conflict, especially with a leader like [Israeli Prime Minister Benjamin] Netanyahu, who uses aggressive tactics to appear uncontrollable. Why should Iran fight with a madman and risk the whole country?”

Tehran’s apparent hesitation could prove politically costly. As the self-proclaimed leader of anti-Israel movements in the Islamic world, the Iranian regime is under increasing pressure to act.

In Lebanon, anger towards Iran is growing. Social media is rife with posts accusing the regime of betrayal for not responding swiftly to Nasrallah’s killing.

“Iran will become a symbol of treason in history, like Judas and Brutus,” read one post that went viral.

Compounding Iran’s challenges is the fact that Pezeshkian, Iran’s first reformist president in two decades, wants to ease tensions with the US and negotiate over its nuclear programme to secure relief from sanctions.

But any détente with the west, which would ease crippling economic hardship, becomes even more complicated with every escalation.

“Iran, weakened by US sanctions, cannot afford a war with Israel,” said one political analyst in Tehran. “This is exactly why Israel is trying to draw Iran into a war.”

The risk of Israel turning its sights to the republic has raised concerns in Tehran. Iranians also worry that Netanyahu’s strategy is to scupper any chances of Washington engaging with Iran, while drawing the US into a war against the republic.

The “criminal and racist gang of Netanyahu . . . might even attack Iran”, warned Mohsen Rezaei, a former senior guards’ commander, on Saturday.

For now, the republic appears set on sticking to its policy of restraint, avoiding direct clashes while potentially using other militants such as the Houthis to attack Israel and the US. “The Houthis have already destabilised shipping routes in the Red Sea,” added the senior reformist politician.

Iran can also be expected to patiently assist Hizbollah in rebuilding, in the hope of guiding it through the most difficult period since its foundation. But the loss of the group’s leader and senior commanders could further radicalise a reborn Hizbollah.

“Hizbollah, post-Nasrallah, may no longer pursue the same calculations and policies. On the contrary, it can become more radical,” Abtahi added. “This is no end to Hizbollah nor Iran’s influence in the region.”

Additional reporting by Raya Jalabi in Beirut and Steff Chávez in Washington

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The US and Europe are two of the largest financial blocs in the world enjoying broadly similar levels of GDP. So why is it that the top 50 banks in Europe only have the same combined stock market valuation as the top five in the US? And is the fact that profitability is higher for US banks proof that those in Europe need to merge to become more like their rivals across the pond?

If you asked Onur Genç, chief executive of BBVA, or Andrea Orcel, chief executive of UniCredit, then the answer would likely be yes. Both banks are currently attempting takeovers of rivals, Sabadell and Commerzbank, respectively. The former is a more traditional, domestic affair, whereas the UniCredit-Commerzbank tussle feels much closer to a hostile cross-border transaction. While German government officials have described it as “unwise”, if it goes ahead, it would be the largest such transaction since the calamitous hostile takeover of ABN Amro by Royal Bank of Scotland (RBS) in 2007, a move which contributed to the latter’s collapse.

So should we be worried? The drivers of recent banking transactions are many of those that have shaped the European banking industry for the past 15 years: sluggish revenue outlook as the sugar rush of higher interest rates fades and rising costs as the promise of IT-driven efficiency is continually offset by higher investment spend, set against a backdrop of fragmented market shares, “market” referring to the eurozone.

It is therefore hardly a surprise that investment bankers are reaching for their pitch books and that mergers and acquisitions are back on the agenda, despite decades of studies suggesting that half or more of deals destroy shareholder value.

But are larger banks a good idea? One of the most important lessons of the financial crisis of the late 2000s was, as then Bank of England governor Mervyn King put it, that “most large complex financial institutions are global — at least in life if not in death”. The cost of the 2008 bailout of the globally active RBS fell entirely on the shoulders of UK taxpayers; those in the US didn’t have to pay a dollar, despite the fact that RBS was a top 10 US bank whose failure would have had clear repercussions for the American economy. 

In reality, the theory that large banks are ‘too big to fail’ seems to still hold true

And while new rules today mean that the cost of rescuing a bank falls theoretically on shareholders and debtholders rather than taxpayers, in practice it is clear that a large bank facing imminent collapse would not simply be allowed to fail once other providers of capital are fully wiped out. Does anyone believe the Swiss government would have simply allowed Credit Suisse to fail if it hadn’t managed to strong arm UBS into rescuing it? 

In reality, the theory that large banks are “too big to fail” seems to still hold true. The bigger banks are, the more problematic issues become. While today’s economic and financial conditions, combined with significant balance sheet strengthening, means that we are a long way from having to worry about bank failure, banking remains a highly cyclical, fantastically leveraged business with lurking dangers.

Some might argue that the formation of a European banking union means that a potential UniCredit-Commerzbank merger doesn’t change the risks: with both Germany and Italy using the euro, any failure would in turn be the responsibility of the eurozone. But that too is a chimera. There is no eurozone-wide deposit guarantee scheme, which in practice means that, were UniCredit to risk failure in the future, it would remain a problem for the Italian government and taxpayer to resolve.

For many banks in Europe looking enviously at their US peers, getting bigger may feel like an attractive option to address the challenges of today and regain their seat at the mega cap table. This is, however, not the case. Such transactions are rarely good for shareholders and, more importantly, for Europe’s taxpayers and governments, who remain the lenders of last resort. 

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Rescuers are still searching for survivors after heavy rain and wind from Hurricane Helene devastated south-eastern US, leaving more than 60 people dead, destroying homes and causing power outages for millions.

Helene, which is now classified as a tropical storm, tore through Georgia and the Carolinas over the weekend after making landfall as a category 4 hurricane on Thursday, causing widespread flood damage.

The US government’s Federal Emergency Management Agency is co-ordinating a rescue and clean-up effort involving 3,200 personnel across six states where a state of emergency was declared.

As of Sunday morning, at least 64 deaths had been recorded due to the storm across five states, according to the Associated Press. The storm, which has weakened from its peak strength of 140mph winds, is expected to dissipate by Monday.

The worst-hit state was North Carolina, where at least 25 people were killed — the highest death toll from a storm in the state since Hurricane Hugo in 1989 — following the worst flooding in a century.

US President Joe Biden has declared major disasters for North Carolina and Florida, unlocking federal assistance programmes for the affected areas. Biden also approved emergency disaster declarations in Alabama, Georgia, South Carolina and Tennessee, allowing federal resources to begin flowing to those states too.

North Carolina governor Roy Cooper posted on social media platform X on Sunday morning that the western part of the state “has been hit hard and we are working together rapidly to save lives, surge assistance and begin a difficult recovery”.

The US National Weather Service office in Greenville-Spartanburg, South Carolina, wrote in a statement late on Saturday that the storm was “the worst event in our office’s history”.

It added: “We are devastated by the horrific flooding and widespread wind damage that was caused by Hurricane Helene across our forecast area.”

Many people were left stranded or without shelter across the region, according to officials. About 2.5mn people were still suffering from power outages across five states on Sunday morning, according to data tracker PowerOutage.us.

The storm could result in up to $34bn in losses from property damage and reduced economic output, according to Moody’s. Forecaster AccuWeather’s preliminary damage estimate was even higher at between $95bn and $110bn, suggesting Helene might be one of the most destructive storms in US history.