Inflation, money policy and wages

Yesterday came the expected good news that headline inflation is below the 2% target. Core inflation has been below target since June 2018. Meanwhile wage growth is around 3%, so real wages are now rising. People can look forward to having more to spend as their pay goes up.

The Bank of England has been changing its mind about all this. In a past good lecture the Governor argued that there is no longer a simple trade off between lower unemployment and higher inflation. The so called Phillips curve suggested that if unemployment fell wages started to go up faster, leading to price inflation and the need for the authorities to rein things in. Revision to this pointed out that in a modern open trading economy like the UK prices are held down by global competition, and wages by inflows of migrants and by importing labour intensive goods and services from lower wage countries. In his most recent speech the Governor has rowed back a bit on this sensible observation. He claims that there is once again a modest trade off between lower unemployment and higher wages, and that therefore the Bank will need to tighten further to control prices in the months ahead.

I do not agree. It is true wages have been going up faster in the last year, but there is no evidence this is flowing through to prices which remain under the cosh of global competition. In part wages have gone up through the introduction of the Living Wage, in part through cost push pressures in areas of the economy like care homes where recruitment has been difficult. The danger is lifting interest rates too far too fast will plunge us into a downturn. There is too little money and credit about as it is, given the Bank’s tightening policy. The Governor does at least acknowledged that he has deliberately tightened policy over the last year.
It is time he said job done. The Fed has been more magnanimous in saying they have tightened enough. The Bank of England should also say this more clearly, and work to ensure a decent supply of credit to households and businesses. As The Governor argued convincingly there is no debt problem in either the public or banking sectors in the UK. With China slowing and the Eurozone stalling we need a positive policy in the UK. With inflation under target now is a good time to promote growth and allow people to buy more cars and invest more in property and business.


  1. Iain Gill
    February 14, 2019

    Wages in sectors where the state is still encouraging large amounts of immigration of corresponding skills are still depressed, flat lining or worse.

    Wages if you look at native workers and discount recent immigrants are far worse than the picture you paint.

    Like everyone else in the real world I am tired of the political class ignoring all this.

    Get real John.

    Who are we running the country for? Yet to arrive immigrants or people already here?

    So sadly I think your analysis sweeps the important stuff under the carpet.

    1. Peter
      February 14, 2019

      ‘Inflows of migrants’ are indeed a mechanism to depress wages. That does not help native Britons reliant on wages, though employers benefit. The country does not bear the cost of raising such migrants either. They arrive as fully productive net contributors.

      Short term economic considerations can be very attractive to some politicians and so the cycle continues.

      However migrants and their families require housing, health services and education and – dependant on their background and attitude – they may or may not fit in well to the British way of life. That never seems to matter to most politicians or employers though. Raising such issues does no good. Instead of examination of the issues themselves, politicians attack the motives of those who pose the questions.

      1. Merlin
        February 14, 2019

        The Dutch government says €291m (£256m; $328m) in investment came to the Netherlands last year and 42 firms moved there – allegedly as a direct effect of Brexit.

        But that’s okay. They must be lying. Along with the IMF, World Bank, Ford, Nissan, the BCCI…

        1. Edward2
          February 15, 2019

          The value of the UK’s foreign direct investment (FDI) stocks in 2017 was £1,336.5bn, a rise of £149.2bn since 2016, according to figures published by the Office for National Statistics (ONS).
          #despite brexit.

      2. Iain Gill
        February 14, 2019

        Re “The country does not bear the cost of raising such migrants either. They arrive as fully productive net contributors” some do, some dont. We are still handing out “indefinite leave to remain” to people arriving already close to retirement age, with their working life behind them, who will quickly become a net cost to the state, and so on. We are still allowing people in with expensive pre-existing medical problems, and they fill up the hospitals. And so on.

      3. Captain Peacock
        February 14, 2019

        The same politician are quick to blame the elderly of pressure on the NHS while they just ignore the fact that if you increase the population by immigration by an extra 1 million people every 2 or 3 years all resources will be scarce.

      4. Anonymous
        February 14, 2019

        Cultural change can make political consensus impossible to reach – which suits the Blairists.

        It makes very ordinary and decent people look ‘far right’ in the eyes of liberals; to be ignored (or worse in the case of Andy.)

        Don’t like the way people vote ? Change the voters.

        This also applies to the sexual revolution in which we now have a minority within a minority calling the shots. More accurately the Blairists are calling the shots on their behalf.

        We now have thought crime. It won’t be long before not being openly enthusiastic will be a crime. Next decade’s thought police are being educated in our universities this day.

      5. David Price
        February 14, 2019

        ” They arrive as fully productive net contributors. ”

        Migrants do not all arrive as fully productive net contributors.

        Some may do but it all depends on what sector you are considering and at what point in time.

    2. Anonymous
      February 14, 2019

      Real wages are relative to the cost of housing.

      My kids have got immeasurably poorer WHILST IN THE EU.

      Andy is too remote to understand the reason we voted for Brexit.

      1. L Jones
        February 14, 2019

        Do you think the word ”remote” to describe Andy is the one you are groping for?
        There would appear to be many others far more apt.

      2. NickC
        February 14, 2019

        Anon, Andy thinks we should remain in the EU because he’s rich. Like much of what he says it is irrational or just a non-sequitur.

    3. Mitchel
      February 14, 2019

      “Who are we running the country for?Yet to arrive immigrants or people already here?”

      Surely you know who “we” are running the country for -it’s neither of the above!

  2. Peter Wood
    February 14, 2019

    I disagree, the inevitable recession is starting. In short, Western economies, and China, have supped at the free money bar for 8/9 years, debt has risen and we’re now seeing the defaults start – the hangover is fast approaching. The ECB is the worst actor in this play.

    BTW, it looks like its coming down to another binary decision for you MP’s; either May’s rubbish or a no/WTO deal. If I might suggest, will you brave Brexiteers muster all your energy to go out and explain to your colleagues why WTO/Article 24 is by far the better option. the deadline approaches rapidly!

    Reply I have made my position clear many times and am not changing my mind. I do not support the Withdrawal Agreement.

    1. agricola
      February 14, 2019

      Quite right John. The problem is not with what you have said or think it is with the media who in general are not prepared to allow the no deal, WTO rules, and GATT Art 24 route to be promulgated. Our press and airwaves are full of ignorance , the mayor of London has just been allowed to spout his propaganda as I type. Hosts of programmes are too predujiced or ignorant to question their one mind set ignorant guests. The level of ignorance out there among our legislators is appalling. The route that Owen Paterson, you more recently, and others have advocated in effect trumps, as in the card game, the punative attitude of the EU with no redress. It answers the largely artificial reaction of the CBI to no deal because current trading arrangements are maintained until a new trading treaty is in place. It obviates the need to pay a £39 billion bribe. Most important trade deals with the rest of the World can be negotiated from 30th March onwards. It is a no brainer even for those whose actions suggest they do not have one connected to their vocal chords.

    2. A.Sedgwick
      February 14, 2019

      She said yesterday “we want to Leave in March….” – significant change yet again in wording and intention? In short more lies?

      1. Chris
        February 14, 2019

        Yes, this change in wording is crucial, as one of the pundits highlighted yesterday. I think we are all now very good at interpreting what May says. Ambiguity, confusion, double entendre, and, most disgracefully, plain lies.

      2. Caterpillar
        February 14, 2019


        Having just watched some of today’s debate (parliament channel) it is shockingly clear how inept/ biased the majority of MPs are. There have been two years in which the government could and should have been held to account in being prepared to leave at the end of March (which either the government has not done or has not disclosed), but MPs have failed to do/achieve this. Now we have the pathetic sight of these infants (at best) publicly squabbling to block no deal i.e. to block leaving so that only whatever WA the EU offers is all that is available. If in the next hours the Govt cannot clearly demonstrate that the UK is ready for no deal then it is better for the country and democracy to revoke Article 50 and participate in the EU elections so that these infants can see reality… and certainty. (All time now should be spent on getting ready to leave, and all debate should be focussed on ensuring this is the case and on clarifying what happens next. The country should not be kept in the dark, with the noise of infants squabbling in the backgroumd. The PM should not be running the clock down.)

    3. Hope
      February 14, 2019

      May has put forward an amendment today effectively ruling out no deal! She has lied betrayed the nation and acted as a traitor in relation to Brexit. Watch Davis, Baker and Braverman’s evidence to European Scrutiny committee and tell me you did not reach the same conclusion. The EU offered a free trade deal and security cooperation etc along the same lines as Dexu were working towards under Davis they claim but May rejected it!

      May now saying she seeks changes to the backstop of the servitude plan. Parliament voted to change it! She is refusing what parliament told her. Yet she claims otherwise. Lying again.

      JR, your party has run out of trust.

      Inflation is down so Brokenshire imposes 3 percent plus add ons to our community charge, in addition to them 5.6 percent last year. With no reforms or efficiencies! My LA refuses to clear, salt and grit roads, how does this help the economy!

      Immigration at historic record highs.

      Knife crime and murder at historic highs and May yesterday still will not accept her cut in 20,000 police numbers and preventing stop and search has a bearing. People are literally dying because her policies! Prisons are no longer a deterrent, Gauke wants them out ASAP or make their life as cosey as possible.

      Hammond, like Osborne, has failed to deliver your central economic plank used in three elections to balance structural deficit. Taxation at 50 year high and last week Hammond sneaked another death tax under the heading of fee so it would not be debated!

      Martin Howe QC makes it clear the £39 billion ESTIMATE will be much higher- and with the add ons even higher. The arbitrator under May’s servitude plan is the ECJ! May cannot stop giving away our taxes. Overseas aid is actually £1.5 billion more than thought and is £15.5 billion!

      Any sane person would vote against her motion today to extend or delay Brexit. They would vote against her servitude plan. May has brought her servitude plan in November and pulled the vote with claims she would get legally binding changes. She failed. She handed parliament empty letters. In the interim Tusk and Junker insults our nation further, instead of walking away she goes back for more. Parliament voted in historic numbers against her servitude plan. May now in contempt of what parliament told her to replace the backstop goes back to seek the same changes which she was going to ask for in November! How many times do you need her to behave in this way before you realise she is devoid of trust and cannot beleive a word she says?

    4. Mitchel
      February 14, 2019

      Interesting January trade figures from China this morning;exports(in $ terms) +9.1%,imports -1.5%.Trade surplus,at $39.16 bn,twice that of Jan 2018 and ahead of analysts expectations($33.5 bn – Reuters survey).

      Exports to USA -2.4%; imports from USA -41.2%

    5. Mitchel
      February 14, 2019

      China’s Vice Premier has just cancelled trade talks with the UK over that stupid boy at the MoD flashing his “lethality*” about.Very,very predictable.

      (*nice to see the fax machine from Washington is still working).

      As I have said before if we insist on being America’s vassal,you can forget any favours from the Eurasian group of countries tradewise.

    6. NickC
      February 14, 2019

      Reply to reply: I am extremely grateful JR. There are MPs of principle who will honour the Referendum, and you are one. Thank you. As you imply it is not just the “backstop” in the Withdrawal Agreement that is dreadful.

  3. Peter
    February 14, 2019

    On the other hand, so-called ‘quantative easing’ debases the currency. Despite the claim in this article that ‘there is no problem’ the high level of public debt and also the government deficit PSNCR are also damaging.

    Off topic, I hope politicians do refuse to back the Prime Minister tonight. She is up to her old tricks – trying to force through her 585 surrender agreement to the EU. This must not pass. If she goes down the delay route so be it. We live to fight another day and in due course she can be turfed out and replaced by an honest broker acting in the country’s interest not that of the EU.

    1. Zorro
      February 14, 2019

      I saw Sir Ian McKellen the other night in his one man show – very enjoyable evening overall. We should like Gandalf have one thing to say to PM T May about her Withdrawal Agreement – “You SHALL not pass!!”


    2. NickC
      February 14, 2019

      Peter said: “… quantative easing debases the currency”. Not necessarily. The purpose of QE was to counteract the drastic reduction in the velocity of money consequent upon the banking crisis of 2008. Without QE the 2008 great recession would have turned into depression.

  4. Mark B
    February 14, 2019

    Good morning.

    Does the inflation figures include the rises in my Council Tax ? Because if it does not, then it should ! The cost of a loaf of bread has shot up ! Up from 40p per loaf to 50p, an increase of 25%. Is that included in the inflation figures ? If not, then it should !

    In short, I give no more credence to these figures than to any others that any government department produces, it’s just nonsense. We managed well enough before these self important buffoons imposed themselves upon us. Come out with a workable strategy to reduce the trade deficit and then the National Debt. Come up with workable solution(s) for Leaving the EU that does not include the Civil (dis)Service maintaining its grip on power via high EU alignment. ie A backdoor way to do as they want and not as the people, via its elected representatives, wish.

    1. Dame Rita Webb
      February 14, 2019

      Yep and check out the inflation on utility bills, car insurance, bus/train fares etc. JR may be sound on BREXIT but like the rest of his pals in Westminster he is blind to the realities of biflation that the voters have to experience. The price of cars, houses etc may be coming down, but it is certainly not the case for the cost of everyday necessities. Must be because MPs eat and drink in subsidised bars and restaurants and all travel is on expenses.

    2. Ian wragg
      February 14, 2019

      Quite. We’ve just received notifications that our Council Tax is going up 4% to£1960 per annum.
      20 years ago it was £370. We now suffer miserable service for a 500% rise.
      It looks like May is determined to betray the country and force through her hated WA. Is no one capable of stopping her.

      1. Captain Peacock
        February 14, 2019

        The Tories think the fear of Corbyn is enough to make the British people roll over. Well Iv got news for them if this appeaser May betrays Brexit the Tories are finished.

      2. Duncan
        February 14, 2019

        Yes it can be done but the people will have to take to the streets like they did many years ago to protest Thatchers poll tax- if they are not prepared to take this type of direct action? well then we can forget about it. What is happening is the government and establishment of today have decided Mrs May knows best, so they have decided to thwart the peoples decision and rights- there is no demrocracy

    3. a-tracy
      February 14, 2019

      An 800g everyday essential loaf in Aldi = 36p. I wonder what missing ingredient there is in that loaf compared to the average 50p loaf? People I know have been switching to Aldi and Lidl from their regular supermarkets perhaps that is what is keeping inflation down if so, it is unfortunate that German companies can achieve these savings but our own can’t, is this because of tax regimes for the UK registered supermarkets?

      1. Dame Rita Webb
        February 14, 2019

        I am hardly a fan of trade unions, but its worth looking at their research on how the German discounters treat their staff. You may also like to keep a close eye on the labels as to where their stuff comes from and what it contains, with chemicals like sodium nitrite. Then you might understand the cost differential.

        1. Mark B
          February 15, 2019

          I agree. That is why I am learning to bake my own bread. But I knead more practice 🙂

          I’ll get my coat !

      2. Peter
        February 14, 2019

        The legacy of the Aereated Bread Company. I thought sliced bread sales were down. Better to pay for decent bread or make your own. Soda bread is easy to make.

      3. Narrow Shoulders
        February 14, 2019

        The use by dates on Lidl and Aldi loaves seems to be longer than other supermarkets and branded bread. They also seem to last longer in the bread bin.

        It might not be what is missing but the longevity of the products. In which case is the preservative doing you good? Or do they just bake it differently.

        1. a-tracy
          February 15, 2019

          One would expect the bread has passed all the Eu safety tests to be sold here.

      4. NickC
        February 14, 2019

        A-tracy, At 36p or even 50p a loaf, bread is a loss leader.

        1. Mark B
          February 15, 2019

          This is true. I notice that there are other things which cost more that you would pick up.

          I will only buy my bacon from M&S. No added water and the taste is out of this world.

      5. Dennis
        February 14, 2019

        I shop at Aldi for many good things of good value but never for a 36p loaf – can it be real bread?

        I buy a crusty brownish loaf at Morrisons which a short time ago was introduced at £1.45. Soon it went to £1.50, then £1.63 and now is £1.75! but is the only edible bread I can find in my town – I don’t live in London or Iran or perhaps San Francisco for better bread.

        1. a-tracy
          February 15, 2019

          That’s what I thought Dennis. I hope these people who are buying this bread aren’t poisoning their children.

      6. Fedupsoutherner
        February 14, 2019

        Atracy. I was told IG was because they have no shareholders and are family run. Don’t know if its true though.

    4. Rien Huizer
      February 14, 2019

      @ e-Tracy

      Fifty pence for a loaf of bread? The cheapest loaf you can buy in a leading Dutch or German supermarket would cost almost twice as much. You are very lucky. Prices of bread are expected to rise worldwide as a result grain prices (maybe you remember a worldwide draught in 2018). No matter whether you live in Canada or Monaco.

      1. a-tracy
        February 15, 2019

        Ah but it will be blamed on Brexit

    5. NickC
      February 14, 2019

      MarkB, Bread at 50p a loaf? Horrors!! Try being a coeliac where a 535gm loaf is £1-50 at best.

      1. a-tracy
        February 15, 2019

        If you are diagnosed with coeliac disease by a doctor, in some parts of the UK you can receive gluten free staple foods via prescription from your GP.

  5. Prigger
    February 14, 2019

    The Minister for International Development could hardly make herself heard even to me watching her on TV yesterday. She was saying we are giving a bit of money to ease the plight of starving Venezuelans. The Labour Party MPs were engaged in paired chatting throughout.
    Meanwhile Mao McDonnell has got his name in the media with the news of 1910 events in Wales.
    Few British people believe the Houses of Parliament actually exists except for those who have gone to London and physically touched it…and returned several times for a repeat touching.

    1. Cheshire Girl
      February 14, 2019

      I tried to watch PMQs yesterday, as I often do, but the noise made it impossible to hear what anyone was saying. The Speaker asked for quiet several times, so that people could be heard , but that fell on deaf ears. In the end I had no option but to switch off.

      To be quite honest, I prefer to listen to the Lords. No noisy barracking or jeering. You can hear every word. Many of their debates are very thoughtful, and certaimnly worth listening to. PMQs usually are a disgrace! They seem quite unaware that the public may be watching. I dont think they care.

      Reply PMQs is not representative of the work of the Commons

      1. Chris
        February 14, 2019

        Reply to reply:
        It may not be representative of the work of the Commons, but it is the public face that you all decide to show to the public.

      2. Richard1
        February 14, 2019

        It has become a dreadful event. May & Corbyn are both appallingly wooden. May generally has the better of it, being more intelligent and better informed. The Speaker’s posturing makes it unwatchable

        1. Dennis
          February 14, 2019

          If I were the leader of the Opposition then I would say that I would only appear if the PM actually answered the put questions . It should be a rule of the house that questions must be answered and the PM must not ask questions of the opposition dring PMQs.

  6. Lifelogic
    February 14, 2019

    Indeed, while base rates are low bank margins, fees and terms are generally high and rather restrictive. The banks are over regulated and micro managed by government and this is preventing them doing some perfectly sensible lending which is slowing growth. The main things slowing growth however are:- the highest taxation for fourty years, a expensive religious energy policy, damaging restrictive employment laws, attacks on the gig economy, endless red tape, endless waste in government, a lack of competence and a positive vision from the PM, over restrictive planning, OTT building controls, the threat of Corbyn (thanks mainly to May and Hammond), the policy of blocking and constricting the roads, a dire NHS ……

    1. Lifelogic
      February 14, 2019

      So Mc Donnall tells us Churchill was a “villain” (for tackling riots and many criminal actions by striking miners). If Corbyn and Mc Donnall (heaven forebid, ever take power) and when we get riots on the streets will they just instruct the police and troops to join in the with rioting and destruction of private property perhaps?

      No wonder Labour are behind the Tories in the polls (even Tories led by the appalling, disingenuous, socialist remainer Theresa May).

      1. Richard1
        February 14, 2019

        This, together with the clear & virulent antisemitism, shows that the old Labour Party of democratic socialism and more lately of social democracy, has been comprehensively taken over by far left political extremists. what on Earth are the likes of Yvette Cooper, Chukka Umana, Chris Leslie etc etc still doing in this party of class & racial hatred and identity politics?

    2. Ed Mahony
      February 14, 2019


      You keep going on about tax.

      The UK is great enough to be successful with relatively high or low tax. The Scandinavians and Dutch have relatively high tax. Their economies are doing fine.

      Singapore has low tax. But then they’re a small country. Focused on finance. And taxes there are going up. It also appears a pretty boring place to be with lots of boring shopping malls (I might be wrong, but this is the impression I get).

      Whether tax is too high or too low is irrelevant i think to the real problem in this country – by far: the break-up of the British Family.

      Whether one is religious or an atheist, let’s all please agree that the break-up of the British Family is the biggest problem facing our country. There’s lots of evidence to show that Strong Family Life encourages work ethic, sense of responsibility, good mental and physical health, high productivity, sense of patriotism, sense of public duty and so on.

      If we could begin to address Family Life, we would save our countries BILLIONS and BILLIONS (and you would no longer have pay high taxes to pay you keep bringing up). And it’s not just a money thing. Our country would be much happier in general.

      So when is the government going to begin to address the most important problem facing our country? There’s no instant answer. But tax breaks and the rest could begin to make a difference. And more besides.

      1. Ed Mahony
        February 14, 2019

        And how seriously does the Conservative Party take The British Family when it introduces Gay Marriage?

        We need to get back to absolute basics, starting off with the basic concept of supporting the British Family, the British Family with a Mum + Dad + Children + Extended Family Members helping out.

        It’s NOT rocket science. But our modern world seems to have gone complete bonkers (and we’re paying a huge price for it – both financially as well as in terms of happiness).

      2. libertarian
        February 15, 2019

        Ed M

        Er the Scandinavians suffered because of their high tax rates and had to reduce them, Sweden & Norway now have a tax rate roughly the same as ours

        1. Ed Mahony
          February 16, 2019

          I’m not making a big point about tax except to say tax isn’t the big issue that Lifelogic makes it out to be. We would do fine with tax rates as high as Germany or the Netherlands or as low as Singapore.

          My ambition is low tax but it’s not a burning ambition. For me my burning concern is that the real problem with our economy is primarily social in origin not economic.

          And if tax is important to grow our economy, then so is creative investment, especially in the High Tech sector, like we’ve seen the Israeli government achieve, and other countries elsewhere.

          Lastly, I spoke to my pretty right-wing brother-in-law who works as a banker in the City, and he says that he used to support the (low tax) Singapore model but has now ditched it (based on discussions, I presume, with his friends and colleagues in the City).

        2. Ed Mahony
          February 17, 2019

          Also, again, just to emphasise, we must aim for LOW TAX as long-term ambition:
          1. It’s right that people choose to spend their own money not government
          2. Don’t want people to depend on the State of hand-outs – bad for tax-payers and bad for those receiving hand-outs. And so on.

          But we can’t rely on government lowering tax radically to improve our economy. That will only create unintended consequences further down the line:
          1. Short-term investments / short-term business goals in business – leading to more boom and bust but more importantly businesses that lack in real brand value (businesses with high exports, that have levels of productivity, high skills, high wages – and so on).
          2. If working class people aren’t getting a good enough salary, they’ll just depend more and more on the state / and or vote in a SOCIALIST government.

          I want to see government make life easier for entrepreneurs especially in the High Tech industry, including clever, objective government investment in the High Tech (like creative capitalists do as opposed to socialists who just throw money at things).

          Growing the High Tech industry would have hugely positively effects on our economy, reducing – long term – high taxation.

          But we also have to look at strengthening the British Family because in the old days it was always the Family (immediate and extended) that helped family members in hard times instead of relying on the state.

  7. Fedupsoutherner
    February 14, 2019

    All I know is my council tax continues to rise while services get worse, it takes longer to see my doctor, I’m having trouble finding an NHS dentist and my pension is not keeping up with any price rises. As to what Carney or any other so called expert thinks, I couldn’t care less. With bankers bonuses and inflation proof increases for those who sit in judgement of us all its a case of “I’m alright Jack”. They need to walk a mile in Joe Blogs shoes and they would soon see what crap they are spouting. Joining the real world might help. Calling planet earth

    1. Lifelogic
      February 14, 2019

      Exactly. Highest taxes for 40 years yet dire and decling public services. I passed two recently closed public loos the other day and one recently closed library. Even this is beyond them. Police seem invariably to choose to do nothing about most crimes. Fine to shoplift and mug someone unless they are 100 and die as a result it seems.

      1. Anonymous
        February 14, 2019

        Except speeding tax payers. Zero tolerance.

        Ultra tolerance for criminals.

        So why does zero tolerance work for speeding but ultra tolerance works for shop lifting or carrying knives ?

        Seven years of Tory misrule sees properly registered drivers spanked and crime out of control. There is more to this than police cuts.

    2. Andy
      February 14, 2019

      None of this is rocket science. You cut funding for services – as the Tories have dramatically – and those services get worse.

      Comparatively fewer doctors means longer waits. More complex (and more expensive) treatments means less money for other things. Fewer police officers and less money in community services means more knife crime. Homelessness rises when services to help people who may end up homeless are axed.

      If you want better services you have to pay for them. And if you want to have big tax cuts you have to understand that the cost is that services will get worse.

      1. Edward2
        February 14, 2019

        Yet private sector businesses often do more for less.
        The only solution for public sector businesses is always a clamour for ever more money.

      2. Ginty
        February 14, 2019

        Wrong as usual.

        Zero tolerance for speeding ultra tolerance for crime.

        Import loads of Big Issue sellers = more homeless

        Recruit more female doctors than males and expect half to quit early or go part time.


      3. Ed Mahony
        February 15, 2019

        The real problem is to do with society NOT government:

        1. Socialism (encouraging laziness and envy)
        2. Social Liberalism (encouraging general social immorality)
        3. Raw Capitalism (NOT Capitalism but raw capitalism where people are encouraged to fritter their money away on shit – like casino gambling to take an extreme example – instead of saving SOME money up for a rainy day).

        We need to restore sense of: family values, public duty, patriotism, work ethic, and so on. Government has a role to play in all this, including tax breaks, creative investments in the high tech sector, things like that, as well as coordinating people in religion, education, the arts and so on where everyone is working together on these important issues.

        1. Ed Mahony
          February 15, 2019

          And gambling’s absolutely fine. I’m no Puritan. But gambling in MODERATION. ‘Everything in moderation’ as the old adage goes.

          In fact, our horse race industry is a great British industry (but even in horse racing we need to be careful of people who gamble far too much).

    3. Dennis
      February 14, 2019

      I have been informed that my refuse collection happens every 2 weeks is in poor comparison to the daily collection in Westminster – is this right? And the Council Tax there is one of the lowest if not the lowest.

  8. Dominic
    February 14, 2019

    Carney’s first and foremost a politician not a central banker. His views, policy actions and recommendations are all filtered through a political prism to determine if such policies have the desired political outcome. If people cannot see the malicious nature of Carney and his overlords in government then they need to open their eyes and embrace one simple fact, we are being deceived using fear, uncertainty and deliberate misinformation

    The world of politics today is a throwback to Europe in the 1930’s in which propaganda, lies and deliberate misinformation where used to mould opinion and trigger a specific emotional response

    Do not underestimate the dark, nefarious and villainous intent of this government and those who seek to support its attempts to undermine British democracy. If that means deliberately tanking the economy then blaming it on Brexit then that is exactly what Carney, May, Hammond and Robbins will do

    1. Chris
      February 14, 2019

      Yes, D, you are right (last para in particular). The end apparently justifies the means with these scoundrels.

    2. L Jones
      February 14, 2019

      Once upon a time – not too long ago, your words, Dominic, would have seemed far-fetched, conspiracy-theorist hyperbole. Now they sound all too true….

  9. Lifelogic
    February 14, 2019

    It seems the A380 is to be scrapped. I suppose it was not quite as much of an economic basket case as the economically idiotic Concord project. But it was not much better. Too much government involvement, political interference and midirection with a misuse of taxpayers money as usual was the problem.

    Not their money, so what do they care.

    1. margaret howard
      February 14, 2019

      You really ought to inform yourself a bit better. The Emirates were the main customers of the plane and they have pulled out of their promised orders

      Airbus said the “painful” decision to end production was made after Emirates reduced its latest order. The Dubai-based airline is cutting its overall A380 fleet size from 162 to 123.

      Emirates said it would take delivery of 14 further A380s over the next two years, but has also ordered 70 of Airbus’ smaller A330 and A350 models”

      So they are switching to other, smaller Airbus models

      The aerospace giant showed a net profit for 2018 of €3bn (£2.6bn) up nearly 30% from the previous year.

      Not bad going for an ‘economic basket case’

      1. Edward2
        February 14, 2019

        So a few weeks ago you claimed jobs in this company’s UK branch would be lost because of brexit.
        Now you say its because of poor sales.
        Make your mind up margaret.

      2. Know-Dice
        February 15, 2019

        Probably only making a “profit” through illegal subsidies from German and French governments…

        1. margaret howard
          February 16, 2019


          “through illegal subsidies from German and French governments…”

          The mote and the beam parable?:

          “Taxpayers are handing businesses £93bn a year – a transfer of more than £3,500 from each household in the UK.

          The total emerges from the first comprehensive account of what Britons give away to companies in grants, subsidies and tax breaks, published exclusively in the Guardian”

          1. Edward2
            February 16, 2019

            Tax breaks….normal accountancy rules every nations allows companies.
            offsetting expenses
            depreciation allowances
            ofsetting losses made against profits

            Grants and subsidies….for research and development to develop new profitable job creating products and services.
            And State investment in businesses willing to come to the UK and set up thus creating wealth and jobs.

    2. hefner
      February 14, 2019

      Not your money either as most of the “public” money comes from the various Gulf governments. And with petrol use likely to be declining over the coming 10?-20?-30? years, how could you condemn those governments, which want(ed) to get a lion’s share in worldwide air transport.

  10. Lifelogic
    February 14, 2019

    A Heath is surely right again today in the Telegraph:-

    The eurozone’s coming recession will confirm Brexiteers’ warnings
    As the EU slides into yet another economic crisis, voters will remember why they wanted to leave.

    Remind me: what’s so great about the single market and the single currency again? The latest economic statistics from the eurozone are appalling, and point to a continent that is sleepwalking into a catastrophic recession.

    1. N Murphy
      February 14, 2019

      The Italians will be the next to leave. We should start drafting an FTA for them.

    2. margaret howard
      February 14, 2019


      “Remind me: what’s so great about the single market and the single currency again?”

      Remind me: Why have we lost our AAA rating for the first time since 1978 while EU members like Germany haven’t?

      1. Anonymous
        February 14, 2019

        We lost AAA before the referendum.

      2. Know-Dice
        February 15, 2019

        Would that be the Germany that has trade surplus with the rest of the world, especially with the UK?

      3. libertarian
        February 15, 2019

        Margaret Howard

        Is that the same Germany that is now technically in recession and has a lower predicted growth rate than the UK?

  11. Denis Cooper
    February 14, 2019

    Off-topic, here is my little letter in this week’s Maidenhead Advertiser:

    “Nobody can guarantee Northern Ireland peace”

    “The President of the European Council, Donald Tusk, has aroused indignation with his suggestion that opponents of EU membership will go to hell.

    However after many years of being gratuitously insulted by fanatical EU supporters I myself found Mr Tusk’s comment quite amusing.

    Less amusing was something else he included in his remarks:

    “Give us a believable guarantee for peace in Northern Ireland, and the UK will leave the EU as a trusted friend.”

    The first reality is that nobody can offer an absolute guarantee for peace in Northern Ireland.

    The second reality is that we have already been told by the EU’s chief negotiator, Michel Barnier, that we cannot be trusted once we have left the EU.

    It may be recalled that last summer Prime Minister Theresa May proposed a daft scheme under which the UK would continue to collect customs duties on behalf of the EU, even after we had left.

    Which proposal M Barnier rejected on the grounds that he could not trust us to do it properly, once we were no longer “subject to the EU governance structures”.

    As pointed out at the time, that raised a serious question about whether the EU would trust us to keep to any agreement, unless we accepted continued supervision by the EU institutions. (Viewpoint, August 2 2018, “Will EU trust UK to faithfully perform any deal about anything?”)

    If not, what is the point of Theresa May humiliating herself, and by extension the rest of us, with her increasing pathetic attempts to finalise a deal which might get through the Commons?”

    1. Denis Cooper
      February 14, 2019

      Surely this cannot be true? 🙂

      “EU officials: UK only ‘pretending to negotiate’ over Brexit impasse”

  12. Narrow Shoulders
    February 14, 2019

    Ease monetary measures and commodity prices shoot up. The problem with macro economics is that there are abundant micro areas which suffer untowardly. In much the same way that the EU can not work for each of the 28 countries while trying to legislate over all so macro economics favours business over people.

    Business may want easy money but the people in the economy do not benefit from it.

  13. GilesB
    February 14, 2019

    Whilst we remain under the protectionist umbrella of the EU’s Common External Tariff the prices of most goods can rise without the competition of free market prices

  14. FranzB
    February 14, 2019

    I note today the tone has softened, yesterday it was ‘the Governor’ and today again- whatever happened to ‘Carney’- the foreigner? the price we pay

  15. Sir Joe Soap
    February 14, 2019


    Now we have on the one hand the establishment warning us about all the problems associated with leaving Interpol data behind, and on the other they will not “rush to judge” Isis-trained women who need “help” to re-integrate back into British life.

    I presume the Brexit party might have something to say about this wee paradox.

    1. Fedupsoutherner
      February 14, 2019

      Joe soap. There is no way that Isis loving pregnant woman should even be considered for life back in Britain. She has shown her true colours and admitted that seeing beheaded heads in bins didn’t shock her. We don’t need her kind here and I certainly don’t want to pay to bring her child up.

  16. ian
    February 14, 2019

    NO, he must play follow the leading central bank, that how it works.

  17. Caterpillar
    February 14, 2019

    The velocity of money is low and asset prices are high, I think there is potential pressure and good reason to slightly tighten. (It is time for fiscal policy).

  18. Bob
    February 14, 2019

    What kind of idiot believes that taking WTO off of the table will improve our bargaining position?

    Are these people working for the other side?

    1. Mockbeggar
      February 14, 2019

      Well, if you want the negotiations to fail so that we lapse back into the Single Market and Customs Union by default as the Remainers would like, then the answer is “yes”. After all, that’s what their name means.

    2. Rien Huizer
      February 14, 2019

      @ Bob

      There is no bargaining position. And there is no bargaining going on. All the UK has to do is to figure out if it wants to take what’s on the table or abstain. And in the latter case the politicians will have to figure out how to deal with the internal consequences of either choice.

  19. Adam
    February 14, 2019

    The Bank of England would perform better with somebody less incompetent than Mark Carney.

  20. Bryan Harris
    February 14, 2019

    If inflation is not allowed to exceed 2%, and wages, as we’d like, are going up – then something else is going to suffer…
    I’m not in favour of runaway inflation, but surely the inflation target has to be set, and changed regularly, to reflect how we want the economy to behave.
    Right now growth is suppressed artificially by the constrainta imposed by having this very low rate, but I’m not at all convinced this is good for us.
    Hammond is following the EU approach, and will not allow the economy to reinflate – because they want wages kept low. They keep on providing ever more alleged cheap labour in the form of immigrants, very few of whom enter the job market, but all this will do ruin life opportunities for those willing to work.

  21. majorfrustration
    February 14, 2019

    Government Figures – apply the Forbin Maxim – + or – 2% and believe the worst position.

  22. a-tracy
    February 14, 2019

    “People can look forward to having more to spend as their pay goes up.” Well they would had the Nest pension scheme not take more and more each year from their income, the total NEST contribution from this April will be 8% (5% employee from earnings over £500 per month up from 3% last year), people are actually receiving much more from their employers in order not to be worse off for little recognition of the feat that achieved this.

    The National Living Wage will go up in April by 4.9% this high % point to help with NEST but the employee won’t feel the benefit of such a big increase and the employer has an extra 1% employers contribution making their national insurance/pension contribution 16.8% if they employ their workers on PAYE.

    Also, all of this new money sloshing in the pension investment schemes with little information to the public in general print about what these selected pension investment Companies are doing with the big pot of money in simple laymen terms – are the investments in British infrastructure schemes or worldwide investments, what level of risk to they take on? Which NEST schemes are getting the best investment returns are any NEST pension providers not getting any return? NEST Corporation is the Trustee body responsible for running NEST – has anyone seen a public report from them since this was founded in 2011 or a BBC report or a newspaper report on their capability in review for their first 5 years with our collective money?

  23. Pete Else
    February 14, 2019

    Assuming that the inflation figures were accurate we only need about 25 years of this level of wage growth to catch up to real earnings 40 years ago then. As inflation calculations have been fudged and twisted so they do not reflect what it actually costs to live in the real world these statistics are simply a means for governments to try and convince us we’re better off. We’re not. In the 1970’s a man could support his family and buy a house on a the average single wage. Try doing that now.

    1. a-tracy
      February 14, 2019

      Yes, Pete but the hours that working man often did is equivalent to a man working full time (often 37 to 40 hours now) and a woman working part-time (16-20 hours).

      I know men that worked 84 hours then they took a day off, every time that one day off was a Saturday they had a Sunday off work too making one long weekend every seven weeks, they would not have been able to buy a house then without the overtime. There were many more social houses and the ladder wasn’t so difficult for young British born newly married adults to climb to get a home. Holidays were much shorter for working class people too.

      I think when comparing wages shortened hours, more holidays, less overtime, all has to be taken into account.

    2. Narrow Shoulders
      February 14, 2019

      That is a good and clear measure. Two income families should be rolling in it, not struggling to get by. But is the rise in two income families part of the cause?

  24. Simon
    February 14, 2019

    Sir John;
    How is your famous “novating” of the trade deals going ? LOL.

    Reply Well.

    1. libertarian
      February 14, 2019

      Hi Simon

      Do you not reside on planet Earth?

      You dont seem to have much clue as to whats going on

      Try following Dept of International Trade on social media to see all the countries that have so far agreed to novate/set up FTA’s etc

    2. margaret howard
      February 14, 2019

      BBC Reality Check 14/2/2019

      Brexit: What trade deals has the UK done so far?

      Four out of 40

      The UK has (so far) only agreed four deals. Labour’s Shadow International Trade Secretary, Barry Gardiner, said he understood that talks on 19 other deals were “significantly off track” and that “two are not even being negotiated”.

      The agreements the UK has struck are:

      Switzerland (signed 11 February)
      The Faroe Islands (1 February)
      Eastern and Southern Africa (31 January)
      Chile (30 January)

      1. Edward2
        February 14, 2019

        We cannot sign any trade deals until we leave the EU
        Surely you know this margaret?

      2. libertarian
        February 15, 2019


        How many times do you need to be told, the EU prevents us signing independent trade deals until we’ve left. Get a grip its not difficult

  25. Davek
    February 14, 2019

    Todays motion in the HoC ” notes” that the discussion between the EU and the UK on the NI backstop is ongoing…might as well Note that the weather is a lot milder for this time of year… the rubbish that goes on in the upper echelons…44 days to go and the world is looking on aghast

  26. formula57
    February 14, 2019

    Concerning restrictions by the Bank on credit expansion in relation to vehicle financing, recent data from the USA (that I accept may arise from quite different circumstances) shows a surge in overdue settlements.

    The New York Federal Reserve recently published a study (found @ – requires some scrolling down ) that showed strong originations: –

    “Auto loans, which have been climbing at a steady clip since 2011, increased by $9 billion, boosted by historically strong levels of newly originated loans. In fact, 2018 marked the highest level in the nineteen-year history of the loan origination data, with $584 billion in new auto loans and leases appearing on credit reports, up in nominal terms from 2017’s $569 billion. ”

    but also a concerning rise in overdue settlements by borrowers: –

    “The overall performance of auto loans has been slowly worsening, despite an increasing share of prime loans in the stock. The flow into serious delinquency (that is, the share of balances that were current or in early delinquency that became 90+ days delinquent) in the fourth quarter of 2018 crept up to 2.4 percent, substantially above the low of 1.5 percent seen in 2012. ”

    The UK market seems to me to entice consumers based upon the cash flows in any deal, rather than the cost. There must, accordingly, be risk that easy credit is taken on too readily.

  27. acorn
    February 14, 2019

    Hundreds of years of procedure in the HoC and Punch and Judy are still raising points of order, on what’s a meaningful vote and what is not binding on the Downing Street dictatorship.

    Today again,we have hours of meaningless debate, on a meaningless motion that could have ten amendments, but probably less, once the Speaker decides which is the least meaningless.

  28. Richard1
    February 14, 2019

    Sir John, Is the ‘Malthouse Compromise’ something you support?

    Reply No

  29. Ian
    February 14, 2019

    Today’s letters are mostly on song.
    Complaining about that insipid Carney, doing Hammonds bidding just as he did for Osborne, what a pity Mervin King could not come back for a couple of weeks ?

    Day after day that damned women is still there calling the shots, could not care less about Democricy, doing exactly what her masters in the EU want , with the total blessing of the Establishment, the same circle of lies and promises, still talking out of both sides of her mouth at the same time.
    Safe in the sure knowledge that she is totally bulletproof ?

    How in Gods name is this farce still going on.

    She is to Democracy, what a child is to a shop full of fireworks.

    I like the vast amount of my fellow Brits , are in daily diss belief that those that could get rid of this loose cannon apear struck dumb ?

    Bring on The Brexit Express Nigel, your Nation is crying out for someone who is on our side , not just there own side, he is certainly the only one not being linked to our Establishment, or that of the EU!

    This is a huge opportunity for a party such as The Brexit Express, boy are we hungry for some decent people prepared to do just what we are crying out for.

    Bring It on and let’s clean this Swamp, let us get on with our lives and be done with all the Old has been s , and the bent Civil Service, a clean sweep, it must not go on, it is a dissgrace.

  30. margaret
    February 14, 2019

    The 1% difference in real growth is counterbalanced by higher domestic fuel bills etc.

    1. Edward2
      February 14, 2019

      Wrong one per cent of growth equals billions of extra gdp.
      Increases in energy bills are just a small proportion of the total.

  31. ian
    February 14, 2019

    Mrs T May break cover today and side with bankers, elite and remainers. Brexiteers left out in the cold.
    Game over for now.

  32. Ian Pennell
    February 14, 2019

    Dear Sir John Redwood

    It is good that inflation is down below target and wages are rising. Your explanation about the Phillips Curve not necessarily holding true in an open economy like Britain’s is also valid. Wages business have to pay to their employees is only one of the influences on prices in the shops. There are clearly other influences on prices like the strength of Pound (a strong Pound means cheaper imports), and taxes (particularly VAT and duties). Red tape- such as the new requirement for businesses to get special software (to link to HMRC) to do VAT returns electronically – is also a cost to businesses. Tolley’s Tax Guide now runs to over 20,000 pages and it is so complicated that even the top professional Accountants cannot understand it!

    There is therefore huge scope for scrapping the entire UK Tax Code and starting again, with just a couple of Income Tax bands and taxing land/ property more instead. VAT and duties on fuel could be abolished altogether after Britain leaves the EU and this would greatly eliminate the administrative as well as to reduce the financial burden on businesses. Such a simplification of the tax- codes need not lead to a reduction in revenues and if property and wealth is taxed more at the expense of hard work, enterprise and the sale of goods in shops (and businesses did not need to pay for expensive accountants) the economy would grow more. This is something that would really help the economy at a time of almost zero growth.

    If we could cut or eliminate VAT everybody would benefit- particularly the poorest in society. Cutting VAT would not cause inflation (it would tend to reduce it, at least in the short term) whilst providing a boost to many people’s living standards. Abolishing VAT altogether would also remove a huge administrative burden from many businesses and indeed from the Public Sector. The Conservatives should go for it as/ when this country really leaves the EU) – it would be a huge vote- winner!

    Ian Pennell

  33. mancunius
    February 14, 2019

    Heartening voting results in parliament today. So provocative of May to put herself behind Spelman’s non-binding amendment (unconvincingly won by only 7 votes) , instead of contenting herself with reassuring MPs that she will follow precisely the mandate she was given: to replace the backstop with an alternative proposal. MPs did not vote to limit it in time, or to have some vague EU assurances about it. They voted for it to be replaced by alternative arrangements.
    It is obvious that the EU is not going to do that until the very last moment, and possibly not even then. So we should openly say to the EU that we are heading for a non-deal WTO brexit, and decide ourselves what our new arrangements will be.
    I am concerned that our WTO tariffs are so far non-competitively replicating the EU’s tariffs. This is a rubbish approach to an independent trade policy. We can do far better than that.
    If truth be told, for our independent future with sharp-eyed trade policies we clearly need a sharp-eyed Conservative government with brexit economic vision and expertise. May and Hammond must go.

  34. Mike Wilson
    February 14, 2019

    and allow people to buy more cars and invest more in property and business.

    On come on, give it up! We don’t need to screw the planet with our endless consumption of new cars. Cars these days comfortably last 15 years or more. We don’t all need to be paying £299 a month – forever – so we can have the latest registration on our drive every 2 or 3 years.

    As for property – invest in property! Again, for heaven’s sake! ENOUGH! ALREADY! The next generation is already priced out and many will have to rent all their lives! But you want more people to get back into ‘buy to let’ (as if that is ‘investment in property’) and further screw over our kids.

    Invest in business! Yes, one sensible suggestion out of three.

    Looks like we need schoolchildren to remind us we are taking the planet to hell on a handcart. Stop the obsession with bloody cars.

    1. Anonymous
      February 14, 2019

      “Looks like we need schoolchildren to remind us we are taking the planet to hell on a handcart.”

      Fine the teachers and demand that the schoolchildren make sacrifices such as giving up their smart phones and gaming consuls. Sacrifice is what is meant by going green but they won’t even do that.

      Protest in their own time. See how many turn up.

  35. Andy
    February 14, 2019

    A Tory business minister called Richard Harrington has said that the ERG are not proper Conservatives. He’s called them traitors and says they should join Nigel Farage’s Brexit Party.

    Agreed. Most of them have shown all the skills you would expect from a member of Farage’s mob.

    1. fedupsoutherner
      February 15, 2019

      Judging by what we read here from you Andy, Farage has obviously got many more skills than you.

  36. Ian Pennell
    February 14, 2019

    @Sir John Redwood

    Further to my point above- despite the fact that we have a Budget Deficit of £1.8 trillion (though admittedly some of this is from the Bank of England through QE) there’s plenty scope for slashing and simplifying taxes when Britain leaves the European Union – by borrowing extensively from the British Public (by issuing gilts). Slashing Foreign Aid and not paying the EU £39 billion (and no more EU annual payments) would raise up to £30 billion annually over five years.

    With this £30 billion annually plus another £20 billion of borrowing per annum there is much scope to cut taxes- and spend £billions building millions of new homes to be sold cheap to first- time buyers(thereby getting the young away from Labour). The government could boost spending on the NHS and put a lot more police on the streets and embark on a major prison- building programme (to help deal with violent crime in London and elsewhere). Cancelling HS2 and using savings to up-grade Britain’s infrastructure is vital.

    None of this would spook the Credit Ratings’ Agencies nor provoke Inflation- but would ensure GDP was at least 2% higher per annum in real terms than it would be otherwise. Extra revenues to the Exchequer would then result in a falling debt to GDP ratio and (vitally) they would appeal to Voters sufficiently (should the Conservative Party adopt such policies) to keep Jeremy Corbyn and John Mc Donnell well away from power!

  37. Lindsay McDougall
    February 15, 2019

    Total UK quantitative easing (QE) totalled £375 billion, about 20% of GDP, between 2009 and 2012. This did not result in anything like the inflation rate that might reasonably be expected if the money had all been spent domestically. The conclusion must be that the banks spent much of it abroad, pushing up the prices of assets in emerging markets (much to the chagrin of those countries) but having little effect at home.

    The conclusion that I come to is that next time we need QE (if there is such a time), we would do better to drop money from helicopters than trust the banks. What is John Redwood’s perception of what happened?

    Reply I offered an alternative to QE at the time

  38. libertarian
    February 15, 2019

    Dear Rien Hans Andy Tabulazero Margaret Howard etc

    From the FT ( yes the FT)
    EU fund managers are up in arms over EU rules which would force them to trade dual-listed shares on uncompetitive EU exchanges after Brexit if the Commission refuse to give them access to London after Brexit. The German Investment Funds Association said that “without equivalence granted to UK trading venues, we see the real possibility of EU27 fund managers locating operations in the future in the UK”.

    As I repeatedly told you

    London’s pull as the financial capital of the world is just too strong, whether the EU likes it or not…

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