One of the principal misunderstandings of the Treasury is embodied in their comment in the Spring Statement that “The Bank of England is responsible for controlling inflation”. It is a very worrying mistake. The public thinks the government is in overall charge of the economy including the need to control inflation. The main policy the Bank has pursued in recent years which has triggered the inflation is the policy of printing loads of pounds and buying up government debt with them to keep the interest rates very low. This policy has to be approved by the Chancellor of the Exchequer himself on advice from Treasury officials. The Treasury is part of the wider government which controls around 40% of the economy through public spending. Government gets to set the prices, charges and taxes to pay for most healthcare, education, policing, defence and a range of other services. How it does this will have a direct impact on inflation.
The Treasury needs to see the 2% inflation target as a serious requirement binding on itself as well as the Bank. It needs to work in conjunction with the Bank to achieve it. The Treasury should have objected to the scale of quantitative easing being proposed last year when it went on for too long. It was a good response in 2020 to counter some of the damage of lockdown. It now needs to avoid increasing taxes at exactly the point where the Bank is tightening money and where the gas and oil markets are imposing a huge levy on consumers which is akin to a big tax rise. The economy will go from fast and inflationary growth to slowdown as a result of these important changes of direction. There is no need to overdo applying the brakes after a period of speeding.
The Treasury still promotes the idea that the Bank – and the OBR – are independent and that this guarantees good outcomes. As we can see, they are currently allowing or producing a bad outcome on inflation, which is way higher than their forecasts of a year ago. If they are independent and responsible then we should be asking why the big mistakes? It is also a mistake that they are independent. The Bank requires support in the form of a Treasury guarantee of its bloated balance sheet and needs Treasury approval for its main money policy instruments. The OBR works just for the Treasury and clearly has a series of privileged conversations with Treasury officials before Budget leaving scope for each to influence the other as they work on their parallel documents to be published simultaneously.
April 20, 2022
We now see projected growth rates putting us at the bottom of the G7. You keep blaming the Treasury but your MPs have the voting power to knock them back so as with other criticisms please look closer to home.
I see Boris is using the classic shoot the messenger deflection trick accusing the BBC of criticising Rwanda more than Putin. Utter rubbish.
And regards his future, or lack of, depending on how long you want your parties political suicide note to be, I see the project to save him is called Big Dog.
How apt that we get an utter dog’s breakfast of government.
April 20, 2022
Good moring.
I have always believed that those who supposidly manage our economy have a quatet of measures to control inflation and growth. The first being interest rates. The second being the creation of more money. The thrid being taxation. And the fourth government spending.
I find it curious that a so called ‘Conservative’ government can only focus on the first three of these and not seek to address the last. In fact, it is almost as if they do not want to embrace what might be termed ‘Thatcherism’ out of fear. To me it seems that government and the State see the private individual and business as little more than a Cash Cow to be milked for anything they have. With such a mindset how can an economy grow ?
It seems to me that the pips are beginning to squeek, and that is not a good thing.
April 20, 2022
Good morning
Privatise the Treasury. Private the Bank of England. There is no reason why these two political organisations should enjoy such elevated levels of unaccountable influence. They act beyond their remit and they act to shape economic and industrial policy to suit their political allegiances
The Treasury must be exposed for what it is, an EU insider
But, Tory MPs have given up on demanding radical reformations of such bodies as it seems they have regarding every other issue that is now causing unnecessary privations across our democracy, our civil world and our very existence
An an aside. Welby is etc ed
April 20, 2022
The B of E biggest error is having Andrew Bailey as Governor.His track record is poor.
April 20, 2022
At the FCA Bailey gave us all one size fits all personal overdraft rates of circa 39.9%! Where is the fair competition reflecting actual risks in these rates? Effectively personal overdrafts are now banned for sensible borrowers banking insanity from the fool? The man is clearly not rational nor suitable to be a banker of any description. Carney was appalling too and he was at the BoE when the FCA were allowed to introduce this anti-competitive & damaging banking insanity.
April 20, 2022
The last time inflation was this high was the early 1980’s. This means that the majority of those in any office in government today, will not have experienced it nor know it’s effects and it’s solution. We are going to have to relearn why runaway inflation is so bad for society.
Do we have a financially literate manager running the nation ?
April 20, 2022
I think JR means the chancellor has responsibility who controls the inanimate Treasury actions. If JR can highlight the error the chancellor ought to as well and ought to correct the mistaken belief. If not the Chancellor accepts what is written to be correct. The Treasury is a reflection of the chancellor and a representation of the Chancellor and govt.’s policy. As Rees-Mogg once pointed out he did not blame Olly Robins for the Brexit approach Mrs May was in charge and holds responsibility. Same applies here. If Sunak is not happy with the Treasury he is in charge and has the power to change officials, subsidiary departments etc etc. moreover hold to account whoever writes public reports.
Presumably the chief secretary to the Treasury would pick up on these points as well. There are a few other MP appointees controlling activities of the Treasury as well.
April 20, 2022
Mr Sunak, together with the Treasury officials are the people most responsible FOR the inflation we are now experiencing, caused by excessive money printing and negative real interest rates. Do they know how, and have the political will, to reverse their errors? Couple that with a PM who has never seen a spending proposal he didn’t like, I think we have a problem, one which they have never personally experienced in their careers.
April 20, 2022
The printing of money seems to be common to a lot of countries. Those who have researched The Big Reset see this to be deliberate.
Unless this can be changed nationally, it will continue until the economy, along with many others, collapse; at which point the digital banking and digital currency will be introduced. “As the only way to solve things.”
April 20, 2022
Sharon – Who do you think was supplying “the printed money”? Why are we all paying taxes? We have been fooled for decades but nothing can stop what is coming, Nothing.
April 20, 2022
If the response to the mess of 2008 had not been to print money ( and get addicted to the process) then we could not have had the ludicrous furlough payments.
The oh so independent B of E and the govt. should feel the pain of their actions.
As we ordinary folk are obliged to.
April 20, 2022
The Treasury and the BoE are like conjoined twins: separate, but indivisible. They are both responsible for creating the debt, the consequent inflation and the level of taxes which are now being imposed.
This is a socialist Government.
April 20, 2022
It certainly is very socialist but slightly less so than the dire Starmer/SNP alternative. Can we have the only climate realist, libertarian, small government pre-Carrie Boris back please?
April 20, 2022
The govt has the ability to change BOE, the way it reports and so forth or any other body or quango. I thought OBR and ONS were Govt. creations to deflect blame from govt.s and the Treasury. Unnecessary quangos to deceive the public attention away from policy/decision makers. Who appoints the governor?
April 20, 2022
Don’t forget that the BoE doesn’t just have an inflation target, it has a target to support Net Zero too. Raising interest rates fast would support both of these targets by ensuring people with mortgages have less money to spend on energy and everything else. The government are saying that would be a decision which is entirely up to the BoE because it is independent ?
April 20, 2022
Carney was very political, yet his term was extended by the Tory govt.
April 20, 2022
Exactly. Inflation caused by government policies of money printing, the net zero lunacy, the enforced move towards EVs, heatpumps and similar, the extended lockdowns. The insanity of the government in spending 40% of GDP amd largely wasting it on things like worthless degrees, HS2, net zero…
I am no fan of manifesto ratting Boris. He has got many big things very wrong – the extended lockdowns, net zero, vaccinating the young and children, the manifesto ratting and tax levels, HS2, the endless government waste… But then he is surely a rather better leader than Biden, Trump, Macron, Trudeau, Ardern, Scholz, Morrison, May, Cameron, Major, Heath, Blair, Putin, Brown, Starmer, Sunak and all the most likely Tory MP that could possible replace him.
Rather a damning indictment of the quality of political leaders in general alas. But surely better the election winning devil you know? The main think is surely to keep Starmer/SNP/Libdims/Plaid away from power.
April 20, 2022
The treasury could have predicted that the net zero religion and our outsourcing of carbon production to other countries would massively impact supply and demand thus increasing prices.
Short sighted, superficial ostentation.
April 20, 2022
Indeed does not even save CO2 just exports it – not that that is actually needed anyway.
April 20, 2022
Economic and job destroying insanity too.
April 20, 2022
Petrol Getting to work. Me.
Out of a 100 pound fill up using taxed at source wages I pay ÂŁ75 tax (300% of cost price) and the 25% that goes to the garage gets taxed too.
Tax on tax on tax.
I told you Eat Out to Help Out was going to cost.
April 20, 2022
The government is completely responsible for the high rate of inflation, so the answer to how should inflation be controlled, is to have HMG STOP wasting huge amounts of our taxes in every possible way, reduce the tax burden on consumers, and get the country back to a balanced budget.
HOW could a Tory chancellor forget so easily the lessons of the 60’s & 70’s? Perhaps he hasn’t.
If we didn’t know better, it would appear that HMG policies and actions were designed to hurt people, as well as making life ever more difficult and expensive. The events of the last 2 years didn’t just happen! They were caused.
Parliament has failed utterly to keep the government under control or to hold them to account for the worst of the duplicity, or to recognize what it should be doing. It is past time for a new version of democracy that doesn’t treat voters like serfs and idiots.
April 20, 2022
Sir John, Perhaps you would agree there is a relationship between inflation and borrowing levels? The cost of borrowing, as set by the BofE base rate, has been historically low since 2008 and has driven the wrong behaviours in government and consumers. Perhaps a base rate of 2-4% would control spending and inflation in the longer term?
Incidentally 2% inflation means the pound loses half it’s value every 20-ish years. Hardly the mark of a strong economy.
April 20, 2022
PeteB
Agreed, there was deemed to be little or no downside to borrowing vast sums of money, when it was cheap to do so.
Government also forgot to look at history when printing vast sums of money, which in the past has devalued the very money they were printing.
The people are now going to pay for these actions, with raising interest rates and prices, unfortunately for them taxes are rising as well as the very basics of living.
What a mess the Government has got us in !
The biggest problem, all of the other major parties wanted the financial party to continue !
April 20, 2022
Around here they are also taking waste ground that people park on and putting meters on it, with no work being done to the sites.
So people with no off-street parking (because they cannot afford houses that have it) are now having to find another ÂŁ500 a year on top of all the other costs.
April 20, 2022
At the long term trend growth rate of about 2.5% a year:
http://johnredwoodsdiary.com/2022/04/16/why-dont-the-railways-want-our-business/#comment-1313553
the UK economy will grow by 64% over those 20 years, after adjusting for inflation.
That would be real growth of the economy, and surely it would be better to have that 2.5% a year real growth with 2% a year inflation than squeeze growth down for the sake of lower inflation.
April 20, 2022
@ PeteB – Actually every 34 years at 2% you perhaps need a new calculator as (0.98)^(34)=0.503 but we have more like 10% inflation for many people already – so then under six and a half years as (.9)^6.5=0.504.
Divide the inflation or return rate into 70 for a rough doubling or halving time.
April 20, 2022
LL, I was working on 1.02^21 = 1.51, i.e. cost has risen from ÂŁ1.00 to ÂŁ1.50 in that time. Semantics as to whether this is the same as 50% reduction in value which is your version of the calculation. Do agree at current 10% the timescales plummet.
Although, with 10% the BofE and Govt can swiftly and less visibly write down the debt. John Mauldin, US economist, describes this fiscal sleight of hand well. Worth reading his weekly newsletter.
April 20, 2022
The British Establishment, whose historical power and wealth stem from privileged title to real property, and whose interests have always been central to Conservative aims, have consistently benefited from real inflation to protect their position.
By real inflation I mean the erosion of the real value of money, that is, its ability to purchase real property.
If that were in the figures, then it would be plain for us all to see that it has far, far outstripped wage increases for decades now.
April 20, 2022
Yet there has been a huge increase in the numbers of ordinary people who have afforded to become property owners over the previous decades.
Which rather ruins your conspiracy theory about the British Establishment NHL
April 20, 2022
And they will rely on inflation to reduce the impact of soaring government debt repayments.
April 20, 2022
please detail your opinion of ‘Establishment’ – -it may differ from what many of us consider it.
April 20, 2022
I mean the real one, not Farage’s silly fiction. Look it up in wiki, say.
April 20, 2022
Bit of cliché reaction from you NHL
How about actually addressing the question MT posed?
April 20, 2022
MT – If one names the ‘Establishment’ on this site it will not be published, however it starts at the very top.
April 20, 2022
I didn’t ask for names. Classifications of jobs, roles tec.
You might suggest train drivers….
April 21, 2022
The United Kingdom has numerous entrenched groups that are regarded as forming the Establishment. These include the Royal family, the aristocracy – the landed gentry, the armed services, intelligence, diplomacy, the privy council, senior civil servants, the top judiciary, Church of England clergy, bankers, financiers, industrialists, many press and media owners, and other such influential individuals.
However its core still remains those first-mentioned.
It absolutely does NOT include the Labour, trade union, and co-operative movements, mutual societies, nor, increasingly, the sciences, and it generally excludes national manifestations of international organisations and movements.
April 21, 2022
You predicably ignore NHL the very real power and wealth the people in your last paragraph enjoy.
April 22, 2022
Nor does it include parties representing the interests of the UK nations such as the SNP, Plaid Cymru, SDLP, and Sinn Fein.
April 20, 2022
+1 NLH
My own situation.
A young government security guard in London circa 1997 could afford to buy a house and raise a family in it without his wife going to work.
Fast forward to 2022 and not even a young doctor could dream of doing this.
April 20, 2022
London has become an expensive leading world property market.
There are still cheap affordable properties in Cardiff and Nottingham
To name just two examples.
April 21, 2022
Those couple of hundred families who still own about half of the land area of England never had to pay for a single square inch of it, Peter.
April 21, 2022
The greatest growth and distribution of the the property owning class happened post war.
Totally at odds with your Marxist nonsense
April 22, 2022
Yes, Peter – under left-of-centre government.
That’s been stamped on well and truly now though, hasn’t it?
BTL portfolios grow and grow, but not family-owned homes.
April 22, 2022
You started off with a ridiculous conspiracy theory that “the establishment” are trying to restrict ordinary people from being land or home owners.
Yet we have seen the biggest rise in home ownership by owner occupiers since the 1950s in the history of this country.
You have a politically driven dislike of buy to let landlords and no doubt ordinary home owners because you want everyone to have only one choice, a state imposed council house.
It was the Conservatives under Lady Thatcher who encouraged more people to buy their own homes and purchase their council homes something those “left of centre” parties didn’t like at all..
April 20, 2022
I know young people buying properties in London in Ilford, Dartford, Blackheath, near Croydon and other places just not the already exploded areas. Same around the Country, you can buy a home in my town for £85,000 this week, my nephew and niece have both bought homes without parental help in Staffordshire. You can’t just buy as a young person in already established and overly inflated areas but these gradually dip when the area gets too aged.
April 20, 2022
Forward guidance eh?
They all spend too much time virtue signalling with flip charts and empire building.
And they all think they have the power of divination.
And they don’t!
Their hubris ruins lives.
April 20, 2022
E,
you might recall the principles/rules to follow before interest rates rise ,join the euro, ERM etc under Governor carney the rules kept on changing for interest rate rises so it did not happen. Same for chancellors rules etc.
How much did the Tory ERM fiasco cost us? Same for waster Johnson’s covid while he was pissing it up with his wife. Why did no MP ask why his wife was fined if Johnson claim to be at meetings etc applies. Was she invited to the govt. meetings as well? She was in the garden with baby at one of the alleged meetings. Why?
April 20, 2022
+many
Agree with everything you say 100%.
And the one up North seems to have got off errr…Scott free!
April 20, 2022
Excellent post, fully agreed. There seems to be a real lack of ministerial direction. As in other areas – covid lock-down, green gesture policies – the Country’s prospects are being hobbled by erroneous official groupthink.
April 20, 2022
+1
April 20, 2022
An article about inflation that does not mention house prices, the banking system and debt.
For 50 years the price of manufactured goods has gone down in real terms. British firms are unable to compete with cheap imports because of the wages needed in this country to put a roof over your head.
Successive governments – every government for the last 50 years – has stoked house prices. At the first sign of stagnation in the housing market, down go the interest rates. When it is overheating, up they go. Because the equity in their home is the only real money most people can accumulate in their lives, home owners keep voting for politicians who maintain this insanity.
You’d think by now we would have reached the end game. But, no, house prices still defy gravity. Around here we’ve had a 25% increase in the last 2 years – during a pandemic where millions were furloughed and businesses closed.
Funny how people are all upset about paying a few hundred quid more for their gas and electricity but have nothing to say about the twelve grand a year they need to pay to a landlord to rent a modest flat or the 300 grand they would need to buy it.
If the government really wanted to help out they could pass a law forcing all public and private sector rents down by 10%.
April 20, 2022
Freezing tax thresholds when inflation is at 8% is immoral.
Continuing to charge VAT @ 20% on petrol and diesel is bringing in so much additional tax that the fuel duty could be reduced.
Additional tax received from all sources (and the inflating away of debt) mean our government is better off than it planned to be. An immediate remove of VAT of energy would reduce inflation and be “progressive” as it would be of greater advantage to the poorest.
If inflation is running at 8% and public sector pay rises are kept below 5% then we could probably afford to reduce VAT to 17.5% to offset the additional tax that is being collected without effecting the income / expenditure balance.
There is huge potential to collect less tax as a percentage of total activity as a result of this (foreseeable) spike in inflation
April 20, 2022
We can see the Treasury manoeuvre to exercise power without responsibility but it will have to do a lot better to succeed in pinning the blame for the Sunak Slump on the Bank, will it not?
April 20, 2022
The simplest measures that could be taken to reduce inflation, improve the economy and raise living standards at a stroke is to abandon net zero and the insane climate change act then cut the size of government and taxes in half.
Toby Young’s DailySceptic today – “Inconvenient Flatlining of Global Temperatures Airbrushed From History by the Met Office”
April 20, 2022
Madeline Grant today – “We’re trapped in Tony Blair’s university nightmare
The 50 per cent target for higher education has been a disaster. Now the ex-PM wants to raise it further”
People are in large debt + high interest for largely useless degrees of no significant value and are then unable to afford (or even build) homes. The solution is paid on the job skill training with day release or night school. Soft loans for degrees should largely be scrapped for most subject outside Stem, medicine, dentistry. Certainly people with less than say three Cs at A level should not be offered them. They should resit & understand their A levels first or get a job.
April 20, 2022
Business could change this at a stroke by changing there requirements for jobs.
Unfortunately HR is too busy covering its bottom by demanding degrees for jobs and then spouting diversity and equality as their aim.
True equality recognises potential not paper.
April 20, 2022
Could not agree more, LL.
April 20, 2022
Lifelogic :
Agreed.
But the problem is that whoever we vote for the civil service always remains in power.
April 20, 2022
+1 and nearly all private school, left wing art graduates it seems!
April 20, 2022
As I have said on here many times the BoE only has a 2% inflation target and has effectively only interest rates as a blunt tool to achieve this. However the Treasury shoots itself and the Government in the foot when it states that BoE is responsible for inflation control. Whatever the set up etc when you go round your constituency I bet very few complain to you about the Bank not controlling inflation! The buck stops nearer home.
April 20, 2022
“Reservists lined up to stop boat people” (The Sun.)
What does Mr Wallace mean by ‘stop’ ?
Even a one syllable word cannot be trusted from the mouth of a Tory. There are many parts of “stop” that are just not very clear.
Why the lies about Rawanda ? (A reciprocal arrangement by which we have to take Rawanda’s mentally ill refugees. Yet another Tory con trick.)
Why can’t the 80 seat Tory Government just do what it was elected to do ?
April 20, 2022
Why can’t they do what they were elected to do ? Good question. It is a puzzle. It is not even because they want to get re-elected because they go out of their way to implement policies – particularly economic ones – designed to appeal to people who will never vote for them anyway.
On Rwanda – is there anyone who thinks even a single migrant will be sent to Rwanda ? The legal and House of Lords challenges will take years to overcome.
April 20, 2022
It was under a Tory Government that bearded men ended up sitting next to our children in schools.
Partygate is just the latest in a long series of lies.
First they wanted to wait “The official investigation” then to wait “The police investigation” now that the fines are here with more to come it’s “Time to move on.”
Um. No. Not this time.
April 20, 2022
The pandering to those who will never vote for them puzzles me no end.
April 20, 2022
Reciprocal arrangement: I noticed that too although indications are it will be fairly small in number but who knows & what the demand will be on our mental health or other services. The MoD (since 15/4) seems to be now issuing daily updates of Channel arrivals, although the word ‘detected’ seems to be used on the website, with 263 yesterday / 7 boats. Between 11 April and yesterday 19 April, based on recent official figures & figures published elsewhere there seems to be well in excess of 2100 arrivals during that period. The Gov.UK website is as below.
https://www.gov.uk/government/statistical-data-sets/migrants-detected-crossing-the-english-channel-in-small-boats
April 20, 2022
They need to be stopped and loaded into comfort of UK special ferries !
April 20, 2022
These are still not normal times and I don’t agree that the Treasury and Bank should necessarily stick to the normal 2% CPI inflation target. Outside the EU and the euro the government has complete flexibility to decide that our national interests would be better served by temporarily allowing higher inflation, rather than by in effect forcing the Bank to raise interest rates and thereby slow the post-pandemic recovery of the economy.
I would also suggest that the government and Parliament should look again at how the UK’s inflation target is defined; Gordon Brown ordered the change from our own RPI-X to the EU’s CPI to harmonise with the EU and prepare for the abolition of our national currency and its replacement by the EU’s currency, but that is no longer on the agenda for anybody other than a small minority of eurofanatics.
April 20, 2022
My major gripe with this government is they have not changed the things that needed correcting after years of socialist and EU rule.
When Boris got a big majority and took over from the feeble Cameron and May governments I was hopeful that many Conservative (sensible) policies would ensue.
Instead, we have an unholy mix of New Labour, EU and Green policies that are ruining the country. I don’t think Boris should resign over “partygate”, but his days are numbered and the Tories must prepare for a new leader and consign its Green policies in particular to the bin (not the recycling centre!).
April 21, 2022
well said – however I disagree and insist Johnson should resign.
April 20, 2022
But when inflation goes out of control it’s convenient to have sometimes to blame. Why does anyone think that politicians made the move in the first place?
The policy of hitting fossil fuel investment in the UK and US while increasing aid and solar and paying obscene subsidies, while picking fights with the main supplier of cheap has has caused shortage just when China was going for its dash for gas. As a result, inflation in energy is 400% and it’s all the fault of politicians acting without electoral support.
Johnson needs to go while there is an opportunity.
April 20, 2022
Wind and solar. Sorry I’m on an Amazon.
April 20, 2022
This kind of sensible management of the economy by the BoE and government would have been very beneficial two years ago and since, but now it may be too late. Government policies actually pursued have pushed up the cost of living beyond the point where talking about a 2% limit is of any value. A more realistic target for the medium term would be at least to try to stop inflation getting into double figures, and even that would require a massive reduction in global tension and all the resulting supply problems. For Johnson to be contributing to them by pouring lethal weapons into a war zone for the foreseeable future, as he has promised to do, is just insane. When we’re in a hole, we stop digging, surely.
April 20, 2022
With so many organisations involved passing the buck is a default position.
April 20, 2022
Good morning Sir,
What we, the public need is honesty and above all, someone who knows what they are doing. One does not expect the blacksmith to drive the team of horses.
But one also must be honest, Ik ow Iam repeating myself but i feel that is what is missing most.
April 20, 2022
Off topic, to my great surprise CityAM has published a very sensible article about immigration:
https://www.cityam.com/salvage-rational-though-refugees-immigration-migrants-rwanda-patel/
“It’s time to salvage rational thought when we look at immigration plans for refugees”
However there is the problem that many of the more vocal advocates of unlimited and uncontrolled mass immigration are not driven by rational thought as much as by hatred for the indigenous population.
April 20, 2022
There seems to be a persistent confusion, in wrongly attributing to those who merely point out that applicants to the UK for asylum must be treated according to the law, advocacy of “uncontrolled and unlimited immigration”.
I don’t know anyone at all who supports such a thing.
April 22, 2022
You must have a narrow circle of acquaintance.
April 22, 2022
You are personally acquainted with people who advocate uncontrolled and unlimited immigration?
Really?
I mean, like, really???
April 21, 2022
Today Boris Johnson is in India encouraging more immigration into the UK:
https://www.thetimes.co.uk/article/boris-johnson-hints-easier-visas-india-trade-deal-8wpkk0qp8
“Boris Johnson hints at easier visas amid hopes of India trade deal”
I do not agree that trade and immigration should be linked in this way, and perhaps somebody could remind him that it was the EU’s insistence that its “four freedoms” are inseparable which made it impossible for the UK to remain in the EU Single Market. And perhaps somebody could also point out to him that although the Indian economy is large the projected benefit to the UK of any trade deal with India is small.
Page 39 here:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1046839/uk-india-free-trade-agreement-the-uks-strategic-approach.pdf
“An FTA with India could provide a substantial boost to UK GDP, trade and wages.
DIT modelling suggests that an FTA could boost UK GDP by around ÂŁ3.3 billion in 2035, up to around ÂŁ6.2 billion in 2035 (in 2019 prices) depending on the depth of the negotiated outcome.
This is equivalent to an increase in UK GDP of between 0.12% and 0.22% in the long run.”
April 20, 2022
Irrespective of who is responsible for what, it is ridiculous, and possibly courting disaster, for interest rates to be at 0.75% when inflation is nudging 8%.
April 20, 2022
Britain is forecast to be lagging behind last in G7 next year as Sunak taxes bite growth as SJR warned they will.
April 20, 2022
Indeed bloated, wasteful, largely incompetent government, vast over taxation & over complex taxation, vast over regulation & misguided regulation, a deliberately devalued currency and large inflation and then the insanity of expensive intermittent energy and net zero on top. This exporting jobs and whole industries and making others struggle to compete amd freezing OAPs. Plus an NHS with vast waiting lists that fails millions and yet Boris & Sunak still expects some growth?
April 20, 2022
I guess it would be the right time for Sir John to produce his forecasts for the second half of 2022 and 2023.
April 20, 2022
Why is that everybody and his dog can see that Sunak’s action will depress the economy, but the government cannot? It is deliberate, to herd us back under EU control, and I fear it will be EU control …. without EU membership. They (the PTB) won’t allow the electorate a choice, ever again!
April 20, 2022
UK ret – Do you think the agenda/policies of G7 are in the people’s interest?
April 20, 2022
The civil service and allied public employers are leading us to a disaster.
They continually increase in size and scope with never any cuts in spending and with decreasing efficiency. This leads to an increasing taxation burden on private businesses and a shortage of available workers.
They promote mass immigration leading to a collapse of housing, healthcare, schooling and infrastructure with increasing pressure on social cohesion because we’re generating separate communities who do not believe in democracy, equality and tolerance.
They have designed Net Zero to ensure we have high electricity prices with rolling blackouts, sub-optimal electrical products (evs and heat pumps), industry forced to leave and re-wilding to increase our dependence on imported food.
Of course we’re going to experience inflation and severe depression.
April 20, 2022
What government pressure can be put on Saudi Arabia to pump more oil in order to squeeze Pootin in Ukraine?
April 20, 2022
High oil costs suit them plus, our government wanting to reopen the Iranian nuclear deal has damaged relations.
April 20, 2022
What this country and the world needs is currency that is beyond the control of government. That would prevent uncontrolled growth of government power, stop endless wars and make currency a store of value not a means to bribe the electorate and extract wealth from them at the same time.
April 21, 2022
Bitcoin!
April 22, 2022
China has simply banned it, like other countries.
April 20, 2022
The BoE may theoretically have control of inflation, but when their biggest customer is a government they cannot control they have little chance of achieving it. As a generalisation, government spending is budgeted by incompetents wherever you care to look. Consider HS2, Defence, and IT just for starters. Politicians and their complicit but unidentifiable civil servants are way out of their depth.
Consider the following basic government failures.
1. Supply never reaching demand in the housing market, hence price inflation.
2.Failing to use our own gas coal and oil to isolate the UK consumer from world markets. This is directly responsible for the current fuel cost crisis and a major political reset on the near horizon.
3.Fuel cost directly impact the prices of many other items which will inflate by at least 10% by the autumn.
This is someone who knows nowt about economics beyond the glaringly obvious, and for sure I would add that it is not all down to the BoE because they cannot control government.
April 20, 2022
Interesting piece. There’s a lot of smoke and mirrors in what the Treasury does, it needs a minister with better understanding of economics than Sunak has to manage it.
April 20, 2022
Instead of tackling the problem of inflation and the cost of living by taking serious and effective measures, the government is just going to tinker at the edges and use this crisis to make things worse in other areas. For instance, it is now virtually certain that the government will once again – for the FOURTH TIME – delay the checks on EU imports which should have been introduced two year ago!! We are told that this is being done to keep down the price of EU food – but this is the OPPOSITE of what we want!! This will favour EU producers at the expense of their UK counterparts. This is the behaviour of Britain-hating TRAITORS.
Nobody needs to buy French cheese rather than cheese made in the UK, or Spanish carrots, or German sausages, or any other EU food. We want Britain to become more self-sufficient in food, and that means encouraging people (and supermarkets) to BUY BRITISH – and making EU imports more expensive than their British equivalents is part of this. Those who choose to buy EU food are not the Red Wall Tories, but the snooty, Remainer, metropolitan Labour ones, and they can well afford to pay a few pence more more their treacherous imported delicacies. We should start adopting policies that help BRITISH PRODUCERS, not those of our EU ENEMIES. The fact that JRM is said to be in favour of helping EU food producers just shows how he has betrayed the Brexit philosophy. The man is contemptible.
April 20, 2022
Off topic, some news from Moldova, which like the UK is not in the EU or the EEA:
https://www.moldpres.md/en/news/2022/04/20/22003019
“Customs Service urges exporters to apply mechanisms to facilitate international trade”
“According to the Customs Service, holding the certificate of Approved Exporter entitles the exporter to confirm the preferential origin of the exported goods by completing the declarations of origin on a commercial document, regardless of the value of the goods. The Approved Exporter Certificate shall be issued by the Customs Service free of charge and for an unlimited period.”
April 20, 2022
Also off topic, I’m getting sick to death of the government not bothering to explain its ETA plan so that all kinds of misconceptions can easily be propagated to stir up anti-British and anti-Brexit sentiments:
https://www.bbc.co.uk/news/uk-northern-ireland-61162338
“Brexit: Cross-border permits will damage industry, say NI Tourism”
“She said there were also concerns about how it would impact cross-border workers like coach drivers.
“A not-insignificant amount of these are non-Irish EU nationals, and under these proposals they too would need a visa for every crossing. How can we justify this?”
Well, how about this for a start:
“… it would likely cost about ÂŁ10, would be valid for more than a year and would cover multiple trips … ”
I wonder whether the 127% pro-EU committee chairman:
https://johnredwoodsdiary.com/2021/03/11/the-uk-single-market/#comment-1215238
bothered to clarify this for those who were concerned.
April 20, 2022
Lots of chatter on the left about the energy companies charging us a social levy to subsidise some of their customers. I can see this spreading into every area of commerce. Who is going to decide who gets the subsidy and who pays for it? Where is the arbitrary line going to be drawn?
April 20, 2022
Socialism – From each according to their abilty, to those according to their need.
April 20, 2022
I’m thinking of stopping my direct debit to the (French) electricity supplier that was foisted upon me two years ago. Why should I give them money in the summer when I use hardly any electricity? No doubt the rates for a non-direct debit supply will be even higher, but if we all did it?
April 20, 2022
Just a reminder that Parliament is sovereign in the UK, Rose.
So it could leave the companies to do as they like, or make rules for them.
April 21, 2022
NLH: You may have a higher opinion of Parliament than I do!
April 20, 2022
Sadly JR, your government has no capacity to control inflation; because, it has no idea how a fiat currency economy can be operated to do such. It certainly doesn’t want the little people to ever discover how they are being screwed. I will reference the following knowing it will not get past moderation on this site, but it will on others. https://neweconomicperspectives.org/2012/01/mmp-blog-31-functional-finance-monetary.html
April 20, 2022
I would suggest that the phrase in the opening paragraphs that posits the unemployed will always be prepared to work for money throws this theory into disarray Acorn
We have a client state which devours benefits and does not need to work for money therefore however much fiat money is created the government can not achieve full employment and can not satisfy demand without importing more labour and others who will devour benefits.
Money creation will then lead to inflation as more money chases relatively fewer supplies
April 20, 2022
Lucky you, unlike me you made it past moderation and you have a link. But unlike some here you have the advantage of being both on topic and interesting.
April 20, 2022
Yet you think increasing money supply and state debt has little or no effect acorn
April 20, 2022
It seems like the BoE’s control of base rate and the existence of the OBR may be unnecessary. So cancel them. If Government makes bad decisions it should reverse them if possible.
April 20, 2022
I understand 2100 illegal immigrants have arrived on our shores to be fed, watered and provided with accommodation over the last week, does anyone know if they have been put on a flight to Rwanda yet? Not sure I agree with this strategy anyway as I believe stopping and returning them safely to France every time they embarked on their journey to the UK would be cheaper for everyone. Eventually they would stop entering France as they know they would be returned as soon as they left for the UK. Why does the Government not see this? I am sooooo fed up with what is happening!
April 22, 2022
Well that would require French cooperation which will not happen. The Rwanda plan can obviously work and will deter nearly all the crossings from France. Providing the lefty lawyers, civil servants, courts and judges are prevented from killing the plan. But I suspect the courts will manage to kill the plan.
Boris says he did not criticise the BBC or Archbishop Welby. But why on earth not? They are both appalling and need criticism. Welby seems to think he has direct communication with god on political matters. If he has then God is clearly wrong, he has a crossed line or just the wrong type of God.
April 21, 2022
Also, it’s completely unacceptable for some British companies to be trading still in Russia from one degree to another. It’s not a question of Blood Money (that’s their look out) but that they’re actually helping to prolong the war which puts our economy in the medium to long-term in greater instability.
The sooner and more effectively we squeeze Pootin’s finances / economy, the sooner / better chance we have of ending this war and returning to more international economic stability.