Inflation and debts

The recentĀ  decision by the Bank to raise interest rates by another 0.5% to 2.25% has done enough to slow the inflation the Bank had allowed to build over the last year. According to the Bankā€™s own forecasts inflation will now subside to the 2% target over the next two years as the economy slows and as world commodity prices and energy prices come under control, whether from market forces or government intervention. The danger is the Bank will do too much by way of rate rises, withdrawing too much money and credit from the system, creating a nasty recession. Their own estimates already show the UK in recession as we enter next year on their current policy.

Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā  The Bank of England carried on creating money and buying up bonds for too long and on too vast a scale last year. An inflation was well set Ā by early 2022 when the Russian invasion of Ukraine disrupted energy markets and added to the inflationary pressures with a surge in gas and electricity prices. Whilst this energy price shock had as its first impact a boost to inflation, if left untreated it would also bring about a recession. Large sums are removed from people and companies to pay the sky high bills, with much of that money sent abroad to pay foreign suppliers and pay the elevated energy supply tax bills of foreign governments. None of this money remains in the UK to pay wages and buy goods. Ā It created a nasty double problem for both the Bank and the government.

Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā  The Bank was right to correct its past monetary excesses. It had Ā bought too many bonds to keep the longer term interest rates too low for too long. In the process it allowed a bubble in the money supply to develop. At first the excess money simply created an inflation in the prices of the bonds the Bank bought and in shares and properties which the sellers of those bonds bought with the proceeds. It then started to seep out into the world of consumption, bidding up the costs and prices of a wider range of goods and services. This is now being adjusted sharply by a major change of money policy and by the inflation robber coming in the night to depress the real incomes of all energy buyers.

Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā  The Bank needs to be careful from here. The government is providing considerable assistance to people and companies through the energy support measures Ā and through reversing or cancelling inherited and future Ā tax increases. These are needed and are not in themselves inflationary if borrowed through issuing new debt to savers. The much tighter money will slow the economy, and as the Fed brakes Ā the US economy violently so there will be reduced price pressures from global commodity prices, from international transport rates and from internationally traded goods. Nor need we worry unduly about the level of UK debt. At an official 96% of our national income it is way below Japan, and Ā below Italy, the USA and various other advanced countries. As a substantial proportion of the debt is owned by the Bank of England and all is repayable in local currency the state should be able to roll over the bonds as they fall due without too much problem. The official figures and commentary spreads alarm about the current high level of debt interest. This is a distortion of the position. The cash sums the state has to pay to cover the interest bill on the debt are at quite modest levels because so much of the debt has been financed at the very low interest rates or recent years. Of the Ā£8.2bn of stated interest in August only Ā£3.5bn were cash payments. The rest is the increased eventual repayment cost of the indexed debt, which will simply be refinanced Ā when it falls due.

Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā  Of course I would like borrowing to fall and the budget to move closer to balance. The truth is there are no options to let that happen easily. Were the government to refuse to offset some of the energy damage we would have a deeper and longer recession. That would mean much less revenue and more costs from higher levels of benefit expenditure to compensate people for loss of some or all of their work incomes. If the government seeks to stop the recession then that entails in the first instance borrowing more to allow the tax cuts and subsidies to sustain more activity. The second round effects should mean the state borrows less if it stops a recession now than if it opted forĀ  austerity and a longer recession. The government needs to get more people off benefit into work, find ways of working smarter in crucial public services, and cutting out things the state doesĀ  not need to do in order to control public spending . Getting a better grip on numbers ofĀ  illegal and low paid economic migrants would also make a welcome saving.

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277 Comments

  1. Peter Wood
    September 26, 2022

    Good Morning,

    ”The recent decision by the Bank to raise interest rates by another 0.5% to 2.25% has done enough to slow the inflation”

    REALLY? Core inflation is 6.3% and we’re running a Ā£40-50 Billion trade deficit. I don’t think 2.25% is going to make the slightest difference. We need to get interest rates up near to core inflation.

    We ARE seeing a run on Ā£, does the government/Bank want that to continue?
    Sir J, you lived through the sterling crisis years, with interest rates at 15%, surely you can see we are in a WORSE condition now?

    1. Sir Joe Soap
      September 26, 2022

      This idea that the Pound can fall without consequence as implied by this morning’s post is ridiculous. Anything imported will obviously be more expensive, and cause core inflation to rise with all the knock on effects of pay demands. We clearly need to flex the interest rate up to 6-7% if only temporarily. There is nothing wrong with this in tandem with tax cuts which will help folk with the extra mortgage interest.

      1. Mark B
        September 26, 2022

        The other thing they do not realise is, all the people that they will be importing will consume, water, gas, electricity, housing stock, transport, NHS and other services. None of which are being expanded enough to support them. All so a few more large business can save on training.

        Privatising the profits and socialising the debts.

        1. Hope
          September 26, 2022

          +1

      2. Nigl
        September 26, 2022

        ā€˜Imports will be more expensive causing inflation to increaseā€™

        Not true, it will/may reduce consumption, encourage a switch to home products. Exports will be cheaper, so more competitive and foreign earnings repatriated have a higher value.

        Germany has benefitted for decades being part of a ā€˜cheapā€™ euro rather than a strengthening DMark

        1. Ian B
          September 27, 2022

          @Nigl +1

    2. Peter
      September 26, 2022

      It is all about getting re-elected now, winning back support lost by May and then Johnson.

      Keir Starmer’s latest words on Net Zero and green issues will be very helpful indeed for Conservative prospects. Labour gain green party voters and some Lib Dems but lose a huge number concerned about cost of living increases.

      The blame game continues as others point out. Delivery will be the key issue. Promises of what could be done have little credibility after 12 years. This cabinet agreed to the damaging policies of Johnson and Sunak after all.

      Still no progress on Northern Ireland but kicking it further into the long grass is now being spun as ‘helpful’.

      1. Mark B
        September 26, 2022

        Exactly.

      2. ignoramus
        September 26, 2022

        Not sure.

        Polls have Labour way ahead. I will probably vote Labour myself for the first time since Blair.

        I genuinely don’t understand what’s going on with the government. In one week they have managed to lose the confidence of the people, of business and the markets. Not only that, they are borrowing eye-watering sums to give to the rich – while it is those same rich people who will ultimately have to pay back all the borrowing and then some. It benefits nobody and I say this as one of those people who is meant to benefit.

        1. John Hatfield
          September 26, 2022

          Oh dear ignoramus, you really have got hold of the wrong end of the stick!

        2. believe me
          September 26, 2022

          I have absolutely no idea why Labour or anyone else would want to be in government to clean up the mess that this tory government is going to leave behind? – i mean what would there be to gain – whoever follows is going to be tainted and get the blame as well.

      3. Christine
        September 26, 2022

        I very much doubt that increasing immigration is a vote winner, nor is keeping net-zero policies or joining Macron’s new EU group for future new members. Politicians are completely out of touch with the thinking of the majority of British people. Truss is just continuing with the WEF ideals. What next, an attack on our farmers like in the Netherlands and Canada? Removing our cars? Leaving the masses cold and hungry? I won’t be voting Conservative any time soon. Begone the lot of them, let’s take back control.

        1. Mike Wilson
          September 26, 2022

          nor is keeping net-zero policies

          Could you be more wrong? Like it or not, most people have fallen for ā€˜net zeroā€™ hook, line and sinker. Any political party that says a word against it is toast.

          1. Mickey Taking
            September 26, 2022

            there might be an epiphany after this winter, hungry, cold, unemployed or even having the ‘flu.

      4. Hope
        September 26, 2022

        800,000 increase in public sector employment over a decade under Tory rule and 6% increase in population, increase in public service delivery?

        I wonder how many of these work from home aka child minding, gardening etc.

        Tory policy= Growth equals mass immigration!

      5. Mark
        September 26, 2022

        The manner in which the pound was ambushed in Tokyo hours after a weekend suggested a pre-planned attack of the kind we saw when the pound last touched $1.03 in March 1985 as I witnessed on the Reuters FXFX screen, or in the fiasco surrounding the ERM. Some of the same hedge funds are likely involved.

        The only tangible reasons why the pound should suddenly be worth much less this side of the weekend than before it are
        the prospect of a Labour government implementing an economically suicidal dash for net zero as advertised at the Labour Party Conference or the Conservatives persisting with the Boris plan as a response;
        a perception that the UK would be a primary target of any escalation by Putin to nuclear war, based on the war of words and because it is far enough away to reduce radiation hazard for Russia;
        a malign attack by interests who see their future threatened by a return to Conservative values.

        1. IanT
          September 26, 2022

          My understanding Mark, is that Sterling trades in mcu hlower volumes than some Asian currencies (for instance) – so presumably it is also much easier for hedges to short it and try to make some quick money. The Fed is pushing rates up very quickly and frankly, i thought that the BoE should have done more recently (and of course they have been very slow to responde generally).

          I do agree that the optics of Bankers Bonuses etc are not great – but then again, if you pay a Banker Ā£1M and the goverment gets an immediate Ā£400k. When he spends the remaining Ā£600k (on fast cars and champagne in expensive restaurants?) then they take another Ā£120k in VAT. This probably explains why 1% of UK Income tax payers pay about 30% of all income tax. This might not cheer the check-out lady at my local supermarket very – but if she can actually get that NHS appointment, then it may well have been paid for by one of those greedy Bankers

    3. Pauline
      September 26, 2022

      Kwartengā€™s policies are those advicated by J Redwood. The markets have spoken. The UK is friendless. Time for an election

      Reply Yes, today they spoke. Sterling up 5.8% against dollar. FTSE doing better than Dax or Nasdaq. Election due end 2024

      1. NBill Brown
        September 26, 2022

        Yes but the fact is pound is much weaker today to all major currencies than a year ago. Incl dollars, Euro and Swiss Franc

        1. IanT
          September 26, 2022

          Well I hope you don’t take that view if investing in the stock market Bill – because prices are very volatile at the moment, be that equities or currencies – prices can go down but they can also go up. No-one can exactly time markets – although some are clearly trying to short Sterling at the moment. Let’s hope they get their fingers burned.

        2. John Hatfield
          September 26, 2022

          Blame Boris the Wrecker. Thankfully now gone leaving others to pick up the pieces.

          1. Mickey Taking
            September 26, 2022

            if the bullshit has been cleaned up and the root cause removed, I for one will be much happier.

        3. Peter2
          September 26, 2022

          Euro v Dollar at a 20 year low today bill.

          1. NBill Brown
            September 26, 2022

            And so what

          2. Peter2
            September 26, 2022

            The what bill, is that you claim the fall in the Pound is due to the recent budget.
            Yet the Euro is falling as is the Yen
            Why is that?

          3. mancunius
            September 27, 2022

            Exactly, Peter, and the remainers are pretending ‘That’s different’. (Hence Bill’s ‘So what’. :-)) When the falling euro reached parity with the dollar two months ago, I don’t recall French or German government MPs kicking up a fuss and calling the euro-economy ‘a gamble’.
            And yet a bigger gamble than the dysfunctional sleight-of-hand euro and its ever more divergent compromise economy it would be difficult to imagine.

  2. DOM
    September 26, 2022

    The solution is simple but the Tories will appease and pander until this nation is bankrupt. This party’s been taking us down this Socialist road to ruin since they brought MT to her knees

    You cannot circumvent the fundamental laws of finance no matter what party politicians say.

    Truss is just another leader who is using debt to finance party political vested interest and this form of politics will bankrupt this nation

    Public spending rules must equate with the fundamental laws of finance not with the laws of politics

    1. Sir Joe Soap
      September 26, 2022

      viz far higher interest rates. It’s the right thing to do. It will cool the ridiculous housing market and prices and soak back the tax reductions rather than funnelling it into the market for goods increasing inflation.

      1. Ian Wragg
        September 26, 2022

        The Bank of England has no idea what inflation will be in 2 years time.
        Interest rates should be at least 5%. It’s time we prudent ones stopped financing the reckless policies of government and lazy households.
        Sir kneelalot is going to quadruple windmills creating millions of jobs in China. That should provide 5% of generation on a cold winters night.

        1. Original Richard
          September 26, 2022

          IW :

          Yes, but not just wind turbines, also solar panels. 85% of wind turbines and 100% of solar panels are supplied by China and China controls 60% of the raw materials for batteries, motors and generators.

          And these renewables are described by our politicians as providing energy security!

      2. Dave Andrews
        September 26, 2022

        You wouldn’t say that if you had a hefty mortgage, on top of rocketing energy bills.

        1. Sir Joe Soap
          September 26, 2022

          If borrowers are protected in perpetuity, lenders won’t lend. Precisely what is happening to the UK government as the largest motgagee.

        2. Merrie Qubus
          September 26, 2022

          When people take out a mortgage, they should be cognisant of the fact that the interest rate may well increase.

          1. anon
            September 26, 2022

            They are also cognizant that they need somewhere to live, renting every 6 months is not sensible long term for some. They will not be given a hotel and spending money or indeed any help unless they are broke anyway . This is why builder/ freeholders can sell leaseholds. Its not because its demanded by the buyers.

            I really hope another party makes moves on this as it will impact a lot of voters. Policy action needed as promises no longer count for much.

        3. IanT
          September 26, 2022

          I used to have a hefty mortgage Dave. Frankly the problem is that (all) Western Governments have kept interest rates artifically low, whilst printing far too much money. Historically (pre-2000’ish) interest rates in the UK averaged about 5%. Younger people have come to assume that rates can never go very high and that property values can never fall very far – understandable but false.
          I’m sorry but I still remember very high interest rates and the resultant negative equity that ensued. Not comforting for you to hear I know – but the result of 20 years of fiscal manipulation & mismanagement.

        4. Sir Joe Soap
          September 26, 2022

          I had an 18% mortgage rate on a Ā£20K mortgage so Ā£3.6K interest a year when earning Ā£7K gross back in the day (1982). Deposit raised on Access Card. Let a room out.

        5. mancunius
          September 27, 2022

          Dave, with all respect, a ‘hefty’ mortgage is a bet on interest rates not rising and income flowing in steadily. Inflation is baked in as that combination is literally impossible, even with all the fake GDP growth provided by immigration to keep the numbers looking good.
          Think of the provident savers and investors who are screwed by that policy, one that central banks and western governments have conspired to perpetuate. It’s unreal. It’s lasted 13 years – it couldn’t last for ever.

    2. turboterrier
      September 26, 2022

      DOM
      Your comments involving the fundamental laws of finance are, as with every sector of life inescapable as they form the very base of a solid foundation so very true and ignored with peril.

  3. Pat
    September 26, 2022

    Good morning

    In contrast to the economic hysteria gripping the press and by all account many Tory backbenchers regarding the recent government mini budget, this column provides much needed calm and rational analysis.

    Thank you, it is much appreciated.

    1. rose
      September 26, 2022

      Yes, Pat, I agree wholeheartedly.

      Since Gordon Brown interfered with the Bank of England, the BBC and co have regarded it as yet another sacred left wing quango which must never be scrutinised.

    2. Ian B
      September 26, 2022

      @Pat +1

    3. Mickey Taking
      September 26, 2022

      calm? rational? do you read it all?

    4. mancunius
      September 27, 2022

      Hear hear!

  4. Stephen Reay
    September 26, 2022

    If the pound stops too low for too long this could keep inflation high , I don’t think it will , and should return to some sort of normally shortly.

    1. Lifelogic
      September 26, 2022

      I too think the market has over reacted. But the government urgently needs to get on with cutting out the vast government waste, starting the bonfire of red tape, abandoning net zero and Gummerā€™s deluded Committee for Climate Change, starting fracking, mining, drilling, nuclear getting the work benefit incentives right, building more houses, ditch the circa 75% of worthless degree and let them get jobs and go to night school or day release. We need a state sector that spends no more that about 50% of current levels.

      1. Cuibono
        September 26, 2022

        It struck me that ā€œthe marketsā€ are doing a woke tantrum thing ā€¦like that big payment provider has done recently to the subscriptions of any even slightly Right organisation.
        Truss has been trumpeted (we should be so lucky) as a return to conservative values.
        And the ā€œmarketsā€ are punishing the Ā£ and the voters.
        The ā€œmarketsā€ need not worry. No doubt she will ā€œhaveā€ to drop her ā€œconservativeā€ policies in order to ā€œsaveā€ the economy.
        You knowā€¦just like Brexit and Project Fear.
        And our leader IS an expert nudger.

        1. Lifelogic
          September 26, 2022

          If Truss gives us a real return to conservative values I too will be rather amazed. She has not even cancelled net zero, HS2, retains Alok Sharma and is backtracking on Northern Ireland too. Still a tiny step in the right direction and she is better than a Labour/SNP/Libdim Gov.

          1. Cuibono
            September 26, 2022

            +1

        2. Dan R
          October 3, 2022

          Looks like your prediction is coming sooner than later. There is a lot of social media FX traders who are left wing youngsters with no clue. I just wonder how many exactly.

      2. Mark B
        September 26, 2022

        Very much agreed.

      3. Hope
        September 26, 2022

        LL,
        No, to building more houses. Stop mass immigration. Tories imported 1.2 million last year and all have a right to family to being here! Same for illegals!

        Help and support farmers to farm to produce food, help promised from Brexit and getting out of cap. EU quotas and rewilding Crap should go, get back territorial waters for fishing.

        Remainer Truss has kicked the can or abandoned N.Ireland protocol thereby giving EU control over N.Ireland and allowing EU control over our country!

        Truss has cut national income but continues spending! What about cuts to public sector value for money etc.

      4. turboterrier
        September 26, 2022

        Lifelogic
        There you are again highlighting all the waste of government civil and public services. Until there is a seismic eruption and all the interested parties become obsessed bordering on paranoia about actually addressing it then nothing will change, it’s not their money.

      5. Jim Whitehead
        September 26, 2022

        LL, +1, precisely, and concisely, thank you.

      6. Ian B
        September 26, 2022

        @Lifelogic +1 Also the State needs more than a haircut, needs paiing back to the bare bones. With taxpayer money only going to those areas that put ‘the best of the best’ first.

      7. Your comment is awaiting moderation
        September 26, 2022

        “We need a state sector that spends no more that about 50% of current levels.”
        Certainly no more, but way less should be the aspiration.
        How anyone could think that large scale printing of new money wouldn’t lead to inflation boggles the mind.
        If Ā£20 notes rained from the sky then what would they be worth?

      8. Lynn Atkinson
        September 26, 2022

        State sector should spend 10% of the whole, thatā€™s what South Africa did for decades, thatā€™s how a small minority could employ the vast majority – and feed and educate so many!

  5. Nottingham Lad Himself
    September 26, 2022

    This daily buck-passing looks ever more silly. The Tories have been in for twelve years now.

    The budget was a final admission though, of what that party have always been, however phoney their post-war affectations that they shared a goal with other parties of making the country a pleasanter, more civilised place.

    Plenty of their new voters – and they have always been there – never wanted that anyway. They wanted a place where the snarling mob would hold sway.

    Well, the village green preservation societies and Anglican congregations have surely noticed that, and do not want to be associated with the thuggish bar room loudmouth, the speeder-through-residential streets, or the tax-dodging, cash-in-hand, fly-tipping trader.

    1. Peter2
      September 26, 2022

      You need the people you are describing to vote Labour like they used to NHL
      You hilariously forget that fact.

      1. jerry
        September 26, 2022

        @P2; Whilst you hilariously forget (or are ignorant of) the latest polling suggests the Tories have already lost those “red wall” seats, hence why they have made a play for the “Remain” City vote (London and the south east), but will a basically Brexit Tory party really secure those Remain voters when many made good during the Blair era, Labour have finally ditched Corbynism, and are proposing the UK basically become a Greater Switzerland, within the wider European community?

        If some think Brexit is done and dusted think again, if Truss messes up, does not secure a better NIP (or invokes A16), and other now vital RotW trade agreements in time for the next general election, an effective “BRENTRY” [1] might just be around the corner after the next election given a recent speech by Keir Starmer with regards Labour’s future relationship with ‘Europe’, a country doesn’t need to be a member of the EU to be ruled by them!

        [1] British ReENTRY into the EU

        1. Peter2
          September 26, 2022

          You miss my point by a country mile Jerry.
          NHL and many like him despises the very voters Labour need to vote for them to overturn a huge 80 seat majority.
          Labour has become a London centred party that doesn’t like its own traditional supporters.
          PS
          The Conservatives have already lost the Red Wall seats you say.
          Did I miss the general election?

          1. jerry
            September 26, 2022

            @P2; “NHL and many like him despises the very voters Labour need to vote for them to overturn a huge 80 seat majority.”

            Whilst the average person will not “despise” the Tory party for giving then nothing whilst cutting the taxes of their “rich friends”? Remember, perception is what matters, facts & theories about some Laffer curve likely mean little or nothing to the average ‘red wall’ electorate (and many others besides) who voted for Boris and Brexit in 2019, people who are essential to the Tory party in maintaining that 80 seat majority, if they have indeed lost the London and south east Remain vote. It is anyway now less than an 80 seats majority, nor is over-turning ~40 seats unheard off [1], and that’s all it needs, Labour do not need to win a majority, they just need to be the largest party, the LDs, SNP and PC will likely be happy to help do the rest with a Supply & Confidence pacts.

            “The Conservatives have already lost the Red Wall seats you say. Did I miss the general election?”

            You’re off on once again P2… Did you actually fully read my comment, what exactly do you not understand about opinion polls, never mind the definition of the word “suggests”!

            [1] Lab lost 50 seats in 1979, 75 in 1970; Cons lost 51 in 1966, 61 in 1964.

          2. Peter2
            September 26, 2022

            You are making up several red herrings as usual Jerry.
            Go back to original post and start again
            But if you want to write another long rambling essay be my guest.

          3. NBill Brown
            September 26, 2022

            Peter 2

            This is 2 years ago they are lost

          4. Peter2
            September 26, 2022

            What is two years ago billy?
            Who is lost?
            Please explain.

          5. jerry
            September 27, 2022

            @P2; “making up several red herrings as usual”

            Indeed YOU are! Otherwise please do tell us what is factually or historically incorrect in the comment you replied to. Unlike you I do not make assumptions about future election results, even less stick my head in the sand.

          6. jerry
            September 27, 2022

            @NBill Brown; Indeed, they’re toast, like the markets – how much more is it costing the Treasury to finance our national debt since Friday?…

            Labour might make economic policy over a beer & curry, on the back of an envelope; but this PM and her Chancellor give the appearance of having made economic policy on the back of a fag packet, after a night at the win bars, sans any Tapas. šŸ˜„

    2. Lifelogic
      September 26, 2022

      If I could work out what point you are trying to make I could perhaps reply.

      1. Hope
        September 26, 2022

        I am not sure about the village greens sentiment when I see large crowds of Hindus and Muslims fighting Leicester or another nationality of people fighting outside Iranian Embassy!

        A large proportion of illegal boat people being Albanian. How do the authorities know whether they are convicted criminals? Why not travel by accepted routes from Albania? What has happened to these people? Who are involved in county lines drug gangs or south east sex industry?

        Truss wants more by loosening immigration controls. How is her diversity working so afar?

        1. jerry
          September 26, 2022

          @Hope; “How do the authorities know whether they are convicted criminals?”

          Via the UK’s PNC, Europol & Interpol perhaps?…

          But how does anyone know whether those they interact with are convicted criminals or not, it matters not one jot where they come from, down the road or half way around the world, if someone uses a fails name and address (not fake, the name and address might be real…) for all anyone else knows they could have a conviction for murder and be out on licence or whatever, never mind be wanted for such crimes.

          1. Hope
            September 26, 2022

            Drivel again. Released criminals get conditions foreign ones do not.

          2. jerry
            September 26, 2022

            @Hope; Indeed, your comments are “drivel”, more so your unthinking replies when they are also often needlessly obnoxious, but then I guess the truth cuts deep.

            “Released criminals get conditions” you bleat, conditions that are pretty damned useless if the said criminal drop off the radar either here in the UK or flees abroad. I understand Spain used to have quite a problem with British Criminals who had dropped off the UK radar, to the extent that one of their Costa’s gained the unofficial name of ‘Costa del Crime’ and had some quite nasty residents using fails names.

            Funny how @Hope never seems to worry about “foreign ones” when they are British and in someone else’s country…

        2. Diane
          September 27, 2022

          Albanians – Home Office has admitted that asylum seekers will not be fast tracked for deportation back to Albania. Home Office U Turn ( Independent article ) H O lawyers confirmed this in a letter to…. ( a prominent refugee charity ) I wonder if the EU has any intention yet of fast tracking Albania’s accession to their club.

      2. IanT
        September 26, 2022

        Yes, I couldn’t reaaly understand his point either LL.

        I gather NLH doesn’t like the Tories but beyond that he lost me. His reference to snarling mobs and thuggish behaviour just made me think of the Labour Party Conference and (name removed ed) for some reason…

        PS I have never heard ‘God Save the King’ sung with so little enthusiasm, pehaps it would be better to just stick to ‘Keep the Red Flag Flying’ which if Keir Starmer was honest, is much closer to their true beliefs

      3. jerry
        September 26, 2022

        @LL; Pot kettle, the same might be said of your own rambling comments! šŸ™‚

        1. Peter
          September 26, 2022

          jerry,

          LL has certainly increased the volume of his posts.

          He is on about Rachel Reeves ‘A levels today!

          I note an increase in his “so and so said in The Daily Telegraph today” style posts. They are starting to catch up with “PPE” and “…down the drain” posts.

          I can’t be bothered to calculate the percentage of LL posts in today’s total though.

        2. Peter2
          September 26, 2022

          Do you therefore agree with all NHL wrote above Jerry or is this yet another example of your hobby of contrary posting?

      4. Mike Wilson
        September 26, 2022

        I think he is trying to say that traditional Tory voters – characterised as village green lovers and attendees of the local Anglican church – do not want to be associated with the bunch of spivs the Tory party has attracted. Quite where he gets this nonsense I have no idea. My observation is that, in very general terms, people vote for whoever they think will tax them least.

        1. IanT
          September 26, 2022

          “My observation is that, in very general terms, people vote for whoever they think will tax them least.”

          I think there is a great deal of truth in that observation Mike! šŸ™‚

        2. jerry
          September 26, 2022

          @Mike Wilson; “My observation is that, in very general terms, people vote for whoever they think will tax them least.”

          Indeed, but so far the perception seems to be, despite the mobilization of the Tory tabloid press, whilst the Truss govt has cut taxers the only group truly benefiting is that “bunch of spivs”. Reversing the NI increase and bring forward to April 2023 a 1p cut in the basic rate for just about everyone else isn’t going to cut it – hence all the talk about future tax cuts, but now the markets have kicked off…

    3. Michelle
      September 26, 2022

      Not really quite sure what you are on about there!!!
      The village green preservation society? What village greens? There is precious few left thanks to Labour and Conservative mass immigration projects. Many people have fought and died, been crippled mentally and physically for life in order to keep that ‘village green’ and the thought of home, its customs, familiar faces etc sustained many through terrible hardships. Of course such people and ideas are now hated vehemently here by the corporate state and its baying followers.
      You are right about the bar room loud mouth, the cash-in-hand fly tipping trader and the speeder through residential streets. I’ll add to it, the waste of young lives through the allowance of the drug ‘culture’ for multi-culture sake, along with many other ills disconnecting a once cohesive society into one that is lost and sits waiting for the government to wipe their noses.
      I’m not sure if your point is that all this is down to Conservatives, letting Labour off the hook when in fact they are to blame for much of the snarling mob, indeed many of the so called snarling mob have Labour stamped right through them like a stick of Brighton rock, especially the politically motivated Union bully boys who love nothing more than stirring up a snarling mob for their own ends (nice pay packets they have too I believe)

      In case you haven’t noticed there’s nowt to choose between either of them.

    4. Mickey Taking
      September 26, 2022

      Martin ‘Plenty of their new voters ā€“ and they have always been there ā€“ never wanted that anyway. They wanted a place where the snarling mob would hold sway.’
      Well it is a good job I am used to laughing. Oh! my aching sides. You are trying to reach a new low in sheer nonsense.

    5. a-tracy
      September 26, 2022

      NLH – I explained to people today at work who were just listening to the headline the rich get a 5% tax reduction [John, your party need to explain the necessity for this, this was Brown’s sting in his last year in office, but why now? What are you hoping these people do with this perk?]; that the Tories, since 2010, have raised the personal allowance considerably, taking more people out of paying tax and national insurance than ever. As I said yesterday, in the first ten years of Labour (1997 to 2007), they only increased the personal allowances by Ā£1800 [Ā£4045-Ā£5225] in ten years, the Tories raised it by Ā£6025 [Ā£6475-12500] in ten years. They have raised the threshold to pay national insurance now by a further Ā£3070 pa NI free allowance.

      1. acorn
        September 26, 2022

        What was the average income income in 1997 compared to today. Quoting nominal numbers over such a long period is nonsense. Try quoting it in “real” terms and see what you get by taking the “time value of money” into account.

        1. a-tracy
          September 26, 2022

          Acorn, ah so average incomes went up much more with the Tories too!

          1. a-tracy
            September 26, 2022

            Ok so Iā€™ve had a look at the figures and the % of the average wage made up by the tax free allowance has increased over the last ten years, at the beginning of the period in 2010 it was 24.81% tax free, in 2021 it was 39.7%. Also in that period we are repeatedly told we imported a high % of Eastern Europeans who were willing to work for lower wages than those born here, which depressed average earnings.
            We are also told that since they stayed at home after covid and less are coming wages are going up again.
            In 1998 NMW was Ā£3.60, In 2022 it is Ā£9.50.

        2. Peter2
          September 26, 2022

          Playing with statistics to get your preferred results doesn’t alter what tracy set out acorn.

          1. a-tracy
            September 26, 2022

            Peter, Iā€™ve noticed statisticians do this a lot. One other point I thought of is that Labour introduced Working Tax Credits 2003 and Child Tax Credits 2003, this encouraged people to only take 15 hours work and get benefits to top their incomes up to full time pay levels + housing benefits, this bill has boomed, do the benefits get added on top of average incomes when we compare average incomes I wonder (otherwise the average incomes would be depressed falsely). For example if you import 3 million low paid people and top up their income in benefits, sending child benefits out of the country, does it all get added to average incomes?

        3. Mickey Taking
          September 26, 2022

          True,
          What was the mortgage interest rate, how much was pint of beer, pint (or litre) of milk, gallon of petrol, loaf of bread, cinema ticket, man’s shirt, bra, kilo of spuds, packet of white rice, pasta etc.? BBC licence!
          In other words what was the cost of living like?

      2. Peter Parsons
        September 26, 2022

        The Conservatives only increased the personal allowance in 2010 because they were required to as part of the coalition agreement with the LibDems.

        If you watch back the leaders debates in the run up to the 2010 election, you’ll hear David Cameron say “it’s a nice idea, but unafforable”.

        They didn’t do it because they wanted to or believed in it.

        1. Peter2
          September 26, 2022

          Gosh
          The Lib Dems…promoting lower tax
          A first.

        2. a-tracy
          September 27, 2022

          Yes, I know Peter it was a coalition with the Tories as the majority party.
          In 2010 when Labour left office, the personal tax allowance only allowed people to keep 24.81% of the average earnings before paying tax (this was after Brown removed the 10% tax band). In 2021 the personal allowance allowed people to keep 40.18% of the average earnings before paying tax. At the same time the Tories (yes the ones your side blame for only looking after the rich) took the child benefit off single earning parents that had the audacity to train up to get jobs over the 40% tax band, then they withdrew the personal allowance for those earning between Ā£100k and Ā£120k. The Conservatives alone increased the tax-free portion of the national insurance charge by Ā£3000 (personally, I disagree with it I think everyone should contribute to their health insurance and their State pension).

          We import the poor from other Countries, top up their earnings, send child tax credits abroad to their families that stay at home, the parent in the UK sometimes works for just six months to max out benefits. The EU low-paid workers that didn’t come back after covid have forced wages up that is a good thing, yes or no?

          1. Peter Parsons
            September 27, 2022

            “your side blame”?

            I don’t have a side. I’m perfectly willing to criticise all sides when I think they are wrong.

          2. a-tracy
            September 28, 2022

            Peter, are you willing to congratulate all sides too? I certainly haven’t read you ever being optimistic or positive about any conservative action.

            For example, did the EU low-paid workers not coming back after covid help to force up wages for the routine occupations and lower technical occupations?

            Did raising the semi-routine, routine, service and lower technical personal allowances help the large proportion of the workforce in these occupations to keep more of their earnings or not? Was this a good thing or not?

          3. Peter Parsons
            September 29, 2022

            I am, yes. I am, for example, in favour of raising the threshold for the basic rate of income tax and it’s good that the Conservative Party have seen the light about the benefits of such a policy and changed their position on it compared to a decade ago or so. Same with the minimum wage.

  6. Lifelogic
    September 26, 2022

    ā€œThe government needs to get more people off benefit into work, find ways of working smarter in crucial public services, and cutting out things the state does not need to do in order to control public spending.ā€

    Indeed but they cannot even bring themselves to cancel HS2, the ineffective and dangerous vaccines for younger people, the worthless degree subsidies, net zero, the better off on benefits politcyā€¦not have they done anything much on the bonfire of red tape. Nor are the incentives to work over living off benefits sufficient.

    ā€œGetting a better grip on numbers of illegal and low paid economic migrants would also make a welcome saving.ā€ A better grip? They not only have no grip at all they are actively assisting their passage and encouraging even more legal but low paid migrants.

    Many industries have little chance of competing based in the UK with energy cost up to four times higher than they are in the US and other places – farming, hospitality, fertiliser, chemicals, food processing, manufacturing, fishing, constructionā€¦

    1. Lifelogic
      September 26, 2022

      When I mentioned all the many vast tax rises and new taxes we have suffered since Mrs Thatcher left office I missed off the cancellation of child benefits (for people on more than Ā£50k) and loss of personal allowances (when you earn Ā£100k+) both huge tax rises grabs. Where is all this money going? It certsinly does not seem to be providing any improved public services of much much real value?

      I also mentioned the loss of 3-8 years of state pensions with the increase in starting ages. JR said this was government expenditure that I wanted to be reduced – well yes but it can perhaps be better considered as finally getting some of your paid in tax and NI back after years of paying in. So getting perhaps up to Ā£76,000 less back in pension is really another tax rise in effect.

      I also read that the police are also cutting the margin on speeding fines by 1mph so 24+ in a 20 limit area will now get you cash cow mugged (as the cyclists overtake you). Yet another back door motorist mugging tax grab.

      Might it not be safer for drivers to watch the road rather than stare at your speedometer and the speed limit signs all the time?

      1. Cuibono
        September 26, 2022

        +many
        Over 1,000 new arrivals per day.
        Hotels cost a huge amount and so does that government-enabling security firm now turned to leasing buy-to-let properties to newcomers.
        Is Truss a fan of mass immigration?
        I think she must be!

      2. Cuibono
        September 26, 2022

        I think that the Chief Sec to Treasury after Brownā€™s defeat (and holing up in Downing Street) told the truth.
        There is no more money!
        The politicians, over decades, have gathered more and more money and assets from voters and used the wealth to buy votes. Each persuasion desperately outspending the last.
        Free money = votes. ( See the SUVs in the drives of modest terrace houses).
        Dodging, diving, printing, borrowing, salami slicing, squeezing the piggy bank!
        Gosh we canā€™t even leave the ERM this time!
        Fantasy politiciansā€¦fantasy economy.

      3. Hope
        September 26, 2022

        Cameron promised to stop child benefits to EU children who never set foot here, 10 years ago about Ā£33 million! No action to date. So Tories stop UK parents getting child benefit but willing give EU children money even though they do not live here.

        I also fail to see why the UK taxpayer provides free housing, energy and food for economic drifters! Why do we pay for elderly care homes for,Scot germs and drifters but make UK citizens sell their homes! No to more housing. Stop the channel invasion!!

        JR called me a liar in 2012 when I pointed out EU students getting free tuition in Scotland, same applies: life time of debt for UK students but free tuition for EU students at some of our best universities!! It took other bloggers to point out I was right. This is his giving away our taxes without merit, reason or cause. Lord King could not answer me on the point either when asked face to face, same for Willetts. All provided excuses with hollow factual basis.

        1. a-tracy
          September 28, 2022

          Hope, child benefits should only ever have been for the more expensive child-rearing in the UK. If the foreign parent is none working, why should the British tax-payer keep them when more and more Mums are forced back into the workplace here because of the cost of homes in the UK?

          Suppose a UK Mum or Dad is a primary carer and decides that after childcare expenses, they’re better off staying at home and doing a little part-time job and relying on their partners’ income, which goes above Ā£50k. Why should they lose their child benefit that helps to top up their lost income or helps to pay for the childcare in the UK, keeping the money in our economy and helping to pay a decent wage to the child-minder, nursery, and out-of-school care?

          When we talk of parents in poverty I would like the full facts, how much in total benefits are they getting, housing benefits, uniform allowance, equipment allowance, computer allowance, little top ups here, little top ups there. If single how much is the absent partner contributing and if nothing – why?

      4. Lifelogic
        September 26, 2022

        Also under Thatcher we had free university fees and even about Ā£1000 PA I think to live on at Uni. which was plenty. I also had sponsorship and a summer job so I even had money spare to help my parents out (who had four children). You even qualified for unemployment benefits in the student holidays if not working.

        So where are all these higher taxes going? Vast increases in taxes massive reductions in public services. Not helped by having so many now doing duff and pointless degrees, not working and building up huge student debts I suppose.

        1. Mike Wilson
          September 26, 2022

          So where are all these higher taxes going? Vast increases in taxes massive reductions in public services.

          You know where they are going! They are being pissed up the wall by every element of the public sector. There is nothing that the public sector considers too ridiculous when it comes to spending money.

          1. Lifelogic
            September 26, 2022

            +1

        2. Peter Parsons
          September 26, 2022

          Thank the Conservatives for the end of students being able to claim anything during the summer holidays and for the end of the maintenance grants as it was the Conservatives who first introduced maintenance loans.

          I remember the promises they made at the time about how the grant element would be retained, how the grant element would not fall below 50% of the available support. Every one of those promises was broken within a few years.

          Whenever the Conservatives choose to criticise the LibDems over tuition fees, it just reminds me of the time when they were equally dishonest about student finance.

          1. a-tracy
            September 28, 2022

            Peter, but people only pay back any grant or loan when and if they are successful, and the English grads pay back a 9% graduate tax. What is wrong is the other nations within the UK are exempt from this graduate tax for as long yet pay no extra tax themselves for this benefit in kind. Then they occupy positions in England earning nearly 10% more than the English grad next to them.

        3. a-tracy
          September 27, 2022

          They’re going in the 2003 working and child tax credits. They’re going in housing benefits to all comers, to disprove what I’m saying the councils should report how much of their council/ha houses are to people on full housing benefit and not contributing and where they come from local or RUK or Foreign.
          The numbers going to university went up to over 50% from around 10% when you probably went to Uni, there were two extra years added on to stay in school from 16 – 18, all this has to be paid for, we were told it would improve productivity and qualified people we are now told productivity has fallen and isn’t keeping pace and we don’t have enough people with the right qualifications, our education system has failed.

      5. miami.mode
        September 26, 2022

        It’s more or less accepted that for speeding an allowance of 10% plus 2 mph will not result in a fine but evidently the Metropolitan Police allowed an extra 1 mph so basically it’s a case of Londoners not now having special lenient treatment.

        1. Lifelogic
          September 26, 2022

          Clearly done only to raise more cash. But then you get points, banned and higher insurance premium too. This 12% IPT tax on them too.

          1. miami.mode
            September 26, 2022

            Doubtless LL you would have a different opinion if you had to clear up the mess or loss of life caused by car crashes or “accidents”.

      6. Kyle Harrison
        September 26, 2022

        Taxes have gone up because we have an ageing society. Our society was younger in the 1980s. We now have a lot of pensioners not working, claiming pensions, needing social care and NHS care. This is the demographic reality that faces us. Even under Thatcher the overall tax burden didn’t fall very much. Yes, income taxes came down but VAT went up substantially from 8% to 15%. And Nigel Lawson’s bigger income tax cuts in the late 80s were fiscally unsustainable. Just a few years later Norman Lamont had to raise VAT to 17.5%.

        Unfortunately, due to our ageing society it’s hard to avoid higher taxes in the long run unless we reduce pensions by raising the retirement age or reducing the amount paid. Or do other radical changes to things like the NHS I.e. introducing fees to raise extra revenue or reduce some demand. All very politically difficult.

        1. a-tracy
          September 26, 2022

          Have we got a lot more pensioners not working as a % of the population, Kyle, even with all the young immigrants we have taken in over the past forty years? What figures do you have? Do they include the extra 100,000+ extra excess death losses due covid? Do your figures take into account that women that could draw their state pension from 60 now have to wait until they’re 67 (an extra 7 years not claiming and continuing to pay in National Insurance), plus the extra 2 years for men. The highest in Europe.

          1. Mickey Taking
            September 26, 2022

            I have the impression a lot more pensioners are still working, now that employers ought to find it harder to remove them! And then what about the aged volunteers – free of course but essential to keep lots of things running.

          2. a-tracy
            September 27, 2022

            Actually Mickey before the Covid years I had a lot more pensioners continue to work over 65 and this was before the age discrimination law changed, it was nothing to do with finding it harder to remove them, no one has ever been forced out. After covid, two died under 70 fortunately not at work, three retired between 65-70 and one retired from their part-time relief job at 75, one reduced their available hours.

        2. Lifelogic
          September 26, 2022

          Norman Lamont had to raise VAT to 17.5%.

          Because the foolish John Major had joined the ERM causing a huge and pointless recession for which the pathetic man did not even ever apologise.

      7. Lynn Atkinson
        September 26, 2022

        Sheā€™s fracking. I saw a farmer ploughing the edge of his field yesterday, an area I suspect was ā€˜set asideā€™ for all the nightmare EU decades. God knows every budget from now until my state funeral (eternity) will need to be a tax-cutting budget. But I feared Truss (from her world wide humiliation on the foreign affairs stage) would be as bad as Boris, which is as bad as it gets.
        She is a huge surprise, a massive relief. She should have had an old hand in the Treasury, but he had the wrong colour face.
        Count your blessings! We live to fight another day, which is more than the Germans are sayingā€¦

        1. NBill Brown
          September 26, 2022

          Lynn

          You really need to learn more about basic economics

          1. Peter2
            September 26, 2022

            badic economics….Like your claim just a day ago billy that it was mere speculation to suggest Labour would not have put up taxes at this time and now just a day later at their conference they tell us they would have done just that by reversing changes made in the recent budget.

      8. acorn
        September 26, 2022

        The MET reduced its limit from 10% + 3 mph to 10% + 2 mph, like everywhere else.

      9. Ian B
        September 26, 2022

        @LL you forgot the introduction of VAT. Was 10% now 20% – big chunks were sent direct to the EU now it is kept at home, which trash can are they dumping it in?

      10. No Longer Anonymous
        September 26, 2022

        Indeed. The new mining class is the political class, in need of reform – which not only gets fast-passes to the Queen’s lying in state but four free ones for mates !

        We are nearly there. All that is needed is the Zil Lanes for the Tesla class.

      11. Mickey Taking
        September 26, 2022

        My wife attended a speed awareness course not very long ago. Like her, others in the group were camera ‘d at 34 33 32 and all ‘done’ – and the camera was well hidden.
        I find myself noting curious unmarked vans parked in laybys, or on odd grass areas, with rear windows ‘blacked out’.
        Take note should you go up the Fairmile hill beyond Henley and reach Bix !!
        You might not see grazing cows, but there has been a large cash cow there.

      12. Peter Parsons
        September 26, 2022

        Not speeding isn’t difficult. Why do you have a problem with people who break the law (with a 20% margin of error at 20mph) being punished accordingly?

        1. Mickey Taking
          September 26, 2022

          25mph not actioned? Really? When I drive through London suburbs as I did yesterday motorists were still hitting the brakes at every camera and inching through at 18-20 mph. On the M4 raised section EVERYBODY drives at <40 mph – almost everybody obeys the weird 60 mph restriction on the so-called SMART west London stretch of the M4 – THEN guns it to 80 when the 60 limit ends.
          How smart is that? And that section could take 3 x the traffic easily.

    2. Lifelogic
      September 26, 2022

      Liz Truss must ditch the anti-farming lobby
      British farming cannot be seen as a nostalgic cottage-industry, in a countryside treated like a theme park. It should be ambitious.
      JAMES DYSON is surely right in the Telegraph today. Cheap reliable on demand energy and fertilisers are vital for this too.

    3. Lifelogic
      September 26, 2022

      A shame out new energy secretary one Jacob Rees-Mogg (who replaced Kwasi) also has no physics, maths or energy/engineering qualification or much understanding of the issues either. Let us hope he learns quickly and ditches Net Zero now. To give clear blue water between the Tories and the Green Loons at Labour/SNP/Libdims.

      For the next election instead of get Brexit done (it still has not been by some way) we perhaps need:- ā€œGet cheap, reliable & on demand energy done nowā€

      1. Mike Wilson
        September 26, 2022

        Let us hope he learns quickly and ditches Net Zero now.

        I’m going to hazard a guess and say that at least 80% of people fully go along with the net zero lunacy. I think you are barking up the wrong tree if you think the great unwashed are just desperate for someone in power to say net zero is nonsense.

        1. Lifelogic
          September 26, 2022

          But why do 80%(?) of people fully go along with this obvious scam? Because the BBC, King Charles, David Attenborough, St Greta and others have brain washed people. It is so very clearly a vast exaggeration & a con trick. There is no climate emergency & CO2 is not some World Thermostat. Even if it were the idea that worldwide we can agree to control CO2 is for the birds! The things the government push like EVcars, Wind, Solar save little or no CO2 anyway! EVcars increase it.

          1. Mike Wilson
            September 26, 2022

            But why do 80%(?) of people fully go along with this obvious scam?

            Well, you went on to answer your question. Because the establishment, the media and ā€˜the internetā€™ have told them. So, they believe it. If the Tories turned round now and said ā€˜Actually we need to re-think this, slow down, accept weā€™ll be using fossil fuels for the next 50 years, will allow coal mines and fracking etc. ā€˜ they would be electoral toast. Pointing out how wrong the climate nutters are will not make a shred of difference.

    4. Mitchel
      September 26, 2022

      Not just the UK but-and more acutely so-also Germany.

      Sirius Report tweets this morning:

      “Germany facing reality once again:

      Scholz goes with a begging bowl to the UAE.All he got was a single LNG load due in Dec and a non-binding memorandum for more and as yet unspecified deliveries in 2023.”

      The UAE has just joined the China-Russia-led Shanghai Cooperation Organization (and is seeking accelerated full membership),so the West should not expect any special favours from that source.

      The SCO is going to wipe the floor with the G7 over the next decade or so

      By the way,if you are wondering what is going on in resource-rich Iran (really going on I mean,not the western MSM presentation of events),you will find the US’s National Endowment for Democracy(the Orwellian title for what is in effect the National Endowment for Regime Change) is heavily involved.

      The US’s admirable Ron Paul Institute tweets this morning:

      “Doesn’t it strike anyone as strange that the “leader” of this “freedom” movement in Iran is a US govt employee and bosom buddy of the neo-cons?”

  7. Narrow Shoulders
    September 26, 2022

    So it is OK to print money to pay people’s gas and electricity bills to stave off a recession but it was also OK to cause the same monthly increases in cost of living payments by inflating the housing market for the last 10+ years with money printing (by retail banks) and government support packages.

    My rent has increase in some years by the same amount as the “catastrophic” increases in gas and electricity prices that we are being protected against.

    No outcry then because those on housing benefit were protected against those increases. Now the relative poor must be protected again but once more the outcry is that the people who pay for everything get to keep more of their own money.

    Ever since George Osborne attacked those with the broadest shoulders your government has groomed and abused the taxpayer as though we were young girls in northern towns. Time to radically cut spending.

    1. Mark B
      September 26, 2022

      Good post !

    2. Lifelogic
      September 26, 2022

      George Osborne & Cameron should of course have scrapped the 50% and 45% income tax rates immediately on taking up office, cancelled HS2, cut the vast public waste, scrapped the climate change lunacy and the green crap subsidies, cut back on worthless degree and also should have kept to his Ā£1 million each IHT threshold promise then too. We could have been in a far better place now had he done so and Kwarteng would not have had to do it now.

      1. Mickey Taking
        September 26, 2022

        What a comedy act duo they were! but both have the last laugh – lots of VERY gainful jobs since being shown the door stomping off in a hissy fit.

    3. Hope
      September 26, 2022

      Illegal criminals get free accommodation at four star hotels with little to no chance of being deported under the Tories. Current response from Truss: loosen migration controls!! Wow, the party is really listening and fulfilling its repeated 12 year manifesto pledges. Johnson even said his system would severely reduce immigration!!

      Is there any right minded person who believes a Tory MP on immigration? Cast iron promises, no ifs or buts, do or die guarantee would leave me to believe a word they say. The party appears institutionally dishonest to me on the election promises it makes.

  8. Stephen Reay
    September 26, 2022

    It looks like Ā£ will take another pounding today. Many experts are predicting a rate rise this week.

    Reply No MPC meeting scheduled and pound rallied from Asian lows

    1. Hope
      September 26, 2022

      Make tax cuts, govt. income, and keep wasteful spending, what is not to like!!

      What happens if we followed govt budgets ie all took a pay cut but carried on wastefully spending the same? That makes sense- not. JR says govt and bank will have to tread carefully!

      While Truss announces another Ā£2.3 billion give away to corrupt Ukraine (more than EU countries put together) she says a price worth paying for our hardships, and announcing loosening of immigration at high cost to the taxpayer!

    2. Lynn Atkinson
      September 26, 2022

      The whole concept of the currency floating is so that it takes the pressure instead of business and people. If the Govt looks after business and people, the currency will not suffer massive distortions.

      1. NBill Brown
        September 26, 2022

        Lynn
        This is really not the case but the contrary is often the case

        1. Peter2
          September 26, 2022

          Any facts or data to back up you claim bill?

          1. NBill Brown
            September 26, 2022

            Peter 2

            I leave this you the clever one, but the current situation with the pound and interest changes seem to back that up, but you might have missed that as well

          2. Peter2
            September 26, 2022

            Garbled reply from you bill.
            You claim the Pound has fallen due to the budget.
            Tell us why the Euro has also fallen.

    3. Mark
      September 26, 2022

      I suspect the MPC will be revising its schedule.

  9. Donna
    September 26, 2022

    “Getting a better grip on numbers of illegal and low paid economic migrants would also make a welcome saving.”

    You can’t get a better grip when you have no grip in the first place.

    One million visas issued in one year. 50,000 known criminal migrants (known because they ferried most of them in) over 18 months and several thousand more arriving every week. Only a handful of deportations over the same period. British taxpayers forced to pay for immigrants “free” housing; “free” furnishings; “free” education; “free” NHS treatment; “free” dentistry; “free” legal aid; “free” interpreters; “free” mobile phones; “free” pocket money; “free” legal defence; “free” holidays in HM Prisons when they break the law etc etc

    And now Truss has announced that she wants to increase immigration for some sectors of the economy.

    People are furious about the invasion of our country and the Government’s/CON Party’s REFUSAL (because that is what it is) to stop it. This issue alone is going to lose you the next election and the next two. Not that Labour will be any better, they will be worse.

    Oppositions don’t win General Elections, Governments lose them. Your Party has destroyed our energy security; wrecked our civil rights; ruined the economy and is destroying our national identity. It deserves to lose.

    1. Original Richard
      September 26, 2022

      Agreed.

  10. jerry
    September 26, 2022

    “the inflation the Bank had allowed to build over the last year.”

    Yawn, yet again our host attempts to divert us from his own parties economic failings (and the still tanking GBP), it hasn’t been the BoE setting wider economic policies for the last 13 years but our hosts party, and indeed until the economic effects of the pandemic and then energy crisis hit the BoE came under huge pressure whenever there was any suggestion of a rate increase, being told such a move would devastate the finances of anyone with variable rate loans or mortgages.

    If the BoE has been historically so bad at dealing with inflation, as our host keeps repeating, why hasn’t and why doesn’t the govt remove the Banks notional independence, but then our host nor Minsters would have that oven ready fall-guy at hand when the govts own policies turn sour!

    1. Peter2
      September 26, 2022

      They had a target of 2% inflation.
      Even you Jerry must concede they have failed.

      1. jerry
        September 27, 2022

        @P2; You might have a point if the BoE also made our economic polices, not politicos in No.11 Downing Street…

        Of course the BoE, any Central bank, will fail if wider govt polices cause inflationary pressures and/or tie the hands of the BoE, such as an over reliance on borrowed money, excessively high mortgages or credit card spending etc. and thus pressure NOT to hike interest rates, hence my comment about the BoE’s notional independence being a convenient fall-guy when the fan gets messy and voters go looking for someone to blame.

        1. Peter2
          September 27, 2022

          Yes but….
          They acted later than they should have and their actions in raising interest rates were not bold enough.

          1. jerry
            September 27, 2022

            @P2; Do you have have an exceptionally accurate crystal ball, or do you just like throwing brickbats using 20/20 hindsight, my money’s on the latter. šŸ™„

            You seem to be suggesting the BoE should be proactive, not reactive, so let’s take a very recent fiscal event. Should the BoE have convened a meeting last Friday lunchtime immediately following the Chancellors announcements to try anticipate the markets reaction, in doing so quite possibly hiking interest rates by anything up to 5%; and if they had, how many on this site would have been complaining Saturday morning the BoE had overreacted, never mind what sort of impression such ab action by the Central bank would give of the Chancellor! As I said, the BoE is damned if they do, damned if they don’t, and that’s just how some like it, an oven ready fall-guy and why despite all the complaints nothing has been done in over 12 years to alter the relationship between Treasury and Bank.

          2. Peter2
            September 27, 2022

            I don’t need a crystal ball Jerry because I am looking at economic history of the past.

            Inflation got to double figures.
            Their key target was to keep inflation at 2%

            Anything one analyses of past events can be said to be hindsight.
            But by doing this analysis maybe lessons will be learned

          3. jerry
            September 28, 2022

            @P2; Hindsight, history, won’t tell you what next weeks Lottery numbers will be, you’ll need a crystal ball, and that’s the point you forget. Can you suggest of any BoE actions, since 1997, such as the announcement of increased interested rates, the purchase of Glits etc. BEFORE the markets have reacted to the corresponding event, govt fiscal or wider policy announcement. Yes there has been announcements of coordinated actions between HMT and BoE but then the Central Bank is not really being ‘independent’, are they, and such actions in themselves can spook the markets (and us mere plebs}, the collapse of Northern Rock bank for example!

            Their key target was to keep inflation at 2%

            Impossible to do unless the Central Bank also has a total veto over the govt, no one can keep inflation within any given target if govt policies are, perhaps intentionally, inflationary (or deflationary). Analyses of past events is of course hindsight, and lessons are learnt, but some don’t want to hear those lessons, they just want to throw ideological based brickbats, attack being better than defense and all that.

          4. Peter2
            September 29, 2022

            Jerry going for his 30 posts a day target with yet another pedantic essay.

  11. Cuibono
    September 26, 2022

    Money, I imagine was always a tool of government theft and deception.
    Trust us with your gold and we will give you lots of lovely paper.
    Now itā€™s just numbers on a dodgy, ever-going-wrong screen.
    And soon it will merely be a big draconian carrot and stick.
    Urging, nudge,nudge, nudging us to make the ā€œrightā€ choice.
    And we now have a PM who is an expert in the art of nudgery!

  12. Mark B
    September 26, 2022

    Good morning.

    The BoE has to print and the government has to borrow because not only you will not, but cannot cut spending.

    In all your articles, Sir John this is the one area that you have refused to consider it.

    Your party has lost its way is scared of the unions, the media and of Labour.

    Reply I have often provided ways of cutting spending!

  13. Bloke
    September 26, 2022

    Consumers control what buys to sell. Prices cannot inflate unless Consumers decide to swallow the increase. Govts and Banks donā€™t know what billions of consumers will do when they bite.

  14. Richard1
    September 26, 2022

    Urgent need to cut wasteful spending, I canā€™t work out why Tory MPs arenā€™t calling for this. If there had been a strong message on this in the statement we surely wouldnā€™t be seeing the crash we are now seeing in the Ā£. HS2 is the obvious place to start, the extra 100,000 civil servants who have been hired since 2016 the next. All those quangos and regulators need a close eye as to what they actually do and what the public benefits are.

    Nothing undermines public and investor confidence in a govt like a crashing currency. Perhaps the market has over-reacted. But we simply canā€™t afford a continuation of the profligacy and waste of recent years. It wonā€™t be possible to carry through The Truss-Kwasi measures unless this is addressed.

  15. Lifelogic
    September 26, 2022

    Labourā€™s Reeves announces Ā£8bn ā€œnational wealth fundā€ for green investment. She seems to think the energy solution is to ā€œinvestā€ even more taxpayers money in ā€œGreen Energyā€ – by this she means expensive, unreliable wind and solar electricity. But ~ 80% of energy used is not even electricity Mrs Reeves – it is oil, gas & coal for heating and transport.

    It it were a sensible investment it would not need any taxpayerā€™s money. Net zero and so called ā€œGreen Energyā€ is the cause of the energy crisis. The other thing giving concern to the markets and to myself is the appalling risk of a Labour/SNP/LibDim/Green government perhaps as soon as May 2014.

    Reeves has A-Levels in Politics, Economics, Mathematics and Further Maths, was a good (female) chess player, read the dreaded PPE Oxon and also has an MSc in Economics from the LSE. So surely she can get a rather better grasp of reality than this? But then why on earth did she join the Labour Party if she is actually bright and understands economics?

    Labour also going on endlessly about more insulation have they looked at the impracticalities, costs and absurdly long pay back times (if ever) on insulating older homes in the fairly mild UK? Even with the current higher energy prices?

    1. Lifelogic
      September 26, 2022

      I just listened to Racheal Reeves’s speech. Like most labour politicians she thinks you can just increase the minimum wage endlessly to make people better off on day one (it just makes loads of them unemployed and a lot of bust businesses dear). A plan about as sensible as standing in a bucket and pulling on the handle to make yourself taller! Infact even less sensible as it would make people poorer on average.

      Lots of green energy lunacy and the usual evil politics of envy Labour’s main selling point to dim people with the usual grievance chip on their shoulders. I had expected rather better of someone who won the British Under-14 girls chess championship title. Someone that, I assume, achieved decent A-Levels in Politics in her Economics, Mathematics and Further Mathematics, PPE Oxon. and an MSc in Economics from the LSE. But no, just the usual evil and duff lefty group think and bogus let’s all be equally broke economics. Nothing much about the low skilled open door immigration levels either. Nor the endless road blocking agenda, plus she wants loads more red tape and employment protections – to depress wages and productivity even further. Great plan dear same as we have had from the Tories but even worse!

      1. a-tracy
        September 26, 2022

        Lifelogic, I donā€™t have your STEM degree, however, I disagree about the NMW/NLW i believe what actually happens is that if you pay the bottom grade Ā£15 per hour or nearly Ā£30,000 pa for a 37.5 hours full time, what will the degree grade nurse then require, the train driver, the social worker and teacher, the unions will want their parity up the grades for a start (58% more). The bottom wonā€™t be able to buy anymore than they can today and why doesnā€™t anyone ask Rachael Reeves if she pays the lowest grade of pay 58% more will she put Universal credit up 58%, will she put pensions up by 58%, so how does anyone really benefit? The people will then be as relatively poor as they are today but everything in the UK will be so expensive nobody will want to come here.

        1. Lifelogic
          September 27, 2022

          Indeed if you force a high minimum wage on companies they will often be unable (due to lack of income) to pay more skilled people much more than the minimum wage. A minimum wage law is a law preventing low skilled workers from working (even if they want to and employers want to employ them) at x per hour if x is less than the minimum allowed. Even if the job is very close to home and they enjoy doing it!

          1. a-tracy
            September 27, 2022

            That is just disguised by self-employment, I was told that the self-employed, by another poster here, can’t charge their holidays (the equivalent of 28 days pa), national insurance (without IR35 their regular employer gets away with Employers NI), pension contribution (8% should be due to nest) or ssp sick cover (even tiny businesses are exposed to Ā£4000 pa in basic ssp and ssp holiday, the Sun wrote an article yesterday saying National Insurance covers SSP it hasn’t for a long time) this should be all on top of the NLW per hour worked; what is that if not a fudge of the national living wage? Even zero-hour employees are paid holiday pay 1 day after 9 worked, so they’d be better off on zero-hour contracts than self-employed.

  16. Ralph Corderoy
    September 26, 2022

    Dear Sir John, You say the Bank’s rate reaching 2.25% has ‘done enough to slow inflation’ and so imply it should not be raised further in the near term. But in more normal circumstances, say three years from now, do you think a healthy rate would be around 6% given long-term norms and an inflation target, in a deflationary world, of 2%?

    Reply No idea what we will need then. The important thing is to use interest rates to avoid excessive money and credit growth. UK money and credit is now contracting in real terms, so no need to squeeze more. It exploded in 2020–21

  17. Gary3
    September 26, 2022

    The pound has fallen further – don’t think the markets understand yet about ‘Kwasinomics’ ?

    1. Peter2
      September 26, 2022

      Euro v Dollar currently at a 20 year low too Gary.
      What’s causing that slide?

      1. NBill Brown
        September 26, 2022

        Peter 2

        Lack of confidence in the current fiscal policy

        1. Peter2
          September 26, 2022

          What are you trying to say bill?
          Is it that the EU’s current fiscal policy is so poor that their currency is sliding versus the dollar?

          1. NBill Brown
            September 26, 2022

            Peter 2

            The fiscal policy of most of the larger EU countries is much more conservative than ours, but the monetary policy of US determine the value of the dollar but you probably missed that Peter 2
            s

          2. Peter2
            September 26, 2022

            Very odd response nbilly
            But glad to see you concede that it is mainly the USA’s policies that are creating disruption in todays UK and EU currency markets

          3. hefner
            September 27, 2022

            Over one month (from 27/08) ā‚¬/Ā£ -3.07%, Ā£/$ -7.9% . Obviously the $ has been strengthening wrt other currencies. But not all currencies have slipped as much as the Ā£ has done.
            One of the reasons why the slip of the euro is not as bad as the Ā£ one is that the ECB took their decisions within the summer. In the UK the Conservative beauty contest over six weeks in July/August prevented the Government, Treasury and BoE from taking the early necessary decisions.

            P2, seriously, do you ever check anything before commenting?
            Don’t bother to comment after this. I wonā€™t react.

          4. Peter2
            September 27, 2022

            The Euro is at a twenty year low heffy
            Seriously, you missed that fact when you checked.
            But I agree the party leadership competition delayed actions being taken.

          5. hefner
            September 30, 2022

            I cannot resist P2, I have to get out of my ā€˜vowā€™: you never check anything before writing, do you? I actually do: In October 2002 the ā‚¬/$ was fluctuating near parity, 0.983 on 01/10/2002 and 0.982 on 31/10/2002 with a drop to 0.971 in the middle of the month. Which shows that your ā€˜Euro at a twenty year lowā€™ is a fruit of your imagination. Learn to use the historical currency exchange sites.

            Do you realise how often you are shown to be wrong. You seem to be unable to check even the easiest to find website.
            You provide ā€˜opinionsā€™ because you are unable to do anything else.

    2. miami.mode
      September 26, 2022

      Should that be Crazynomics?

  18. Keith from Leeds
    September 26, 2022

    Your posts are all good, common sense & the mini-budget suggests we may, at last, have a conservative government. But the government will never be in control of the UKs finances without a serious cut in the cost of government. Since the cost of Civil Servants & their pensions is astronomical their numbers need to be reduced by at least 50%. At the same time, all Quangos need to have their budgets cut by 50% from the start of the next tax year, & every penny of spending on “woke issues”, like Diversity, Inclusion & Equality Managers needs to be cut immediately. It is no coincidence that the initials are DIE! Equally the NHS needs the same treatment, every penny spent needs to benefit patients & if but does not then don’t spend it. If the government gets serious about all of this the pound will rapidly recover, inflation come down & further tax cuts can be made. Then the economy will grow & all the people in the UK will prosper.

  19. Ian B
    September 26, 2022

    A flawed system needs constant fiddling just to redress in inequalities it creates. A free and open market works Governments and their proxy manipulators just delay natural adjustments.

    Only yesterday the MsM was reporting that wholesale gas has dropped by 50% since August and it is expected to be below the energy cap by Q1 of 2023 – meaning the subsidies provided by the taxpayer are going to be substantially less than budgeted for.

    The MsM on the other hand is still the Government in the UK, they are still the cause of the Countries woes, the sooner those elected starts ignoring them the better we will all be.

  20. Shirley M
    September 26, 2022

    So the immigration lies continue. Although the CONS promised the electorate they would reduce immigration, they have deliberately increased it, and if the news is to be believed Truss is going to encourage MORE low paid immigration to ‘boost GDP’. So we boost GDP, as the expense of everything else. We prop up the profits of companies that pay low wages, at the expense of everything else. We propr up the income of low paid immigrants, at the expense of everyone else. We house immigrants, at the expense of everyone else. We provide NHS, education and all the other services, at the expense of everyone else.

    The CONS are the pits. At least Labour were honest about ‘rubbing our noses in diversity’. The CONS just lie, lie and lie again.

    1. Mark B
      September 26, 2022

      Agree.

    2. a-tracy
      September 26, 2022

      Shirley, Universal credit isnā€™t as transparent as Working Tax Credits and Child Tax Credits, you know know how much say a single person over 25 years of age with no children can get in Universal credit if they earn the NLW Ā£9.50 x 37.5 hours per week = Ā£18,525 pa? If two people live together both earning the NLW get Ā£37,050 how much UC can they get?
      If you add one child into each scenario how much can the single parent and the couple get?
      What do you want the ā€˜low paidā€™ to be paid per month? Do you want people who only work 25 hours per week to have their weekly wage made up to the same as someone working 37.5 hours per week with Universal benefit?

      1. Mickey Taking
        September 26, 2022

        all this wouldn’t be such a problem if we didn’t have so many working age people having to survive on benefits.
        That or starvation and crime I suppose.

        1. a-tracy
          September 26, 2022

          We imported 3 million low wage workers MT to keep prices down, pick our fruit, wipe our bottoms, we paid child benefits out of the country to keep them sweet, people could earn in six months what took more than a year in their own country. UK Wages are rising now. The NLW is pushing up pay differentials, this is why train drivers and bus drivers are striking for parity. The NLW in 1998 it was Ā£3.60 it is now Ā£9.50. The real living wage is now calculated to be Ā£10.90 (Ā£11.95 in London) lots of business are signed up to this.

          1. Mickey Taking
            September 26, 2022

            correct – and the Poles and Romanians know their Ā£ is worth up to 10 back home. So those fruit pickers are building nice homes back there. Rather like the contracts we got with Vietnam war, Aussie mining, Saudi, Libya, Dubai …..mercenaries if you dare.

          2. a-tracy
            September 27, 2022

            MT – their wages are rising in their home countries now their expectations rose from their jaunts abroad, they didn’t need to come back after they built their lovely new homes, instead, they can just come for three months instead of six, and Liz seems to want to facilitate it because no one wants to deal with our own idlers.

  21. Nigl
    September 26, 2022

    Your sanguine approach appears in contrast to many of your own MPs who are already panicking, threatening to vote the measures down. Donā€™t they realise this is your only chance of avoiding annihilation at the polls?

    I guess many believe Boris could have BSā€™d his way out yet again when in fact he was the major contributor to the current mess.

    The value of the Pune seems the hot topic. I would be interested in your thoughts. At what level is intervention needed and what would that be?

  22. Lifelogic
    September 26, 2022

    Luke Pollard MP and Steven Timms MP both Labour on Talk TV JHB just now both talking compete tosh on the economy, green energy and insulation! Surely the Tory agenda on this is quite bad enough! Let us hope the supposedly bright Rachel Reaves says something more sensible later but I rather doubt it. A shame with her A levels she did not read physics or electrical engineering she might then understand some basic energy realities and insulation practicalities. A shame Truss and Kwasi did not either.

  23. Denis Cooper
    September 26, 2022

    I thought I’d take a look at the Bank of England’s effective sterling exchange rate index:

    https://tinyurl.com/3s94facb

    The most recent update is for last Thursday, September 22, and obviously it will have changed since then, but up to that point there was nothing in the chart to cause panic. I’ll keep an eye on it.

    The media like to dramatise by picking out the rate against the US dollar or the euro as seems most exciting.

    1. miami.mode
      September 26, 2022

      What would you prefer, Denis, the Argentine peso, the Bangladeshi taka, the Costa Rican colĆ³n, the Haitian gourde, the…………?

      1. Denis Cooper
        September 27, 2022

        The effective exchange rate, as I said, trade weighted as explained on the Bank’s website.

        On September 23 it was 74.5 which is actually not an all-time time, that was six months ago at 73.1.

  24. Magelec
    September 26, 2022

    I realise that the government has only been in power for days at present and they must concentrate on the most pressing issues left by Boris. However, I do hope that they will soon announce cuts in the huge amounts of waste that they are allowing to continue. Truss and co have to face up to cancelling uneconomic projects and useless quangos.

    1. Mark B
      September 26, 2022

      Most of those in government were in government under Johnson.

  25. ukretired123
    September 26, 2022

    I think the financial markets have been spooked by Labour party conference antics of announcing that they have win the next election like 1997 in 2024 and by the Bank of England blaming the government instead of its own and Sunak and his pro-EU Treasury cabal’s incompetence too.
    Our enemies are active too.

  26. Denis Cooper
    September 26, 2022

    Off topic, claiming to speak for the EU the Irish ambassador told the Labour party conference:

    https://www.breakingnews.ie/ireland/irelands-ambassador-to-uk-urges-negotiations-to-resolve-brexit-protocol-issues-1368462.html

    ā€œ… we solve it by implementing the protocol … We think itā€™s the best and only solution.”

    I wouldn’t venture to claim that the protocol is the worst solution, but a scheme which purports to address EU concerns about unacceptable goods possibly being included in the trickle crossing the open land border into the Irish Republic by imposing restrictions on all the goods entering Northern Ireland, plus imposing EU rules on all the goods produced in Northern Ireland – because something like half of the goods crossing the border have not come in from outside, they have been locally produced – is clearly cockeyed, and I still await Liz Truss publicly recognising that the best solution is UK export controls, not EU import controls.

    1. Jamie
      September 26, 2022

      With everything else going on I don’t think many people are minding too much about what is going on in NI – it’s all become a bit of a yawn!

      1. Mickey Taking
        September 26, 2022

        its certainly not the craic.

    2. rose
      September 26, 2022

      Are Heaton Harris and Baker going to remember they are Brexiteers? It would only take a little determination to sort it all out. I don’t like the sound of HH’s “landing zone.” Or his threats of an election.

  27. Javelin
    September 26, 2022

    Western Government advisers have drifted far into socialist and Marxist territory and donā€™t even realise what is good for their country anymore. Western Government advisers have implemented:-

    (1) Chinese communist style lock downs causing money-printing, inflation and higher interest rates.

    (2) Green unrealistic, unaudited, utopian destruction of the energy sector, dependency on Russian oil and gas and an energy crisis.

    Letā€™s make this 100% clear, the civil service advisors laid both these options out as potential courses of action. Itā€™s the civil service advisors that needs to be upended and rooted out.

  28. Roy Grainger
    September 26, 2022

    The UK unemployment rate is as low as it has been since the mid-1970s, we must be as close as it is possible to get to full employment with the unemployed being largely the unemployable. So ā€œgetting people off benefits and into workā€ is going to be difficult and of marginal benefit.

  29. Ralph Corderoy
    September 26, 2022

    Andrew Lilico writes, https://twitter.com/andrew_lilico/status/1574298371468447746:
    ‘It was a significant error for Kwarteng to have said BoE independence is sacrosanct. What he ought to have done was to distance himself from the BoE & its framework as soon as he entered office. Then he’d be able to present himself as riding to the rescue today, pushing a 1% rise’

    Truss and Kwarteng correctly think rates should be higher so it did seem odd for Kwarteng to needlessly fix the Government’s position of BoE independence when it only came about so as a pre-election promise from Labour’s Gordon Brown so the markets were less spooked at the thought of a Labour Government in charge of the price of money.

  30. oldwulf
    September 26, 2022

    “Nor need we worry unduly about the level of UK debt. At an official 96% of our national income it is way below Japan, and below Italy, the USA and various other advanced countries.”

    The “official” 96% debt would be more than doubled were the public sector pension deficit to be included ?

    1. Mark
      September 26, 2022

      It depends what you regard as official. Under the original definition of PSND the overall debt is now Ā£2.75 trillion, worth 121% of GDP. I’d add in off balance sheet PFI financing next. Pension have always been treated as a cash spending item along with other welfare payments. If we see rising yields pensions will become a lot cheaper. For that to be a real effect we need the economy to adopt a real growth path with the elimination of malinvestment.

  31. Lester_Cynic
    September 26, 2022

    Have you completely banned me from posting?
    Censorship at its finest

    1. Mark B
      September 26, 2022

      Oh we have a new member. Well to the club of unmentionables my friend. We are a small but growing band.

      Membership is FREE.

  32. Kyle Harrison
    September 26, 2022

    I am genuinely fascinated by the transformation of John Redwood from Thatcherism loving monetarist in the 80s to the Keynesian, debt is something we don’t need to worry about all that much, man of today. He even bangs on about the problems of importing energy rather than producing it ourselves. Fair enough points. But this is the point Arthur Scargill was making in the 80s! It was Thatcher and the Tories that shut down pits and preferred cheaper coal imports instead.

    Reply It was a nationalised industry that shut coalmines. I helped the miners who bought out Tower colliery and ran it themselves to show the NCB they were wrong about that planned closure! The electricity industry shifted to domestic gas from N Sea, not to imports. No need to lie about my views.

    1. Mark B
      September 26, 2022

      And if you did your research, Kyle you will find that all governments, both Labour and Conservatives shut down coal mines. In fact, Harold Wilson shut down the most.

      If our kind host allows : https://en.wikipedia.org/wiki/Coal_mining_in_the_United_Kingdom#/media/File:UK_Coal_Mining_Jobs.png

      1. Lifelogic
        September 26, 2022

        +1 many closed because it became uneconomic perhaps many are economic again now. Or would be without the net zero religion and taxes!

        1. Mickey Taking
          September 26, 2022

          agreed – coal was almost ‘dirt cheap’ back then. Certainly not now.

  33. paul
    September 26, 2022

    Bottle going already john.

  34. Chris S
    September 26, 2022

    Steady nerves are needed. The Truss government have made a reasonable start and the excessive reaction of the markets was to be expected.

    I would have increased tax thresholds rather than abolish the 45% rate to spread the benefit of tax cuts more widely. That would usefully have made it much more difficult for Starmer as well. Still, there is room to increase thresholds in the spring.

    It does feel that we have finally gone back to Conservative policies. Not before time !!

  35. NBill Brown
    September 26, 2022

    We need money to increase productivity through investments in education, NHS, mental health and infrastructure investments. Not by increasing the savings rates of the top 5 pct of the population, who will not be increasing their consumption with tax cuts.

    1. a-tracy
      September 26, 2022

      Bill, there has been enormous investments in education. In September 2014 the education leaving age was raised to 17, and from September 2015 it was raised to 18. Has this increased productivity in the last 7 years? The government says not, productivity is decreasing in the UK.
      More than half of young people now go to university up from 19% in the 1980s one would expect to see your productivity improvements from that investment.

      1. NBill Brown
        September 26, 2022

        Atracy

        This is not enough and much more is needed for us to raise productivity

        1. a-tracy
          September 26, 2022

          What so everybody has to go to university?
          All the courses allowed that are being taken now? No reviews, no holding to account.

          Personally Iā€™d prefer nursing staff to start training on the wards from the age of 16 a six year degree with three days on the job, actually caring for people and two days in college/university.

          Iā€™d like all 16-18 courses investigating, do travel and tourism qualifications actually help these people to get good jobs, or if onto university onto what courses?

          Infrastructure – Iā€™ve never seen so many houses being built my town has gone from 29,000 to 34,000 since 2001. We paid nearly Ā£6bn for HS1. Which infrastructure are you particularly wanting more spending on?

          1. NBill Brown
            September 26, 2022

            Rail and roads north of Manchester and Leeds

          2. a-tracy
            September 27, 2022

            NBillBrown, the conservatives are committed to improvements in the North my town has been given nearly Ā£10m by the government not before time.

            They built all these houses 5000 lots of Rate Band CD+ plus affordable homes without increasing the size of the High School, in fact they knocked a High School down to build houses on it. No-one was really sorry about that because it was struggling at the bottom of the league table. There are buildings on the High Street that could be used by the High School to expand schooling provision, what did they do, sell all the fields behind it to build more houses.
            There has been no improvement to widening the two lane High street as cars park all along it reducing it to one lane causing congestion at rush hour.
            They knocked down the Civic Hall, the replacement in the leisure centre was not satisfactory. You canā€™t see the beautiful town park from the main road, they built a hill up? There is only one train an hour and links by bus to service that train is poor.
            The company they gave the bus contract to cut the service for the whole month of August through strikes and they use energy inefficient, 20 year old double decker buses all day long nearly empty! We had a bus investment in our area with brand new buses they were taken away the local Labour councillors turn a blind eye.
            It was disgusting that when a new bridge was built in Runcorn they charge to use it and cut the free bridge off. They didnā€™t do that in Edinburgh or Sheppey.

        2. Peter2
          September 26, 2022

          Lend us some of your money bill if you think it’s a good bet.

          1. NBill Brown
            September 26, 2022

            Peter 2

            If, you believe that the assessment is wrong in terms of education, infrastructure , mental health and education than please share your thoughts with us, as we would really like to hear your views on the subject and the mini budget. Thank you

          2. Peter2
            September 26, 2022

            Is this bill brown?
            So you want more investment.
            Is that correct?
            I think increased investment is a good thing too bill
            Where would you put your own money into projects?

      2. Mickey Taking
        September 26, 2022

        but the increase in that age group becoming supermarket shelf-fillers or bar-code swipers, or even coffee makers, sorry I meant baristas, has grown wonderfully.

    2. dixie
      September 26, 2022

      Are you seriously suggesting the top 5% keep their wealth in interest bearing accounts?

      1. NBill Brown
        September 26, 2022

        Dixie

        They invest for the future but not necessarily in the UK

        1. dixie
          September 27, 2022

          That is not what you said at all.

  36. Lester_Cynic
    September 26, 2022

    Ahh, itā€™s because I mentioned an attractive parrot

    I can read her unpublished posts on the conservative woman while reaches a far wider audience

  37. The Prangwizard
    September 26, 2022

    The climate reinforces the urgency to make more things here to replace items we have become complacent and lazy about importing.

    We must stop importing people too, this on the part of private and public businesses is another lazy solution and government must take action to stop it, not encourage it.

    Yet the announcement of a relaxation of visa terms is a disaster – case of giving in to subversive pressure groups, abandoning longer term domestic solutions and promises and undertakings and repeating past failures.

    Above all this part of government is failing workers here who would benefit from training and incentives.

  38. MWB
    September 26, 2022

    “Getting a better grip on numbers of illegal and low paid economic migrants would also make a welcome saving” ?
    You are letting people in without any restriction at all.
    Not only should you be shutting the door to any further immigration, you should be rounding up all those who are here illegally, and interning them in camps to await deportation.

    1. Mike
      September 26, 2022

      MWB – That’s what the Italian authorities do – they round up all of the foreign looking people wandering abou aimlessly in the cities towns and ports and put them into camps. Then after a few weeks they move them north to another camp near the French border and when the time is right they allow them to “escape” over the border with pocket money and bus timetables to get them to Calais? and all without fuss – smart people the italians.

      1. rose
        September 26, 2022

        Not very bright at all. Who wants their country to be a transit country? Why do the French want their country to be a transit country?

        1. Gary3
          September 26, 2022

          rose- I don’t think any European country today is exempt from being a transit country, the trick for them it seems is to have a system where the foreigners can be offloaded or strayed to another country, and I’m afraid that in this regard the UK is at the end of the line – there was a time where we could bang the EU table to focus attention and to get something done but that was before.

          1. rose
            September 27, 2022

            Gary, that was the theory. In practice, we couldn’t even get them to observe their own Dublin Agreement. “Pooling sovereignty” means there is none, and no responsibility either. No borders means universal lawlessness. Sweden, Hungary, the Czech Republic, and now Italy are all fed up with just “banging the table”. It didn’t work.

  39. a-tracy
    September 26, 2022

    I think Khan is trying to compete with Kwarteng on giveaways. He has given free travel for all TFL workers – this way, he gets to keep the benefit of the books. The cost doesn’t show but has a high value. Who pays the tax on these benefits? The average annual Oyster card zone one and two is about Ā£1500.00. Is it just the employee that gets it or all their family too? Do they have to pay benefit-in-kind taxation and class 1A? Seriously we should be told, are all these railway workers’ perks taxed as perks are for any other industry? I can’t give my employees more than Ā£5 per day tax-free if they are staying overnight away from home for a meal! Can hotels all give their employees free hotel group hotel rooms?

    1. Mark B
      September 26, 2022

      If it is a benefit then they will have to declare it on their tax return.

      I bet they won’t though šŸ˜‰

      1. a-tracy
        September 26, 2022

        I think HMRC need to answer this Mark donā€™t you. Do these benefits in kind have to go on a P11D or not? Do all train drivers have P11Ds and pay for their benefits in kind. Enough of this unfair treatment of fellow workers.

  40. Derek Henry
    September 26, 2022

    Morning John,

    Hope you are well.

    Please listen to me John this is a HUGE mistake. The reason the Ā£ is falling has nothing to do with the mini budget and EVERYTHING to do with

    a) The way the govt fixed high energy prices.

    b) increasing interest rates

    See Argentina and Turkey for details.

    Putting up interest rates to try and export more Sterling savings would fast-track the UK to Turkey or Zimbabwe status. In an economy suffering from a supply shortage putting up the price of investment is insane. The rate hikes are going to make things worse John.

    5 rate hikes this year and loans at commercial banks have increased $677 bln in that time and loans are growing at the fastest rate in 29 months. Rate hikes don’t slow lending. The increased cost of credit just gets passed onto the consumer via higher prices.

    Then you have the interest income channels John. Which are a HUGE fiscal stimulus into the economy. Fiscally the same as sending out cheque’s.The larger the debt to GDP ratio the bigger the fiscal stimulas.

    The spot and forward price for a non perishable commodity imply all storage costs, including interest expense. Therefore, with a permanent zero-rate policy, and assuming no other storage costs, the spot price of a commodity and its price for delivery in the future is the same.

    However, if rates were, say, 10%, the price of those commodities for delivery in the future would be 10% (annualised) higher. That is, a 10% rate implies a 10% continuous increase in prices, which is the textbook definition of inflation.

    It is the term structure of risk free rates itself that mirrors a term structure of prices which feeds into both the costs of production as well as the ability to pre-sell at higher prices, thereby establishing, by definition, inflation

    Japan never increased rates John and their inflation is around 3%.

    Why of course with both Japan and the EU and their zero and negative interest rates could NEVER hit their 2% inflation targets. Why increasing rates in Argentina and Turkey etc, just made inflation a lot worse.

    Government buying gas at Spot and selling at a lower fixed price has caused the value of Sterling to collapse. It was so obvious this was going to happen without any ” off sets ”

    1. We can’t increase the amount of gas in the short term – but we can make it somebody else’s problem. One interesting artefact of the Russian debacle is that their imports from the West have dropped substantially due to sanctions. And that has strengthened the Rouble remarkably.

    2. Handwaving aside, it’s straightforward supply and demand. Russia is exporting but not importing so the exchange rate can only go one way to rebalance – and it isn’t down.

    3. So we can do the same. We have a vast trade imbalance with China. China has a dirty peg with the US dollar. If we strongly discourage or ban discretionary imports from China. Luxury goods for example.

    4. Then the pound will strengthen – reducing the cost of gas in GBP terms – with limited blowback because of the imbalance. Front it with a Buy British campaign to encourage local substitution.

    Please listen John. The BOE are doing ALL of the wrong things. If you are not very careful they will completely destroy your economic agenda before you have a chance to make it work.

    1. Mike Wilson
      September 26, 2022

      However, if rates were, say, 10%, the price of those commodities for delivery in the future would be 10% (annualised) higher. That is, a 10% rate implies a 10% continuous increase in prices, which is the textbook definition of inflation.

      WHAT? That implies that all commodities are purchased with borrowed money!

      Therefore, with a permanent zero-rate policy, and assuming no other storage costs, the spot price of a commodity and its price for delivery in the future is the same.

      The difference between the spot price of a commodity and its price for delivery in the future is a function of the cost of hedging. It has nothing to do with the cost of borrowing.

    2. Mark
      September 27, 2022

      A very interesting and wide ranging analysis. Commodity forward prices only reflect storage costs (including financing the stock) when there is a surplus to store. When supply is tight the market extracts a higher price (than storage arbitrage would imply) for consumption today. If higher prices fail to reduce demand adequately then they spike higher still. Forward prices also reflect expectations of improved supply brought forth by higher prices, or seasonally lower demand.

      High interest rates will make precautionary and necessary storage for winter more expensive, and any shortfall will cause non-storable electricity prices for winter to move higher still in anticipation of shortage.

  41. Ian B
    September 26, 2022

    at 13:00 from the MsM – The Bank of England is understood to be preparing an intervention after the pound crashed to an all-time low against the dollar.

    I do hope not – that is the silly imature way of squandering taxpayer money. It only upsets those that are big importers. UK produced goods are now cheap on foreign markets which woul be a big plus if BJ hadn’t cut off the idea of the UK being an exporter and turned us into a massive importer to save the planet. There is the contridiction for you.

    Now “unveiled the biggest package of tax cuts in 50 years” a couple of months ago “The UK had the hihest tax rate in 70Years”

    To get back on track we will have to take some big hits, as the WEF crowd take up their fight with the UK

    Lets hope Kwasi and Liz have the balls to face them down

    1. Ian B
      September 26, 2022

      the Financial Times:

      The bigger problem for Liz Trussā€™s government is the Bank of England. It seems that the Governor, Andrew Bailey, did not get the memo.

      Our central bank has been behind the curve since inflation first started to rise sharply in 2021.

      1. Mark B
        September 26, 2022

        The BoE is trying to engineer a rrecession to combat inflation. The government wants to avoid a recession because it does not want to be kicked out.

        The seeds of all this can be laid way back in 2010 with the Greenest Government ever !

        1. Fedupsoutherner
          September 26, 2022

          Mark. CorrecT and Labour want more green. I see a complete balls up in the making.

  42. No Longer Anonymous
    September 26, 2022

    The biggest threat to the environment is NOT central heating or petrol. It is CHEAP CREDIT which has caused personal spending way beyond means, effectively taking the natural brakes off consumption and deferring the bill to future generations.

    Interest rates should have returned to normal years ago and they still aren’t anywhere near it.

    Growth, for some reason, has been the be all and end all in the measure of economic health. What do we mean by ‘growth’ ? Boat boys driving up the hotel business ?

    1. Mark B
      September 26, 2022

      Yes, but when you build an economy on consumption that is what you get.

    2. Fedupsoutherner
      September 26, 2022

      NLA. Yes and be a use of low interest rates we have a generation of young people who have been used to having nice holidays, designer clothes, the latest technology, false nails and just about everything else false, eating out, drinking and nice cars. If they were lucky enough a house with a low mortgage too. Oh boy, are they going to find it tough to cut back.

      1. Mickey Taking
        September 27, 2022

        Just what my better half was telling me, as if I didn’t know, over a meal this evening. The shock, sadly, is going to be seismic and earth shattering for millions who have found living on credit and beyond their means a way of enjoying ‘the good life’.

  43. Mike Wilson
    September 26, 2022

    The rest is the increased eventual repayment cost of the indexed debt, which will simply be refinanced when it falls due.

    Abracadabra eh? I owe Bill Ā£100 but Iā€™m only paying him 1% interest on it. However, when I have to pay him back in 5 years, the Ā£100 I borrowed is index linked – so I might have to pay him back Ā£115. Still, who cares? Iā€™ll just borrow the Ā£115 off someone else and pay him off. Mind you, I might have to pay 5% on the Ā£115 or whatever the lender demands because, as sure as eggs are eggs, Iā€™m going to have to borrow it from someone.

    1. Mark B
      September 26, 2022

      +1

      Mr. Ponzi would be proud.

    2. acorn
      September 26, 2022

      Have a look at the latest DMO Remit at https://www.dmo.gov.uk/media/pddhdwib/pr230922_2.pdf The government uses “Accrual Accounting”; an accounting method where revenue or expenses are recorded when a transaction occurs, not when the cash is actually paid out, unfortunately.

      Be aware that nothing the DMO does in issuing Gilts (risk free savings certificates for corporations), has anything to do with financing the government’s spending. You will see no mention of it in the the government’s current account at the BoE (the Consolidated Fund). DMO issued saving certificates are a liability of the National Loans Fund, the very real home of the magic money tree that creates the Pounds Sterling on demand by the Treasury, for the Treasury to spend.

  44. No Longer Anonymous
    September 26, 2022

    Just how is increasing immigration going to improve things fgs ???

    Get dole fiddlers back to work !

    1. Mark B
      September 26, 2022

      Consumption.

    2. glen cullen
      September 26, 2022

      1.2 million unemployed in the UK….you never hear about that on the news

    3. Fedupsoutherner
      September 26, 2022

      NLA. I second that.

  45. Mike Wilson
    September 26, 2022

    The recent decision by the Bank to raise interest rates by another 0.5% to 2.25% has done enough to slow the inflation the Bank had allowed to build over the last year.

    How on earth can you say that? Time will tell.

    Large sums are removed from people and companies to pay the sky high bills, with much of that money sent abroad to pay foreign suppliers and pay the elevated energy supply tax bills of foreign governments.

    Good point, Remind me who privatised energy and allowed foreign companies to buy our companies? Who was that? Let me think …

    The cash sums the state has to pay to cover the interest bill on the debt are at quite modest levels because so much of the debt has been financed at the very low interest rates or recent years. Of the Ā£8.2bn of stated interest in August only Ā£3.5bn were cash payments. The rest is the increased eventual repayment cost of the indexed debt, which will simply be refinanced when it falls due.

    Thank heaven someone is thinking about, and accounting for, the future cost of endlessly rolling over debt.

    The government needs to get more people off benefit into work, find ways of working smarter in crucial public services, and cutting out things the state does not need to do in order to control public spending .

    I hate to say it but this web site sounds more and more detached from reality. What does this government – or any government – or any government department – ever do to stop the obscene and constant ways of wasting money that the public sector does. Ā£750k on pamplets telling NHS staff that Black Lives Matter! Really! That’s what they think they should be spending OUR money on!

    Getting a better grip on numbers of illegal and low paid economic migrants would also make a welcome saving.

    We are now in ‘tee hee’ territory. Getting a BETTER GRIP! You have no grip. None whatsoever. Boat loads arrive every day and you DO NOTHING – apart from put them up in hotels, of course. Is there ANY OTHER COUNTRY IN THE WORLD where I could enter illegally from a boat onto a beach and be received by officials and taken off to a hotel, given pocket money and free medical treatment. If there is, please let me know. I’ll be off to buy a bloody dinghy.

    1. Fedupsoutherner
      September 26, 2022

      Mike. Love your last paragraph. Great stuff. Isn’t it ridiculous?

    2. Mark
      September 27, 2022

      Privatisation was conducted under Thatcher. Selling off government golden shares and sale to foreign owners was under Blair.

    3. Mickey Taking
      September 27, 2022

      Pop down to Dover, I’m sure the authorities would happily give you one to take away…

  46. Lindsay McDougall
    September 26, 2022

    To understand what might happen to the UK economy, we have to look at America under Ronald Reagan. Reagan implemented a massive tax cut, the top rate falling from 72% to 28%. Reagan also boosted defence spending massively. He attempted to balance the books with big cuts to welfare expenditure but congress vetoed this plan. Reagan had no choice but to borrow substantially. The Fed jacked up interest rates to prevent inflation and the value of the dollar rose, then fell. The outcome was that the US ran a large value of payments deficit for several years and it ended up with large foreign holdings in American companies.

    1. Mitchel
      September 27, 2022

      And an enormous accumulated debt.”The Republicans around the White House in 1981 believed that a projected balanced budget for 1984 would be followed by a $28bn surplus by 1986.But that depended on a ‘rosy scenario’ which did not happen.The deficits in 1985 and 1986 were $223bn and $226bn respectively,leaving a cumulative increase of indebtedness in the Reagan presidency of nearly a trillion dollars.

      By 1988 despite having vehemently denounced government spending in his ascent to the highest political office,Reagan left the US with an enormous national debt.”

      That quote is from Kwarteng from a book he wrote in 2014.So he has no excuse for not understanding what a disaster he has initiated-assuming of course he is not just gormlessly fronting someone else’s programme.

  47. Mike Wilson
    September 26, 2022

    Well, imports will be more expensive so, perhaps, people will finally start buying stuff produced here. Every cloud.

    1. Mark B
      September 26, 2022

      Mike

      What about the raw materials we need to import to make said things here ? Plus the energy. If we could make everything in house using our own raw materials then yes, it would work. But we don’t !

      1. Mike Wilson
        September 26, 2022

        Mark B

        There was a time when we produced our own coal, steel, oil (and the many things made from oil) and made things here. We need to get back to that so we donā€™t have to pay whatever prices foreign suppliers demand.

  48. glen cullen
    September 26, 2022

    In other news – Very disappointed with the commons debate today on Ukraine, not one MP called for the removal of Russia from the UN Security Council permanent five membership ā€¦it was however full of platitudes on how bad the war is, a waste of an afternoon and an opportunity

    1. Mitchel
      September 27, 2022

      Why disappointed?It can’t be done.

    2. Mark
      September 27, 2022

      if anyone attempted to change the founding statutes of the UN to that degree its little remaining usefulness would evaporate. For a start there would be a clamour to remove other permanent security council members, including the UK. Block voting would soon ensure that membership supported only the most powerful bloc, likely led by China.

      1. glen cullen
        September 27, 2022

        The UN was never designed to govern the world, its inception was a vehicle to settle global disputes, conflicts and warā€¦.like the EEC/EU its grown into an uncontrollable political monster
        One country one vote, no block voting, no veto, no permanent members

  49. Mike Wilson
    September 26, 2022

    Mr. Redwood – I see various reports that the ā€˜marketā€™ does not like what the government is doing – because governmentā€™s proposals did not come with figures from the OBR. Iā€™d like to refute this where I can – any chance of a reprise of where the OBR has been very wrong. Iā€™d love to be able to reply to these people with some figures.

    Reply the search to this blog using OBR and or uk debt

    1. rose
      September 27, 2022

      The media are reporting that the market reaction is to the tax rise cancellations, and the minor tax cuts. They don’t mention the gigantic splurge on furlough and now energy bills. Talk about “unfunded”! That is why there is to be huge borrowing.

  50. paul
    September 26, 2022

    The fed is not for turning yet they will keep going.

  51. Iain Gill
    September 26, 2022

    the more I hear about the new prime ministers immigration plans the less I like it.
    the political class are in danger of open rebellion from the majority of decent voters.
    this nonsense cannot stand.
    the danger of a Labour government looks trivial if ALL the political parties are going to force massive extra immigration, when we already know the existing levels are far too high.

  52. anon
    September 26, 2022

    “The rest is the increased eventual repayment cost of the indexed debt, which will simply be refinanced when it falls due.”

    But likely at a higher cost or rate versus other alternatives. Also what happens if holders of GBP assets decide to move out of GBP assets ie net sell GBP.

    We are borrowing billions to give away billions or waste? With a run on the GBP. Madness.

    1. Mark
      September 27, 2022

      The silver lining is that perhaps we get to repurchase assets cheaply.

  53. StephenS
    September 26, 2022

    Chancellor says more tax cuts in the near future at the budget. Bank of England release a statement that says nothing we donā€™t already know sending things back on a downward spiral again almost immediately. Itā€™s hard not to conclude that competence has left the building and the sharks are now circling. Not looking good.

  54. Fedupsoutherner
    September 26, 2022

    I’ve just heard that the only people having large families in Italy are those on benefits. Sounds familiar?

    1. rose
      September 27, 2022

      And it was intimated they weren’t Italian.

      1. Mickey Taking
        September 27, 2022

        Is there an Italian equivalent of this:-
        Being born in Britain might make you confident you have a decent grasp of what it means to be British.
        However, you may find the UKā€™s citizenship test is slightly more difficult than youā€™d first imagined.
        The set of 24 questions, also known as the “Life in the UK” test, will cost Ā£50 and is compiled from 3,000 facts about Britain. The test must be completed within 45 minutes and applicants need to correctly answer 75 per cent of questions to pass. Meaning a score of 18/24 is required to pass the test.
        Anyone born abroad who wants to live in the UK permanently, or who wishes to become a British citizen, has to pass an exam as part of their application. Foreign nationals will need to answer a range of multiple questions testing them on their knowledge of British laws, history and traditions.
        As well being able to answer these tough questions you must also have spent a certain period of time in the country, passed an English language test, and not have any criminal convictions.
        So, if we determined the illegal arrivals on our beaches are criminal – they would all be denied citizenship.

  55. paul
    September 26, 2022

    11 million people of working age who are not working because one thing and another paying no tax, people working for the gov pay no tax, then pensioners paying no tax, and body under age of 18 paying no tax. My man john talking about borrowing money.

    1. glen cullen
      September 26, 2022

      Donā€™t worry so much; if the government can afford HS2 they must have loads of money

  56. DOM
    September 26, 2022

    Starve Labour’s oppressive, progressive political infrastructure before it consumes us all, dilutes our nation, its culture and our freedoms

    The nation elected a Tory government and instead we have a Marxist cabal controlling the entire public sector apparatus

    The Tories must PUT NATION BEFORE PARTY in the way Thatcher did

  57. outsider
    September 26, 2022

    Dear Sir John, I could not resist a chuckle when you wrote: “According to the Bankā€™s own forecasts inflation will now subside to the 2% target over the next two years”. Can you recall any issues of the Bank’s quarterly Inflation Report over the past 25 years when the Monetary Policy Committee has not projected reaching the inflation target in two years time as their central forecast? It was often right, albeit usually in more stable times, so let us hope.

  58. John Dee
    September 27, 2022

    Hello Mr Redwood, hope you are well.
    I agree with your macro analysis of the situation; it’s interesting that Elon Musk is now on the record for saying the FED is going too far.
    Mr Bailey at the BOE gets some stick, but what can he do when the housing market has been inflated by successive governments, and particularly by Sunak. The inflation in the economy will come down quickly – people will shop at cheaper stores; drive around less; the risk now is that the tapering of spending will bring about a recession which will of course be deflationary. Either way inflation is heading out of the economy.
    The Chancellor made a rookie error by promising more tax cuts on Sunday – you need to give markets time to digest whatever has been announced. I think he and the PM have learnt their lesson.
    The pound is finding a natural level against a dollar that has surged too high anyhow.
    The big risk as I see it is the BOE raise rates too high and too quickly and kill off the housing market and bring about a deep recession; but Bailey seems to be resisting this so far. May he hold his nerve.

    1. Ian B
      September 27, 2022

      @John Dee I basicaly agree other than having the Chancellor rock the boat on World Grouop think – thats a Great Idea. Markets are only what the ‘market makers make them’ it has nothing to do with real life

  59. ChrisS
    September 27, 2022

    The markets have clearly over-reacted to the mini-budget which is what they normally do to create millions of more profitable financial trades. To price Sterling debt higher than that of Italy and Greece is ridiculous when we have lower net debt that many leading countries including the USA.

    I suspect Sterling will settle down but the dollar will continue to climb against both Sterling and the Euro because the US is in the fortunate position of being self sufficient in gas and oil. The Euro will be the next to be hit because, while our government has already moved to neutralise the effect of energy costs in a way that will usefully reduce inflation, the EU has not properly responded to its energy crisis. Europe’s energy problem this winter is far more serious than ours. The Eurozone can only safeguard energy needs for both businesses and households by borrowing hugely or printing money.

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