Just like government explaining its line on the pandemic, the Bank tells us its decisions are driven by the data. As someone who does seek to provide sensible forecasts of inflation, growth and deficits going forward, I agree you start your task by assembling good data. You seek to understand the figure you are forecasting, so you are aware of the way it is compiled and what affects it. You needĀ also to be aware of the imperfections in the data, and the quirks from the judgements made about how to define and compile it. As we saw in trying to compare different countries handling of the pandemic the definition of a covid death andĀ how strenuously the authorities sought to record them mattered a lot to data outcomes. Forecasting inflation produces different results depending on whether you use CPI, RPI, core CPI or some other index.
It is however wrong to say policy decisions are data driven. If they are they will beĀ always looking backwards. You cannot drive the car successfully by looking all the time in the rear mirror, though that will give you a perfect understanding of all theĀ hazards you have just missed. You need mainly to observe what you can see through the windscreen ahead, but you need to judge or interpret what you see. Will the green light go amber? Will the child step off the pavement? Could there be someone dashing out from behind the parkedĀ car? Is the road ahead clear enough to accelerate safely? To drive well you need to choose the right data – data about the road ahead, not the road behind, but you also need to interpret it dynamically. So it is with the economy. Knowing inflation has been fast does not mean it will be next year. Seeing oil and gas prices surged last year does not mean they will surge again to keep the inflation rate up. You need to judge how prices will alter ahead. Putting rates up because last month’s inflation was too high is not necessarily a good idea.
To make better judgementsĀ it helps to understand how prices rise. Here the Bank ignores money and credit, yet it is if there is an excess of money and credit around that you are most likely to get inflation through excess demand. The Bank does have a model of what might happen next based on a concept of capacity in the economy. They seek to judge how much capacity there is in the economy to make things and supply services and then compare that with demand. If capacity is fully used they expect inflation, if there is surplus capacity they expect inflation to subside.
There are several reasons why this is aĀ very difficult way to judge the future. The first is it takes no account of the ability to import, yet an economy like the UK relies heavily on imports for marginal supplies of all kinds, so global capacity matters as well as domestic. The second is it isĀ very difficult knowing what capacity is. A business may say it can only supply 200 widgets a day, but if pushed and offered more money it might be able to add aĀ night shift to go up to 300. A restaurant might say it cannot do extra private dining, but could then discover it can hire more staff and open for more hours to serve more meals. Another manufacturer might discover that although he can put on another shift he cannot get an increase in components for the next two months to immediately boost output. To make it easier the Bank often relies on unemployment as the best indicator, assuming higher unemployment means companies could expand easily if there was extra demand by taking on more labour.
I will look in a future piece at why it is wrong to ignore credit and money and how it is difficult to find a reliable proxy for capacity utilisation which works for the future.
March 28, 2023
It surely cannot help forecasting when you have government hell bent on a Net Zero policy with no idea of the actual full cost of implementation and the real impact on every sector of society.
March 28, 2023
Indeed the government was/is wrong on Net Zero, wrong on lock downs, wrong on the net harm vaccines (certainly for younger people), wrong on the lockdowns, wrong on HS2, wrong on test and trace, wrong to close schools, wrong on eat out to help out, wrong on Sunak’s money printing & thus currency debasement & inflation, wrong on the appalling Windsor Framework, wrong on the vastly high tax levels… so what have the Tories or Sunak got right?
See the paper by a sensible Oxford Physicist The Inadequacy of Wind published by the Global Warming Policy Foundation. Not only is it inadequate and intermittent is need load of fossil fuels to build and maintain and load of subsidies so it makes little or no economic sense.
https://www.thegwpf.org/content/uploads/2023/03/Allison-Wind-energy.pdf
Andrew Bailey is not renowned for his good judgement. The FCA gave us 40% personal rip off mortgages for all in effect banning them for most sensible borrowers.
March 29, 2023
Anyone who thinks that wind/solar is a lower cost electricity supply option is utterly deluded. Both require the provision of a parallel generation infrastructure to cover for the inevitable gaps in supply, so you have to pay twice as much for the same level of electricity generation – common sense (that absent facility in all government circles) would say just build the real generating facilities and abandon wind and solar as frivolous luxuries that we cannot afford.
March 28, 2023
@turboterrier – forecasting by those that refuse to think things through and manage, sort of an oxymoron dont you think.
March 28, 2023
There was a time, if you got a modelling forecast wrong you were never heard of again ā¦now itās a badge of honour, just look at the Met, the Climate Crusaders, the UN IMF, Universities and Think-Tanks
March 28, 2023
Oven ready? Brexit means Brexit? Get Brexit done? Stop the boats.
Forecasts….oh dear.
March 28, 2023
I think they have a very good idea of the costs TT – but choose not to publicise them for the obvious reason that people might wakeup to just how expensive this is going to be.
As an aside – I am now paying several hundred pounds plus a year, just in daily energy charges (before I even turn on a light or our gas boiler) – a chunk of which goes to pay for the bail-out of failed energy companies. Since when should I (or anyone else) have to pay for a company that’s gone bust because of their poor planning and apparent lack of sensible regulation? Why isn’t this part of the standing charge broken out so that I can see what this incompetance is costing me?
March 28, 2023
And because they are effectively invisible to consumers Sir John – I wonder if these ‘extra’ charges will be removed once the losses have washed through – or will they just become embedded?
March 28, 2023
+1
March 28, 2023
The wheels are quickly coming off the net zero scam in many countries. No doubt t our government will persist down this ruinous path until a pulic backlash forces them to stop
The BofE is one of the main cheerleaders following the UN and WEF
Politicians would do well to follow what’s happening in their beloved EU. France on fire, Holland drowning in excrement and Scandinavia facing unrest over the open borders policy
Rishi messing about with Nox and graffiti will fool no-one
March 28, 2023
According to the Daily Telegraph headline – ā Bank of England Governor warns that the shrinking workforce has pushed prices and interest rates higherā
I fail to see how increasing interest rates helps this situation as increasing interest rates pushes up annuities so makes retirement more attractive.
The only effect of rising interest rates so fast will be to cause a reduction in investment and less jobs.
March 28, 2023
The root cause of people retiring early is they are disenfranchised with the UK.
The politicians implement Woke, Net Zero and Mass Migration that was never voted for. Politicians support the abuse of the people who built this economy by calling them stale old white men and demand massive taxes and benefits from them to pay for their lack of skills and intelligence. I will retire and leave the economy in the hands of the grifters and scroungers.
March 28, 2023
I speak to successful business people of the previous generation to mine. When I tell them my business problems, they propose solutions and then I explain why (all) the solutions they would have relied on are no longer an option.
With a shake of the head I eventually just hear te deums that they are no longer in business.
Being a capitalist and therefore creating the wealth that the Bank and Nr 11 think they can just print, is nigh on impossible in this increasingly socialist society. No wonder people are opting out as soon as they can.
Sir John I would like to hear your thoughts on the loss of the USD as the reserve currency and the replacement of the petrodollar and how that will impact our economy. Instead of trading pieces of paper for commodities we are going to have to give value for them. Who can create that value? Does the Government comprehend and have a strategy to encourage those who can add value?
March 28, 2023
Javelin
Iām inclined to agree. I know of several people who describe working with some (not all) youngsters, who have a terrible work ethic. Arrogant, entitled, lazy and view older people as dinosaurs. When did this attitude start? If this is reflected in The Treasuryā¦Lord help us.
March 28, 2023
+1
Newspapers, TV ( esp BBC sitcoms) have worked on this for decades. Denigrating our culture, religion and thus, per force, older indigenous people. Schools too have played their part.
Remember Pol Potā¦kids spying on parents? Probably the same with all commie regimes.
Divide and conquer. Always.
March 28, 2023
@Cuibono; Oh that old vexed question, does TV mirror society or does society mirror TV.
“Divide and conquer. Always.”
Indeed, there was a reason why employers used to provided tied housing, even company shops and perhaps pay in tokens that could only be spent at the company shop…
March 28, 2023
Javelin,
When you retire consider moving to Spain. Apart from the climate advantages, your pension will go further, the variety of food availability is incredible, where can you buy an octopus in the UK, their NHS is excellent, their tax regime is less penal, they respect and revere the elderly, woke is unheard of, they believe in visible and available policing, the spanish are basically honest and friendly. To facilitate life get a well recommended spanish lawyer, and learn as much of the language as you can. I am only back in the UK the to family responsibilities, the differences hit you like a brick wall.
March 29, 2023
@agricola; Spain is indeed a lovely country, although I would hardly suggest woke is unheard of, and Spain can be as or more bureaucratic than the French. As for learning the lingo, if you think the Welsh nationals are bad just try speaking Castilian Spanish in Catalonia, you stand every chance of being totally ignored, better to learn French and then pick up some Catalan! Find out if there is a string tradition of a local dialect for the area of Spain you’re interested in, there quite probably is…
March 28, 2023
@Javelin; The reasons most people retire early is due to health issues, not because they are “disenfranchised with the UK”, at least not in the ways you suggest, I know two people in their early 60’s who are all for what you call Woke, Net Zero and Mass Migration policies, one has manual work related spinal damage, the other simply could not face the daily office commute anymore. As far as I can tell neither support Lab, LDs or Greens, one I know was sympathetic towards leaving the EU.
March 28, 2023
It’s because under the Tories work per se is generally grinding, demeaning, oppressive, insecure, and poorly paid. Exactly how it should be to teach ordinary people To Know Their Place in other words.
That will not change no matter what the economic cost until a more enlightened government are in power.
March 28, 2023
But under LABOUR as long as I can remember the message has been ‘ stop work, everybody out, they will have to pay more and increase employment benefits’.
This tactic continuously breaking industries is what has caused work to become generally grinding, demeaning, oppressive, insecure simply because owners/employers have to look to reduce workers effect on their industry – automation, computerisation, de-skilling, importing key items where they are not normally held to ransom (by the UK workforce).
But you cannot see that, can you? Go load the gun again and shoot yourself in the foot, such a long miserable history of it.
March 28, 2023
The problem for the government is the laws of unintended consequences
Taking the clothes off our backs will only precipitate mass retirement and an exodus of the tax base
They will be left with a rump of unemployable gimmigrants and less money to support them
The real workers in this country won’t be taken for granted whilst the cosseted public sector get all the cream.
March 28, 2023
@Ian Wragg; “an exodus of the tax base”
Except, whilst not impossible, that has become less easy to achieve since Brexit except for the very wealthy, or were you referring to tax avoidance (I’ll be kind…) by people who are still resident in the UK?
“a rump of unemployable gimmigrants and less money to support them”
Nonsense, many if not most immigrants come here willing and wanting to work, whatever the far right tell you. Your comments tells us more about yourself than it does those you try to demonize.
March 28, 2023
Here’s me thinking high prices were caused by 100s of Ā£bns of quantitative easing.
What do I know?
March 28, 2023
That’s called deflection, the refusal to manage what you are paid to do, just follow others. Then when it all goes pear shape āit the other guyā
Bank of England Governor just as with this Conservative Government are in a comatose state, they think that by refusing to do the job they were empowered and paid to do that there is no need to āmanageā anything.
March 28, 2023
I earn 150,000 per year. I will now be putting Ā£24k extra year into my pension that I donāt pay 60% in tax.
For me at least you have list Ā£10k in tax.
I suspect anybody over 50 will do the same as they have paid off their mortgage and will not have children at home.
This tax is just accelerating the countries woes.
March 28, 2023
We will become a country of tax avoiders.
March 28, 2023
Indeed we are now all avoiding Tory tax. All incentives for workers/entrepreneur’s are gone. The Tory’s are now the Wilson/Healy combo when it comes to tax and the brain drain has begun accordingly. The 30% rise in Corporation tax, the freezing of allowances across all income taxes for another 5 years, freezing of inheritance taxes again, whilst reducing Capital Gains Taxes. Of course we have noted the inflation busting unemployment benefit rises and the 40 odd different claims the welfare people can claim. All funded by the 46% or borrowing (not in my name). This Government is actually worse than Wilson/Heath. It is simply wrong in every policy area. Does Loughton think the 20,000 additional refugees on top of the 100,000’s from Hong Kong, Afghanistan and Ukraine and the boat people are a vote winner? I think he and the rest of the Consocialists are in the wrong party and should be investigated by trading standards. He and similar people should be made to pay for their largesse, then they may think differently.
March 28, 2023
I too am arranging my tax affairs to such that I pay the minimum amount.
March 28, 2023
Same here. I’m finding it quite satisfying depriving this atrocious government of as much of my money as I legally can.
March 28, 2023
@Javelin; But higher interest rates is what many on this site have been screaming out for since 2007/8, think of the savers they cried! Few were complaining about even 8% back before the Banking crash. The UK still has very low interest rates compared to 25-30 years ago, yet back then business investment remained high.
March 28, 2023
If the people at the Bank of England don’t know “…..why it is wrong to ignore credit and money” they really ought to be fired immediately.
March 28, 2023
Any excuse Javelin, it covers incompetence !
March 28, 2023
Does the BoE know that there’s 1.2 million unemployed in the UK
March 28, 2023
Good morning.
I will pick up on one item in today’s piece and that is of inflation, and the way that it is calculated.
To me there are two types of inflation. Price inflation and wage inflation.
Price inflation is the rise in cost of goods and services compared to previous over a given time. It cannot be controlled, only influenced, as the cost is largely market driven. The only two areas here that I can see where the government and its ‘organs’ can influence the price is through the supply of money and consumer affordability by various taxes and interest rates. It can also cap local and devolved government charge rises. It is therefore difficult to forecast and can only be used, assuming they use the correct information which they do not, as a historical measure with only trending lines being of any real value.
The other form of inflation is wage inflation. Wage inflation is very much affected by price inflation but can, be controlled though good governance of Public Services with wage caps and the slowing of the economy to create higher demand for jobs. But again, it can only be seen in historical terms and via trends.
One does not ask for miracles but better figures and good knowledge of how things work do help. Currently there is a lot of speculation in the housing market. Will it go up or down, etc ? Many commentators are being honest and simply saying that they do not know. Why ? Because they do not have enough data to see a trend and therefore cannot predict which way the market will go.
I find the BoE and the OBR figures to be dishonest and inaccurate because they are using bad data. But what I find worse is, their refusal to learn and to adapt. If you did this in the Private Sector you would not last long.
Time for the government to get rid of the OBR and turn to a range of private economists to do the forecasting.
March 28, 2023
There is a third inflation type: Asset inflation. We saw the period of zero base rates led to much higher prices of houses and other assets. If interest rates are low and cash is cheap people purchase higher risk assets and borrow more.
The cost of the last 15+ years of asset inflation is still to be paid.
March 28, 2023
@Mark B,
‘The only two areas here that I can see where the government and its āorgansā can influence the price etc.ā Tax is the big manipulator as it is politics driven not market driven. It is used to change attitudes, minds and bend results. Tax is no longer the provider of infrastructure and services to promote a strong resilient economy.
The independence of the BoE has not improved anything, based on it all was working quite well before. The OBR? A whole other story a newish concoction that is seemingly a political voice first anything else second, again no improvements on how things were before its creation.
In the round you can say these entities evolved from personal and political āegoāsā of those that are elected and paid for responsibility wishing to say ānot me guvā its those guys over there and distance themselves from āmanagingā
March 28, 2023
@Mark B; “Time for the government to get rid of the OBR and turn to a range of private economists to do the forecasting.”
How would that be any different, unless…… Data tends to be binary, ask 100 experts to look at raw data and you’ll get the same answer back 100 times, on the other hand ask those same 100 ‘experts’ to use their judgment and you’ll likely get 100+ different answers back! Ho-hum, I take your point Mark, but why then even bother paying for private economists, just get the ‘experts’ within No.11 to do the forecasting, again.
What we do need to be rid of is the carefully selected ‘Basket’ when calculating retail inflation, that basket often contains items of totally discretionary spending, often including in-store loss-leaders.
March 28, 2023
@ Mark B – whilst price controls over labour (wages) might be easier to implement than over other prices, will they eventually not be equally futile?
March 28, 2023
I think it’s worse than you indicate. I think we have ‘structural goods and services inflation’. We have deliberate government policies to reduce production at home of many of the things we use daily. In particular we are energy vulnerable. I do not understand why the government imperils us like this, other than it is part of a strategy to force us back into the United States of Europe .
March 28, 2023
Iām afraid itās worse than you indicate. The EU is finished and imploding – we see it daily. Itās to force us to āworld average living standards to facilitate One World Govt. They continue on this path because they donāt have agility – the designers of this dream are long dead. If they had any mental agility they would see that Putin has burst the Globalist bubble, and now he has preempted the āregime change in Belerusā strategy too.
Makes you want to cry with laughter š
March 29, 2023
Absolutely Lynn. The West has been sleepwalking in a world of taking advantage of cheaper labour, plentiful supply of competitive goods and power. Now a new dictator has turned all that on its head and taken us back to basics. Globalism sucks!
March 28, 2023
You make a good point about ‘structural inflation.’ When you have the State doing more and more for people pushing out private enterprise and competition which helps reduce prices.
March 28, 2023
I blame institutional racism, sexism, misogyny and homophobia for the bank’s failings. Oh, and any other phobia that is invoked with one aim, to destroy and take control of any worthwhile powerful institution.
The Tories capitulation to the politics of ‘phobia’ is handing power to lunatics and cranks
March 28, 2023
@DOM +1
Very good and oh so true
March 28, 2023
They now depend utterly on those to remain in office.
Don’t they?
March 28, 2023
Indeed. It has affected all health and public services since ā¦.Blair. He changed the selection criteria to all senior posts to ensure a left wing woke/pc ideology took hold and anyone right of centre was to be shunned. 25 years LATER……….all health and public services are failing as they are all inward navel gazing, work from home and pull any minority ticket if challenged, ensuring that equality in numbers and minorities are looked after. Forget their merit, purpose or function. Still the Consocialists agree as they have had 13 years to change it and ………………….haven’t. Letās have 20,000 more refugees instead to add to the boat people and millions of others so we can all wait longer on the NHS waiting lists. Election please. We need the Labour Party in so everyone can see we need Reform pdq and the other Parties will die.
March 28, 2023
When considering BoE and OBR forecasts it is well to remember the maxim: “garbage in, garbage out”.
March 28, 2023
Did anyone actually need to forecast that money printing would lead to inflation? Or that treating workers truly abominably at work would, at the first possible opportunity lead to fewer going into work?
Or, come to that, winter is generally a cold time but no one forecast fuel shortages due to not stockpiling ( aka forecasting).
Blinking squirrels understand forecasts better!
March 29, 2023
Our squirrels correctly forecast the nut and seed feeders get topped up most days.
March 28, 2023
There’s other ways to tackle inflation. The BoE knows There’s a problem with corporate greed and price gouging, but have done nothing about it. Greedy CEO’s drive the prices up to protect profits, but also to protect and increase their bonuses. Time for this government to act upon corporate greed.
March 29, 2023
Just a week or so ago, I was listening to the farming programme on the radio, when farmers said that supermarkets are putting up prices of milk, and other dairy products but are not passing this on to the farmers. It seems their attitude is ‘we have a contract and we expect the farmers to fulfil it at the prices negotiated’. Very short sighted and damaging obviously, and many are not bothering to sow crops or are running down their stocks or keeping fewer chickens etc. All will result in further shortages in the future just to a few can get short term big profits, but they overlook that people only have a certain amount to spend and will pay more but buy less. Stupidity is greed.
March 28, 2023
Bailey blames people who have had the temerity to retire for high interest rates and high inflation. So nothing to do with the Government driving the economy over a cliff and the BoE printing Ā£billions to facilitate the economic destruction.
It’s all the fault of Joe and Jo Bloggs, who have decided that after 2 years of having their lives wrecked by the Covid lunacy, they’d rather NOT go back to work and be taxed to the max to pay for the Government’s lunacy.
That isn’t data-driven; it’s gas lighting.
A Government which was determined to get the economy back on track would sack Bailey. But I guess he knows too much for Sunak to dare do that.
March 28, 2023
Has the Bank of England accounted for the additional free money that will be pumped into the economy from the inflationary benefits and pension increases due in April?
While workers toil and struggle with below inflationary increases those supported by taxpayers on benefits are insured against these rises by hand wringing worthies screaming fairness.
What is the point of earning a living when you can be handed one?
March 29, 2023
Pensions are not a benefit, they have been paid for and earned. We have the lowest pension in the civilised world and pensioner poverty is higher here than anywhere. They have matched inflation, not busted it, pensioners having been cheated over the last few years with less than inflation increases, especially last year, and even this years rise does not put that back to where it should be. Of course if you can’t work out that 10 percent of sub 9 grand is less than 4 percent of the average wage of 30 grand, you need to have bit of a think.
March 30, 2023
Yep! The confusion arises because there is a thing called āpension benefitā which is a pension paid to people who have never paid in!
March 28, 2023
Fresh from blaming inflation on greedy companies raising prices – an argument you might expect from a student Marxist society – the governor of the BoE now blames people taking early retirement for inflation. He seems to be casting around for any possible explanation other than than that he and his colleagues misjudged monetary policy. He really needs to be replaced.
March 28, 2023
And so too does the man who was Chancellor at the time all this money was being printed and signed off on it.
š
March 28, 2023
Remind me who printed money like it was going out of fashion? Answers on a post card to the Snake/Bailey.
March 28, 2023
Nothing to see here ā Inflation has nothing to do with increased net-zero cost, printing money, or increasing interest rates ā¦.so donāt go blaming the BoE
March 29, 2023
If/when he is replaced he will get a huge pension and a seat in the Lords with access to another 300 pounds per day for having a kip on the red benches and delaying lawful legislation if he feels the need.
March 28, 2023
The reason for entrenched high inflation in the UK and indeed the western world is down to one reason – the quadrupling of the price of gas by the fossil fuel cartel in 2021-22. Currently, here in the UK inflation is 10.4% and will remain high and may even go higher – so long as the BoE keeps the bank rate at 4.5%
March 28, 2023
Gas and fuel prices are below invasion prices but strangly the consumer prices haven’t followed.
This is down to the government following net zero policies by freezing us to death and keeping us off the road.
March 29, 2023
@Ian Wragg
You people really are desperate. Having lost the renewable energy argument, you attempt to divert blame from our now entrenched 10.4% inflation from where it belongs – the Ā£mega-billions in subsidy paid to the fossil fuel cartel – to “net zero.” Pathetic.
March 29, 2023
The amount of money paid to ” the fossil fuel cartel” isn’t the cause of the current level of inflation SG.
Look at post Covid money supply increases and huge deficit spending increases in most Western governments
March 28, 2023
āBank tells us its decisions are driven by the dataā Garbage in, Garbage out.
March 28, 2023
@Ian B; But subjective judgements can also equate to garbage in, garbage out, even more so if subjectivity is allowed to become clouded by political considerations, unless of course the issue is political survival, not economic survival.
March 28, 2023
Prof Ferguson: ‘I’m from the Faculty of Medicine, School of Public Health and am here to help you’
March 28, 2023
His sermon on the mount addresses where quite something ….is he in the Lords yet
March 30, 2023
We need to close the door on the House of Lords to keep the plebs out. The Lords have long since left.
March 28, 2023
There’s one enormous factor out there with trades. People sensing that other folk are pulling out of supplying services will sense that they are in a strong position to increase prices. When that’s coupled with increasing input prices for materials used then the temptation becomes irresistible.
We have a workforce and supply side now who knows they can survive for a couple of years without working or supplying, because +/- they did. So why not try the approach of take it or leave it with customers?
March 28, 2023
Data is the past, it may show trends, but success comes from anticipating the future or forcefully creating it. Elisha Otis on ascending staircases did not envisage more and more elaborate staircases, he created the lift. History/Data we hopefully learn from but avoid making the same mistakes.
March 28, 2023
+many
Very well said.
March 28, 2023
The problem is that lawmakers have taken this to heart, they believe that if they legislate for impossible things – we lazy sods who would otherwise refuse to stir ourselves, will invent what is required to keep within the law. Commercial premises insulation law is a case in point – it cannot be done!
So thatās why they declare the end of the internal combustion engine, the use of fosse; fuels etc etc.
They donāt believe it canāt be done, because they donāt know how anything is done. They are not ādoersā – they are ādictatorsā and āmagical thinkersā.
March 28, 2023
Slightly off topic, we now get the āConservative Democratic Organisation (CDO)ā
Mr Rees-Mogg told The Telegraph: āI am looking forward to addressing the voluntary party, which I have long thought is the backbone of Conservatism.ā
āThe CDO will make the Conservative Party the most democratic and in-touch party in British politics. Democracy will prevail.ā
The aim appears to be, the bringing back of the Conservative Party and having a Conservative Party that democratically gets to choose its Leadership.
And, most of us here thought no one else noticed that this Socialist Government is not the Conservative Party.
It is very hard not to be sarcastic and bitter nowadays, not because of disagreeing with the politics of one side or another, but the disingenuous way a good chunk of those we elect of all completions donāt stand up for the very purpose of their own existence of elected representatives. The ideals of Sovereign Democracy, laws, rules and regulation created by the people for the people. These things are to readily dismissed
March 28, 2023
The Bank of England needs L-plates but drives dangerously.
March 28, 2023
@Bloke; “The Bank of England needs L-plates”
Nice joke, but by the same score so many senior members of any govt these days are barely old enough to apply for a provisional licence, and even if they are many have never driven on the public highways (worked outside of politics)!
March 28, 2023
The BoE is to powerful, it manufactured a coup and got away with it in broad daylight and is beholding to the UN WEF ā¦it can produce whatever data it likes, whoās going to challenge it
March 28, 2023
Is there any good judgement from Government on anything? (And I just don’t mean the Conservative Government). These days individuals are promoted more for political reasons rather than skill and experience in a subject. The benefits of the woke and management culture emanating form the elitist liberal left. Though left and right have lost there original meaning when it comes to today’s political world.
March 28, 2023
Data is one thing , reading between the lines is another . The BofE has not shown any ability in its judgement of public need ; it has long been influenced by the USA and its economic leadership . If we are to overcome our own challenges and difficulties we must first consider the priorities on our doorstep . The Government must manage and the BofE must be secondary to this initiative .
March 28, 2023
But still, Andrew Bailey remains in position, not sacked for failure, so he will continue to fail! It seems we have a PM, Chancellor & Governor of the B of E who have no clue how to run an economy.
March 28, 2023
ā¦ Or a bath.
March 28, 2023
āJust like government explaining its line on the pandemic, the Bank tells us its decisions are driven by the data.ā
The Bank cannot possibly have all the necessary data as it simply doesnāt exist for the massively expensive Net Zero Strategy to transition from cheap, abundant and reliable fossil fuels and nuclear to expensive, intermittent, weather dependent unreliable and insecure renewables. The Treasury refused to give the HoC Public Accounts Committeeās Net Zero Follow-Up Report dated 02/03/2022 any costing for Net Zero.
A recent NAO report pointed that DESNZ has no overarching plan because it is relying on technologies which do not yet exist, such as storage, and hence has no idea of costs. Further, the NAO report says that although there is a costing for electricity generation all the other costs of decarbonisation, storage, upgrading the national and local grids, the cost to convert to heat pumps and evs etc. are ignored.
Never mind forecasting the effects of very high energy costs causing the decline of our manufacturing and necessitating increasing imports as manufacturing moves elsewhere.
March 28, 2023
ādata drivenā as @agricola āData is the pastā
If you are paid to keep inflation under control, and your mind wonders and you let your politics override your job, fail to act/manage – all the data in the world fails.
If through your neglect you forgot your job and inflation rises exponentially, you then weaken the economy that causes more inflation. Which ever way you try to shake it out you are the problem.
Then to suggest in a major speech that O.4pc of the workforce has retired, that then causes interest rate and inflation rises? Or that is what Andrew Bailey tells us.
These things have nothing to do with his puppets in Government creating the highest tax take in 70 years, deliberately depressing the economy. It has nothing to do with unfunded QA. It has nothing to do with the LDI/pensions situation that the Regulator (Andrew Bailey at the time) failed to address.
It is also an abject failure of Government who refuses its job of managing the UK, but instead takes to lightweight airy fairy speeches on stamping out ālaughingā
March 28, 2023
Dear Sir John, Measuring excess capacity has been a statistical nonsense since the later Gordon Brown years, when the economy was “walking along the ceiling”. This was worsened after the banking crash when policymakers could not bring themselves to accept that a negative shock had cut all-factor productivity and therefore the capacity of the economy, a shock repeated in the lockdown period when so many more businesses were lost. No government seems able to tell us that we are all simply poorer because of some adverse shock.
Adjusting interest rates back from the post-crash emergency measures was always going to be tricky, not least in the mortgage sector. But as some of us argued at the time, Bank Rate should have been returned to something like a neutral level (about 3.5 per cent to 4 per cent) by 2014- 15.
The Bank’s other disastrous mistake was its essentially political decision to halve Bank Rate in response to our vote to leave the EU. Since the main problem noted by the Bank had been a fall in sterling, the only rationale can have been to punish voters by pushing the pound down further.
Hence we went into Covid (when we really did need a monetary boost) with nugatory interest rates and could not respond in a timely way to inflation. As you say, being far too late has only made matters worse.
March 28, 2023
Is the BoE advising the government on HS2 ā¦Sunak has just recommitted HS2 while giving evidence at todays liaison committee, maybe its another BoE plot !
March 28, 2023
āAs someone who does seek to provide sensible forecasts of inflation, growth and deficits going forwardā: where does the public can see them as to see whether they are more sensible than those from the BoE?
Reply Here
March 28, 2023
Data driven also includes ‘data trends ‘ and that is looking ahead but not too far ahead. Yes judgement is important but that needs people at the helm who are experienced have wisdom not the Kwasi Truss style of throwing a dice but people who network with others like international institutions and banks – people who are not always political or ideological driven but more circumspect. Problem for us now is that we are outside of the ECB where we would have had an oversight body with an abundance of first hand up to the minute performance data from 27 other countries to call upon as well and now our institutions are in panic mode because of the downturn and the feeling is that we are on our own – so we have to be careful not to make things worse.
To finish the BoE and government data driven focus by itself is not enough to give best outcome – for best outcomes we need friends – we need friends to liaise with to get diverse views so that we can make better decisions – we need the advice of friendly outsiders as well as our own and that is what is missing at the moment – witness Kwasi when he was confronted over his half baked budget ideas in Washington not too long ago – well enough said.
March 28, 2023
The BoE echoes the damaging principles set during the Covid crisis. Data modelling failed us then, as has been proven, yet the BoE readily adopts a similar approach.
Instead of utilising their own knowledge (assuming they had any) and all historical background information to form a clear judgement, they adjust data created by machines to produce ‘what ifs’ and ‘maybes’ to fix the problem.
It seems to me the BoE now emulates the Home Office (and Treasury?) in that it demonstrates itself currently unfit for purpose. As chefs say, “The proof of the pudding is in the eating” and we plebes are starving! Why?
March 29, 2023
I’m afraid Andrew Bailey has always given a clueless impression, both at the FCA and the BoE.
His on-air Radio 4 advice to those who set prices ‘not to set them too high’ must count among the most comically helpless bits of official advice ever issued since we were urged to crouch under the dining table in the event of a nuclear attack.
He seems unaware that food inflation is around 150% and seems now to be rising further. He must know that prices are set by a quasi-cartell of supermarkets that are only restrained by the two keener-priced German entrants to the market, both much more in touch with consumers’ needs. He must know that energy costs are about to balloon in April when the government subsidies are removed. Does the man never shop or pay bills?
March 30, 2023
Here’s some real data Sir J!
UK wholesale gas 2.2p/ kWh for gas from April to June 2023 (source: Google).
UK electrickery is based on these gas prices , so why don’t our retail gas & eleccy prices reduce dramatically?
It looks like a cartel managed by HMG/OfGem… a real Tory voter killer imho.
To ensure inflation stays low, everyone needs sensibly lower priced energy… this must be key for Shapps in his newly announced energy mix and transition to baseload nuclear (~15 years off) plus intermittants/other.
Dear Bailey looks rather delusional by seeking to blame early retirees for higher inflation – he needs to be replaced. It’s not just about good data, it’s also about it’s valid interpretation plus the weighting of other cost drivers/factors. Excess money printing and QE large for instance.
As an past ‘early retiree’ after 37 years fulltime work, I shall continue with my mix of part-time work and holidays. Fulltime years were more than enough and as for Bailey, well, a curate’s egg at best.
We deserve much better.