There is something badly wrong with the Bank of England’s forecasts for inflation. The absence of money and credit from their thinking seems to guarantee they get it wrong. Because they get the forecasts wrong they get the policy wrong.
Their aim is to show inflation will be around the target of 2% in two years time. Quite reasonably they allow themselves some shorter term flexibility around this longer term target. Their problem includes an overwhelming tendency to lurch based on what has just happened to inflation. I call it rear view mirror driving, when what they need is a better view of the road ahead to avoid a crash.
Let us take the last two years. In May 2021 the Bank concluded that inflation in two years time would reach 2%. Because immediate past inflation was below target they decided to carry on with an interest rate of 0.1% and with printing more money to buy up bonds. The more bonds they bought the higher the prices went so the lower the longer term interest rates went. It was an invitation to a credit party where the credit was so cheap. Some of us at the time warned against more money printing and further lowering of longer term rates, pointing to the already visible recovery in the economy and the increases in money and credit. “I see no inflation coming” meant they were looking the wrong way.
By May 2022 the inflation was already well set. It hit 5.5% before the invasion of Ukraine, and then went higher as the energy and food price consequences of that came in. The Bank set an interest rate of just 1% and said rates might in future need to get up to 2.5%. On that basis they forecast inflation would be back down to 2% by 2024 and below target at 1.3% in 2025. Some hope.
This May they decided to hike interest rates by an additionalĀ 25bp or 0.25% to 4.5% and continue with a large bond selling programme designed to cut money and credit further and drive rates higher. On that basis they forecast 2% inflation by 2025 which may be nearer the mark. Unfortunately it comes with the price of overdoing the tightening meaning a bigger real income squeeze and a big slowdown in growth. They areĀ now mesmerised by the inflation they have created and unable to see that the dramatic money tightening they have undertaken will come through. So they now want to do too much too late. The rear view mirror tells them to slam on the brakes when theĀ vehicle is scarcely moving.
May 13, 2023
Good morning.
Hit by the highest ever taxes. Hit by rising interest rates. Hit by large inflation. I am amazed that there is even anything remotely resembling an economy left.
Instead of the Governor of the BoE writing letters to the government as to why he cannot do his job, perhaps it is time the government wrote him a letter, and included his P45.
May 13, 2023
Mark, the Tories have been in power THIRTEEN years, but want you to believe the state of the country is the fault of the BoE ( and civil servants and the EU and the judges and the wokerati and poor people in boats). Wise up
May 13, 2023
The government have learned nothing. They have made matters worse by raising taxes. So we have Fiscal as well as Monetary tightening.
May 13, 2023
Cynic
Absolutely agree, we now seem to have two financial offices which are getting it wrong at the same time.
Have to say the current Bank of England Governor seems very smug about his views from all of the interviews I have seen, he really does not seem bothered about having got it wrong at all !.
As for the Chancellor raising taxes, instead of looking for absolute value for money on all the Ā£ Billions he is constantly spending, when people are struggling with incomes dropping, simply amazes me.
May 13, 2023
all factors abandoned by the Government. Que sera, sera.
May 13, 2023
Everyone faults, including critics.
May 13, 2023
@ Belinda Knott – clearly, you have a point but the “civil servants and the EU and the judges and the wokerati and poor people in boats” to whom you refer will be there to foul things up for the next government and outlast it too.
May 13, 2023
To an extent Sir John is right, but the root of our problem is not so much as Democracy but the way it has been implemented.
We have resulted in a Socialist system that has the power to tax and borrow – to pay us more than we are earning.
The penultimate nail was our choice to close our economy over Covid, as demanded by the NHS & our Media.
The result is a staggering amount of debt. The USA is gripping this reality by thinking of printing a Gazillion Dollar coin.
Fifteen years of money printing has put huge sums in the hands of speculators so interest rates have to be kept relatively level to prevent a run on the $Ā£ā¬.
Ukraine isn’t helping. Nor is a power struggle between China & the US – proxy wars will highlight or lack of energy security.
Ideally we need “The Nasty Party” to change the funding of the NHS and divert it to buying Small Modular Reactors, made here, UK owned.
Set a cap on Tax and Debt levels that any government has to adhere to.
But we Turkeys won’t vote for Christmas, we’ll blindly choose long term penury; welcome to “The Good Lifeā.
May 13, 2023
The problems are more deep-set that this. ZIRP from 2008 onwards has caused addiction to free money in Government, business and private borrowing.
A 4.5% rate to borrow isn’t unrreasonable. It forces the borrower to consider whether they rerally need the money and can affor the interest and capital repayments.
Thrift is a much maligned virtue.
May 13, 2023
Agreed, we now have a generation who believed debt was the way to fund anything and everything.
Most of us out here knew it could not last from past experience, indeed many of us could not understand why it lasted so long at all.
Now the chickens are coming home to roost, and the debts need to be paid !
One thing I do agree with the BOE Governor, is that for many the real cost of rising interest rates have not yet hit them at the moment due to them having fixed mortgage rates, energy costs for a while yet, then the penny will really drop, and many will be in real financial trouble.
May 13, 2023
Indeed, 4.5 to 6.0% price of Sterling seems reasonable if not still a bit risky and definitely NOT overtightening.
How much better to have held most other assets for the past 15 years?
Why should anyone hold Sterling at silly low % return? We’re not a charity.
May 13, 2023
Nobody borrowing money from the banks, whose margin is apparently sacrosanct, has seen 4.5% interest in a while.
Even so we would be OK if the Govt had not made it impossible to āsave moneyā, as you can only make money by being in debt, the nation has followed the Govt into debt.
May 13, 2023
The WEF has the person they want running the B of E and the people they want in No.10 and No.11..
They are following the Agenda.
May 13, 2023
Indeed. We are being softened up for the 1.3 million this Government let in last year. No accident but deliberate policy. Health, housing and tax rises to pay for the Tory’s new guests. Worst Government ever. Just go. We need Reform fast before we’re annihilated as a Nation.
May 13, 2023
Weāve still got enough money to fund foreign aid, pay the EU and build HS2 ā¦.and pay civil servants to stay at home
May 13, 2023
And import all our food āwe are a rich nationā apparently!
May 13, 2023
@Mark B Ahh, but our PM is on record of stating that high taxes are needed to lower inflation. Although most free thinkers would have thought a strong economy would have created a better result
May 13, 2023
Ian B
Well he might ask his misses (who is a non-dom) to pay her fair share of taxes as this would certainly reduce inflation.
May 13, 2023
Sir John is it the fallout on the money markets if those accountable for all this mess were removed (dismissed) that prevents any action by the Chancellor being taken against them?
When and where is the responsibility and accountability of their actions going to be investigated?
Because if your comments are right, which I am sure they are, in the real world actions that cause so much distress and damage to a company, its people and performance would be charge with gross misconduct.
Is it that build back better globalists in charge see all this mayhem as a justified means to a end so nothing is done?
May 13, 2023
@turboterrier
The way the BoE, the OBR and sundry operations are run, are relatively new constructs. Inspired by Political Ego and personal self gratification. Seeing how these entities have offered nothing to the Country as a whole other than exorbitant tax payer cost, then add in failure on top of failure, over how their previous operations were handled, logic says the trial has run it course and there is a need to revert.
Weirdly there wasnāt a problems of this magnitude previously, just the methodical solving of situations as they arose. But, then the UK Government stood up for the UK and did their job in managing the UK
May 13, 2023
Indeed.
Of course to get the value of the Ā£ back to where it would have been with just consistent 2% inflation (which halves the value in circa 35 years) they would have to have about ten years of -2% inflation to counters the years of 10% inflation the bank created (which halves the value of the Ā£ in just seven years).
This rapid inflation is also a huge tax grab by lowering the real value of personal allowances, the pathetic inheritance tax limit still just Ā£325K (it had been for many years) and the higher rate income tax bands, the VAT threshold of Ā£85K and NI levels. Also a theft off savers devaluing them and earners as it is paying them in Ā£1 only worth perhaps 70p. Then Bailey at the BoE complain if they want a pay in(crease. These back door taxes on top of the vast front door tax increases.
May 13, 2023
I have an elderly spinster friend, a retired civil servant teacher then schools inspector. Her pensions give her take home of Ā£2,900 PM (going up 10% too soon) so after housing costs she has all of this as disposable income.
Meanwhile a new junior doctor working full time (in a very pressured job) gets take home of just Ā£1,800 but he has rent for just a bedsit room in London of Ā£1,000PM and interest on his student debts of Ā£800 PM leaving him nothing disposable for his months food, commuting cost. clothing, professional fees, heat, light, council tax… so how is he expected to live let alone save up to buy a home?
The doctor also has to pay more tax too as he has tax and NI (& not just tax) and has pension contributions to make too. Even a 35% pay increase that they are asking for is not sufficient for them to actually live on. Is it any wonder about 50% leave the NHS within 2 years?
May 13, 2023
I have some sympathy with the junior doctors whose pay is much less than that of a Tube-driver.
May 13, 2023
most workers are paid less than Tube drivers.
May 13, 2023
The point is they are not paid remotely enough to live on unless they live in a van or a tent so many leave the NHS wasting all those 5+ years of expensive training.
May 13, 2023
The IHT threshold is bolstered by the Residence Nil Band Rate – but the state shouldn’t be taxing the dead. Australia abolished IHT and so should we. It’s the Conservative thing to do
May 13, 2023
Where are the Conservatives to do this? We don’t have any except on the fringes and they are ignored.
May 13, 2023
Only if you manage to leave your house and not much else.
May 13, 2023
which I venture to suggest is mostly the case, and with more of this Government there will be less and less in savings, investments, family silver!
May 13, 2023
Only in certain limited circumstances of a main residence going to children or grand children. Plus that only tales it to Ā£500k which now worth more like half that in real terms.
May 13, 2023
They have a plan to make us all poorer and they are doing it by inflation and taxation. Inflation raises costs but tax allowances stay the same or reduce. This government, most likely on instruction from the WEF, is on a mission to steal wealth from the middle classes. Think about it. Policies are making landlords sell their properties in droves but the reduction of CGT allowances means the government takes a larger part of their profits. People invest in property but when they die the government takes another large chunk via inheritance tax. Each time wealth is passed on the government takes the biggest share. Each generation going forward will be poorer and leveled out. Of course, royalty and those with trust funds are exempt.
Why are they doing this? Because Western countries are in so much debt they have to destroy their currency to build back better. Cash will be eradicated and replaced by their digital currency linked to social credits. In the BoE report published this week they state people will only be allowed to hold between 5k and 20k in digital currency. They expect commercial banks to disappear. So where will all our money go? To the government I expect. You wonāt even be allowed to give your money away as big brother will know every penny you spend. We are heading for a dystopian future and people are buying into it via the climate change propaganda.
May 13, 2023
Christine, I find I have to agree with you. I did use to think it was all a matter of extreme incompetence, but the sheer destructive content of this government’s policies have convinced me that they are deliberately ruining the nation. Of course Labour would be as bad, possibly worse. The only compensation is that this is unprecedented and therefore fascinating to watch: a government deliberately working against its own people, presumably at the behest of globalists.
May 13, 2023
Ā“Obviously, royalty and those with trust funds are exemptā. Assuming thatās true (it is not as simple as that), why are you not opening a trust to pass wealth to your children or grandchildren? Why are you not researching AIM ISAs – they are IHT-free but risky as they finance British start-ups and SMEs.
The present tax system still allows the BTL landlords to get a 20 percent tax credit for their mortgage interest. Property repairs, maintenance, letting agent fees, accountancy fees and insurance can still be offset against tax.
I have great difficulty to empathise with BTL landlords: The situation of BTL landlords is not that desperate. The possible deduction of mortgage interest from the rental income of BTL properties that was progressively suppressed between 2017 and 2020 must have certainly helped to clean up the market of abusive landlords. (I had three children going to uni between 1998 and 2013, with all at some stage renting in such properties, and their various experiences were between bad and dismal).
As for the delirium about the BoE and digital currency, I would encourage people to read bankofengland.co.uk āThe digital poundā particularly the 80+ pages of the Technology Working Paper and decide for themselves.
Given that cash would be maintained, how the digital money would be different from people presently getting their salary/pension electronically, paying rent/mortgage by direct debit/standing order, paying petrol/all types of large expenses with a debit/credit card, ā¦?
May 13, 2023
Hefner
The 20% tax credit you speak of is only available to BTL landlords who run a limited company.
This doesn’t suit most landlords if they only own one or two properties.
All businesses are able to offset their income against their expenses to get to a final net profit which is then taxed.
This isn’t exclusive to BTL landlords.
Why do you think these reduced tax allowances would clean up the market?
I fail to see the connection.
Many smaller landlords are selling up with all the latest increases in red tape (see environmental certificates)
This has the unwanted result of a reduction in properties available for rent and higher rents being asked by those landlords who remain.
May 14, 2023
Which.co.uk 19/01/2023 āBuy-to-let mortgage interest tax relief explainedā.
The 20% tax credit applies to all BTL landlords.
May 14, 2023
There used to be 100% relief.
No other business is refused to be able to offset their costs of borrowing against their revenues from their commercial activities.
20% was brought in 2022/23 after the effects of reduced numbers of BTL properties and higher rents was seen by the Government.
But it has had little effect on the trend.
May 13, 2023
We’ve been here before. It’s boring if you’re not going to call for the head of Bailey
May 13, 2023
+1
Yes. I too am getting bored with Sir John regularly identifying the problem and the individual responsible, but failing to demand any penalty for his failure.
Reply You do not have to visit the site if it annoys you.
Calling for the sacking of the Bank Governor would not result in his departure nor would it remedy the problem. I am calling for reform at the Bank as they should be worried by their dreadful forecasting record, and by the Chancellor who should change bond sales policy as he has to sign it off and pay for it. politics is the art of the possible.
May 13, 2023
John, just wondering, could you and a group of MPs with economics and business backgrounds of all parties get together and insist on calling the BoE governor to a meeting to hold him and his top team to account, to ask him to answer a list of five key questions to support what they are doing publicly.
There must be some mechanism, backbenchers seem to get committees for all sorts of less important things.
Reply The Governor does have to report to the Treasury Select Committee where questions are asked.
May 13, 2023
Good, can you backbenchers table a question for the Treasury Select Committee to ask on your behalf because Iām sure you are not alone with your questions?
Iām beginning to think this is all being done on purpose by Sunak/Hunt to deliver poor growth and State sector massive under productivity and waiting lists. It will be interested what they go on to do when theyāve finished with their mission. Itās a bit like watching Blair, Brown, Cameron, Major enjoying the pomp and ceremony a couple of weeks ago in the top club.
Reply I send the Treasury Chairman my analysis to help form questions I have offered to give them evidence in public.
May 13, 2023
Next meeting of TSC is on 18 May, and Mr Bailey is scheduled to appear there.
May 13, 2023
The āindividualā responsible is not so much the dire (40% personal overdraft rates) Andrew Bailey as Sunak who was the Chancellor cheering him on. Sunak clearly wanted to devalue the Ā£1 with his vast money printing, the mad lockdowns, vast tax increases, net zero rip off energy and other lunacies. Inflation being another vast tax grab by him on top of the others.
Why do the Gov. āexpertsā think and claim that buses save CO2 relative to cars? Thanks to the train strike I had to get two buses to Gatwick. Average occupancy was 4-5 people + a very indirect route about twice as long as a direct car journey and on large buses that must use about 4 times as much fuel per mile. Plus they need a professional driver with all his CO2 production. Do the maths you deluded experts. Walking does not save CO2 either as fuelled by rather inefficient human food – if you do the maths correctly. Endless lies from Government. They claim walking and cycling produce no direct or indirect CO2, complete drivel. They even still tell us the vaccines were āsafe and effectiveā! Excess all cause deaths of well over 200+ a day still caused by?
May 13, 2023
Ll, I should think most people realise by now it’s a scam, and so trying to make them see sense is bound to fail. The Climate myth is just an excuse to do other things, so the powers that be are not going to listen. We see clearly that there is literally no debate; it doesn’t interest them; it’s verboten and irrelevant to them.
May 13, 2023
But surely Bailey as Chief Exec has the responsibility. What you are confirming is that poor performance in the public sector will never result in leadership change unlike the private sector. How can anyone have confidence in a person whose organisation gets so much continually wrong?
Precisely why we continue to get this rubbish. Why do you accept that?
May 13, 2023
Reply to reply.
How weak. If an organisation is badly run you change the leader to get someone who will change it.
May 13, 2023
Sir John, setting out the problem and the solution is critical to winning arguments. This blog is unsurpassed at clarifying the problems and crystallising the solutions. We read your blog because we appreciate that this is a rare exercise.
Unfortunately the bulk of our political class has degenerated to the point where they canāt recognize winning arguments.
Politics is the art of getting your own way.
May 13, 2023
@ DOM – but Sir John makes clear it is the whole approach that is wrong so removing one leading person that the establishment (i.e. our out of touch, wrong-headed Chancellor) would replace with similar would be without purpose.
May 13, 2023
But without Bailey who at the BoE would champion the governments push on financial net-zero and digital money
May 13, 2023
The only correct predictions are those that the future reveals in hindsight to be accurate.
Past events are the only bases for predictions.
Hindsight reveals the Bank of England predicting only its own worthlessness. Repeatedly.
May 13, 2023
Most types of predictions have little bearing on the future. B of E causes untold damage just by being so dreadfully wrong EVERY time. We would be better off not publishing their hopeless predictions.
May 13, 2023
@Bloke – “Past events are the only bases for predictions” So why does the BoE ignore History?
May 13, 2023
This is a country that runs on tick. With the national debt at 100% of GDP, rising interest rates – now at 4.5% – are costing the Treasury more than we spend on the NHS each year. The situation when interest rates were cose to zero and Sunak could print money with impunity are long gone. Generation debt will shortly become unable to service their mortages or their student loans; savers are losing money every day with inflation at 10%.
At some point the cost of servicing debt is going to crash the economy. This is not going to end well, either for the Conservative party or the country.
May 13, 2023
I think credit card debt and repayment rates are a much worse problem than mortgages, mortgage interest is still low in historic comparisons through much of the last sixty years it averaged around 7% and people can now take 30 year mortgage lengths creating more manageable monthly payments, if they have a good year they can also pay off up to 10% of their mortgage in top ups.
In 2010, UK credit card penetration (the share of the total population who use a credit card) stood at 40%. By 2015, this had risen to 50%, and by 2020, to 62%. Source money.co.uk For comparison, the world average in 2021 based on 121 countries is 22.26 percent. Source the global economy.com. I wonder how many of those 62% use it to budget well on monthly pay but pay it off without incurring interest? The majority of people I know do that and donāt just use it to buy trainers, expensive clothes and pay for holidays and weekends away they canāt afford (although I do know several that get in a mess doing just that!).
In the UK there are 97 million debit cards in circulation and 84 million of these (86.6%) are contactless. re:finder
May 13, 2023
Somewhere down the long dark dusty road we have been travelled for decades the old adage taught to us as children has been cast aside: “If you can’t afford it dont buy it” and Nobody owes you a living.
Too many getting too much for doing nothing which we have to pay for. The way things are going thats only going to get worse
May 13, 2023
Turbo, what annoys me is the arrogance of this generation which believed that the old adages – live within your means, do without if you can’t afford it, etc. – were in some way out of date, no longer relevant. Such hubris was bound to bring calamity.
May 13, 2023
Not at all. The whole collective west runs and tick and we will not crash the economy – they have proved that is a difficult trick to achieve, instead, like the USA, we will default.
May 13, 2023
Meanwhile, in America, the Fed seems to want rates to stay where they are, even if that means the collapse of more banks that were dumb enough to hold Treasuries. I can see America needing to go down the ‘bail-in’ route.
May 13, 2023
Sir John, you say that our inflation went higher than 5%, i.e. up to 10%+ as now, as the energy and food price consequences of the Ukraine invasion came in. But you you also say that countries such as Japan, China and Switzerland haven’t experienced anything like such high inflation. How come they didn’t, if that extra amount was because of the Ukraine war? Surely that factor should have affected them too? Our inflation level is also well above the EU’s. I get the impression that the main reason why it’s so much worse here has been to do with easy credit. One thing’s for sure – that is no longer keeping the voters happy.
Reply Yes, we agree!
May 13, 2023
The main reason is money printing that devalued the pound to circa 70p well done Sunak! On energy the main reason is May and continued by Boris & Sunak net zero religion insanity. Plus we even have the deluded King now to āprotectā all these mad faiths new and old and deluded belief systems like net zero.
May 13, 2023
To do with the stupidity of giving people money, whatever age, to stop home and do nothing. They barely needed it when stopped from going to the shops, so it was spent in a splurge afterwards.
Switzerland, for sure, had a far more practical approach. One or two old people in the local village died. Quelle surprise! Take precautions yes, but the whole scaredemic thing was quickly seen as ridiculous. There was no clear money splurge and Hancock-type induced panic here.
May 13, 2023
You are not going to get different thinking when the people responsible for doing the thinking remain the same and are not held to account for their failure.
We need a clear-out of the clones in the Bank of England, but since they are following the Agenda that has been set for them, it won’t be happening any time soon.
The same applies across Whitehall and Westminster although I predict that a significant number of CON Ministers and MPs will be given the Order of the Boot by the electorate at the next General Election. That, of course, will achieve nothing, since under our rigged so-called democracy, it will just mean the Red Branch of the Westminster Uni-Party will step in and continue the destruction.
I think the CON Party Grandees have decided the next election would be a good one to lose, in the hope the voters’ punishment for knifing Johnson and their abject policy failures won’t be too savage (unlike 1997).
May 13, 2023
@Donna +1
And who did the electorate empower to ‘manage’ the UK. Okay so they went OWAL, over to the ‘Darkside’ and joined Labour withot a further election. Rock and a Hard Place for the electorate
May 13, 2023
Off topic, Sir John, yesterday I sent an email to DUP leader Sir Jeffrey Donaldson headed:
“Why is the DUP not publicly pressing for export controls on goods destined for the Irish Republic?”
This to me is a greater mystery than why successive UK Prime Ministers have kowtowed to Dublin.
Meanwhile the UUP leader Doug Beattie blames Brexit for the problems, that is where this is leading:
https://www.belfasttelegraph.co.uk/news/politics/doug-beattie-hits-back-at-traitor-claims-over-windsor-framework-support/1588831591.html
“the starting point should never have been Brexit in the first placeā
May 13, 2023
This article seems a bit muddled. He’s pressing for Stormont to sit so that he can be part of a “Vichy” government?? It’s not at all clear what happens when he’s put between a rock and a hard place to enact some piece of EU law which isn’t attractive to his electorate and is out of kilter with the UK (think compulsory EU member bail-ins or similar). Where does that leave his Unionism?
May 13, 2023
What utter claptrap politicians and bureaurats talk. 2%? 5.5%? 4.5%?
Clearly not one of them has been shopping in recent history. Many, many items are 20%, 30%, 50% higher than a couple of years ago. The ludicrous folly of letting an over privileged, under performing and out of touch elite decide interest rates, economic policy or indeed anything more difficult than what tax payer funded lunch they’re going to enjoy next is incredible.
The entire system has utterly failed the people it is supposed to serve. All it does now is enrich the few at the many’s expense.
May 13, 2023
As you say they play catchup. They are never really in control, they just respond with the only weapon they have, interest rates, but that all too slowly. Government are the direct cause of inflation. I concede that they were hit with an unknown, Covid, and reacted well vaccine wise but badley with the benefit of hindsight in locking the country down and printing money by the shedload. Now we are suffering from an excess of money chasing the same amount of goods, ergo inflation.
Then we have an insane energy policy offering energy to homes and industry at grossly inflated and totally unnecessary prices. This is the base input to the price of almost everything. It jacks up the price of making it and moving it. All down to government’s flirtation with nett zero.
Follow this with immigration, illegal and legal, totally off the scale. It all has to be paid for to provide the services new arrivals require.
The problems will never be solved by a baby faced, politically illigitimate chancellor muttering soothing platitudes, effectively saying , not my fault gov. Liz Truss had vision. The blob has none. Those who reduce gross immigration by leaving, good luck to you, and please close the door, the lights are going out automatically. Thanks to government the UK is a pot less than half empty.
May 13, 2023
@agricola +1
In fact the refusal of this Conservative Government to manage is the root cause of the situation.
The rest of us had to cut back, reassess our expenditure for these different circumstances. This Conservative Government refused to do the same, as it is said they didnāt ācut their cloth accordinglyā create a balanced budget. This Conservative Government increased the size of the State exponentially far more than the Country had money to pay for it. This Conservative Government rather than creating the environment for a healthy economy, they choose to punish not just the wealth creators but the whole Country by increasing Costs(Taxes). As a result they caused the wage inflation, they(this Conservative Government) cased enterprise to increase prices to cover the Government additional cost imposition. Shere madness
To paraphrase our PM when giving a speech to the Media on the need for Maths, āhigh taxes are needed to reduce inflationā. Yupā¦ work that out.
May 13, 2023
It would be better if Carney were still here that way we could blame it on the foreigner – anything to get us past next year
May 13, 2023
āSomething badly wrong with the Bank of Englandās forecasts for inflationā Like everything else that demands Tax Payer bailouts for mistakes/existence ā the Conservative Government ārefuses to manageā, refuses to accept they are the management of the UK, refuses to do anything that the collective āBlobā which includes the BoE might take offence at.
Anything any where that only exists by making demands on the Tax Payer, is and should be held accountable to those that āpayā by the Countries Elected representatives, no ifs, or buts. Therefore if the Government of the day cant accept the basic premise of why they get elected they shouldnāt be there.
Is it the BoE that is wrong is it it their Boss this Conservative Government?
May 13, 2023
Sir John is obviously correct. His points are proven by mathmatics.
Why, therefore (i) are the government/treasury and their civil service masters continuing to heed BoE advice? (ii) is the Chancellor not replacing the failed BoE management?
May 13, 2023
Home Office ā 12 May 2023
Illegal Immigrants ā 42
Boats ā 1
ā¦.still larger than the size of a British Army fighting platoon
May 13, 2023
Excellent description of how our economy is being mismanaged.
It seems the Bank is now staffed by quota rather than people with talent and intelligence.
May 13, 2023
Read Camilla Tominey in the DT this morning. Sunakās inaction leading you to electoral oblivion. Thatās where we need to see finite action, not the pledge BS we are getting at the moment.
I know the BOE etc effect on the economy but your Chancellor is squeezing us with tax, no hope for business and allowing spending to get out of control in the public sector.
May 13, 2023
I fully support Sir John’s criticism and views of the BofE . Their record is appalling and how they can continue to play the role they due in economic affairs is unrealistic ; it must stop . Only a decision in Parliament can achieve this ; we ordinary voters can only watch and keep our fingers crossed . Sunak is the key trigger ; if he refuses he must go ; the Redwoods of this country can save us .
May 13, 2023
Bert+Young
Redwoods of this country can save us .
Not too many of them to be found in the party let alone the government.
Their allegience has gone to another type of fifth column that keeps attracting supporters with a totally different agenda .
May 13, 2023
Until Andrew Bailey is sacked, nothing will change.
May 13, 2023
Even then he will doubtless be replaced by another dope. We have suffered far too many years of the deluded Carney and Bailey already.
May 13, 2023
If we did not have one before, we now have an implacable enemy in Putin/Medvedevās Russia. Itās time the government and the military establishment take their repeatedly articulated and clear threats to our national security seriously. Supplying the British longrange bunker busting Storm Shadow cruise missile is a major escalation in support for our brave ally, the Ukraine
At a time when it is now obvious that we could not put a single effective armoured division together, let alone deploy it anywhere other than Bovington or Saisbury Plain, the MoD should stop cutting our armed forces and start building them up, particularly the Army.
Allowing a Russian vessel with armed men in uniform aboard to cruise the N Sea, mapping our subsea infrastructure, looks like pure folly to me. It is plain for all to see what is likely to happen next winter if the war in Ukraine does not end this year, with the Russians being expelled from all Ukrainian lands.
The Russians are said to be mobilising another 400,000 conscripts. The Americans have China, Taiwan and Iran to deal with; we need to re-arm and quickly. We cannot just leave it to Poland and our new NATO ally Finland
May 13, 2023
‘Our brave ally’, Sakara? You mean ‘our brave proxy’, I guess. So far thanks to their bravery no British troops have been killed in the war on Russia, apart from a few mercenaries. I take it you want to keep it like that. I hope you don’t want to start WWIII by attacking the Russian navy in international waters. I’d rather we didn’t, thank you – I live not far from an Atomic Weapons Establishment, an obvious target were that to happen.
May 14, 2023
What a load of bol***ks, which sounds like defeatism – if not cowardice in the face of the enemy. Medvedev in particular has repeadedly threatened us with a nuclear strike. The only thing Russians understand is strength. Ever since Cameron and Fox’s appalling 2010 “SDSR” – which absolutely eviscerated the Army in particular – the Russians have been trying to bully us, knowing that felllow-travellers such as you will step into line as one of their “useful idiots” That Russian ship is up to no good, mapping our N Sea infrastructure, ready for another pipeline explosion in the depths of our winter. Remember the Russian Salisbury Novichok nerve gas attack?
Better the Ukraine fights them in the East with our help, than us having to fight them on the beaches here
May 13, 2023
The Russians are forming new battalions from volunteers. Confirmed by CNN.
NATO is beaten. Massive explosions in Khmelnytsky today. Looks like hundreds of tons of explosives were hit – the ammunition for the Ukrainian ācounter offensiveā. Zaluzhny – head of the Ukrainian forces not been seen or heard of since 11th. Etc ed
May 13, 2023
@ Sakara Gold “We cannot just leave it to Poland and our new NATO ally Finland” – we can if we want to and we ought to want to.
May 13, 2023
Sir John, not only do we have the BOE intent on impoverishing us, but there is yet another headline today about āBritains colonial reckoningā. It would be useful to know how much money the U.K. has poured into the ex-colonies, the Commonwealth and the Dominions in say the last 100 years in the currency values of today.
Then we can ask āHow much do you want?ā
May 13, 2023
I see another Bank is leaving Wokingham on 28th August, Barclays this time closing their Branch.
Good grief if the Banks cannot make a living in Wokingham with all of the huge growth in housing, commerce and population, then I suggest they will not make a living anywhere.
When I knew the manager at this Branch 30years ago, he told me they were making Ā£1,000,000 profit a year from it way back then.
Yet another Bank that wants its customers to go on line or use the Post Office (who cannot answer questions/problems or give any advice)
The dumbing down of customer service in Banking continues.
May 13, 2023
Why on earth don’t several banks pool costs, which must be cheaper, and open a Hub, open day time hours only, with cheque paying in that works unlike HSBC’s that seems to be joining the others in forcing online by mobile.
May 13, 2023
As always, John Redwood for Govenor of the Bank of England. Our inflation rate is down to the incompetence of the MAC at the BoE. No foresight. Their job is to anticipate market movements and attain a 2% inflation level. The current rate of 11% in food is greedflation created by suppliers playing catchup on price levels while no one’s looking.
May 13, 2023
The BoE āforecastsā and āwrong policiesā only become transparent when it is realised that we have a Remainer ruling elite – Government, a uni-Parliament, the Civil Service, quangos, the judiciary, academia and state broadcaster ā not aiming for ‘freedom and prosperity’ for the country.
At COP 26 our PM, then Chancellor said :
āSo our third action is to rewire the entire global financial system for Net Zero.ā
Which basically means they intend to make the financial systems of the western democracies weak and unstable.
Just as Net Zero is technically and hence financially unachievable and is intended to make us weaker and poorer, starting with increasing intermittent renewables on the National Grid until it becomes unstable leading to rolling blackouts and eventually collapsing so that it will take some parts of the country, such as London, 5 days to recover from a black-start.
May 13, 2023
Quite right; what is the point of putting interest rates up if most fācasts predict that the UK will struggle to grow.
Next please turn your attention to the two most pressing problems we have at the moment-
– the ever growing public sector and thus the need for ever growing taxation
– the deteriorating attraction of investing in the UK due to comparatively high corporation tax, comparatively high cost of power and the lack of scientific and industrial skills.
May 13, 2023
and a Chancellor who will tax you when you make a profit.
May 13, 2023
Haruspication.
The Bank of England might as well inspect the entrails of sheep to guess both the strength of the Economy and future inflation.
Governor Bailey should be awarded the CBE.
Even Friedman’s cat knows that if you print more money than you produce goods, inflation is guaranteed and workers will demand wage increases in line with inflation as opposed to productivity.
Q E D or is it Q E F for fecit.
JB
May 13, 2023
The story of the management of the UK economy post-WW3 has been “too much, too late”. This is regardless of which party is in power and has applied to both fiscal and economic policy. In 1964, Reginald Maudling unleashed a borrowing boom in spite of the fact the economy had begun to recover nicely in 1963. In 1972, the Heath/Barber budget included a massive public expenditure splurge as a panic response to a 5% unemployment rate. In the early nineties the Major government kept interest rates high in order to keep sterling tracking the Deutschmark. Between 2001 and 2007, interest rates were kept low whilst house prices rocketed, only to be set high when the housing market was cooling in 2008. Throughout 2021, ultra low interest rates and QE meant an ultra-loose monetary policy, to be followed recently by high interest rates and taxes. It’s been dither and panic, dither and panic all the way.
May 13, 2023
Profit-push /greed inflation seems plausible
FTSE 350 profit margin
H1 2019 5.7%
H1 2022. 10.7%
Under the circumstances what would you do to ensure your company survived ?
May 13, 2023
Mervyn King speaking last October
Markets are not in charge. Governments and central banks are. Markets respond to the announcements made by government and central banks. And central banks have lost control of inflation, government lost control of the public finance; not surprising that markets respond to that.
I think all central banks in the west, interestingly, made the same mistake. And during Covid, when the economy was actually contracting because of lockdown, central banks decided it was a good time to print a lot of money. That was a mistake. That led to inflation. We had too much money chasing too few goods. And the result was inflation. That was predictable. It was predicted, and it happened. So thatās one problem we have to try to get out of. But the public finances both in the United States and the United Kingdom were not put on a sustainable track. And markets responded to that.