The spinners went out yesterday to reassure the markets with two soundbites. The old one was the PM and Chancellor are strongly committed to the Chancellor’s new laxer fiscal rules introduced at the budget. The new one was that the new advisers crowding into Number 10 mean the PM and the Chancellor are now more united about the budget.
These lines stretched credulity too far. Few could see the establishment of powerful economic advisers to the PM as anything other than an attempt to get a better set of options and advice than they are getting from the Chancellor who should be the PM’s main economic adviser, backed by Treasury support. Nor are markets. much impressed that a narrow margin over the fiscal rule maximum borrowing has been swept away by the loss of the planned welfare and pensioner fuel cuts and by the rise in government borrowing rates.
As Hemingway remarked, bankruptcy happens gradually at first, then suddenly. It can be the same with bond and financial crises. They are not inevitable. The Chancellor could change the mood if she said she was about to announce a package of spending cuts or controls to replace the lost cuts and cover the interest bill. She needs to fight and win a few spending battles which could include reductions in the rate of increase in welfare and deferrals of some net zero expenditures.She should urgently agree no more loss making bond sales by the Bank of England.
Yesterday it was disturbing that rates rose and the pound fell. As UK government bond rates are so much better than other advanced country bonds you would expect more foreign buying of the bonds and currency if there were no special and specific fears about UK economic policy. The Chancellor should not leave it to a late autumn budget with no stated date if she wants to get back to affordable debt and to within her fiscal rules.Just parroting that the government is dedicated to its rules is not believed by markets who increasingly ask how and when will borrowing be controlled? Trying to do it by tax rises could well make things worse, hitting growth again.
September 3, 2025
Good morning.
What is it they say about deckchairs and the SS Titanic ?
Throwing your previous ‘advisors’ under the bus is not only a bad look but, an admission of failure. The sensible decision would be to admit your failure, not in public, but through a change in policy. But as I have said here before, the government cannot make the necessary decisions on the economy because Parliament / their Backbenchers, will not let them.
Best to throw in the towel now rather than wait for an economic knockout punch methinks.
September 3, 2025
The only appointment that looks out of place is Baroness Minouche Shafik, she appears to have at least the technical knowledge to advise competently. Will she and can she make a difference? I see her as a possible, lone speaker of reality against an army of socialist dreamers, so it may make no difference to the expected self destructive decisions on their way.
Can’t say they haven’t been warned.
Reply What is your evidence for that? She went along with disastrous Bank of England policy and it is said she favours higher taxes.
September 3, 2025
Her educational qualifications and employment history. I know nothing of her politics, so that’s my caveat. With her education she must be aware of our predicament, and know what is needed. Will dogma again trump logic?
September 3, 2025
Peter, I am sure she will fall in line with Marxist convention whatever her personal views may be.
This latest episode in prevarication by Starmer shows us, he would rather employ yet more advisors than make any decision.
The man is unable to think for himself, what he spends his days doing as PM other than flying away somewhere, is anybody/s guess?
September 3, 2025
Yes, I agree, 2TK seems to only want to hear one side of an argument; meaning in this case, how to raise taxes, rather then why not cut expenses. It looks as though Reeves is no longer in control of the budget, even she can see that. Why does she hang on?
September 3, 2025
Two Tier, Free Gear, Rarely Here, Rip off Net Zero Energy Kier with his blatant serial lying (and the dire Sadiq Kahn is his friend). Examples – we will not increase taxes on working people for one example or not increase NI and Energy prices will come down with ever more “renewables”, it was a budget for growth! Connolly was not a political prisoner 31 months not excessive, we will smash the gangs… Loads more such lies!
September 3, 2025
Keir Starmer’s new chief economic adviser said Labour should rip up its election pledges and raise personal taxes, and lashed out at Rachel Reeves for hampering businesses.
Baroness Minouche Shafik, who was appointed to No10 on Monday, used an interview earlier this year to suggest upping income tax and VAT to boost Treasury coffers.
In her new role Lady Shafik, a former deputy governor of the Bank of England, will act as a bridge between Starmer and Reeves, who is lining up a tax hikes to fill a hole in the public finances of up to £50 billion. Lady Shafik has previously worked with Torsten Bell, the pensions minister and former boss of the Resolution Foundation think-tank, who was last week promoted to play a key role in Budget preparations. In 2023 Lady Shafik co-chaired a Resolution Foundation inquiry which called for the abolition of inheritance tax relief on farms and bringing pension pots within a dead person’s estate.
Promotes daylight robbery…..isn’t that a crime?
September 3, 2025
@Peter Wood – are you sure. What we have heard is that she is a Socialist i its purest sense. We also know it appears she cant hold down a job. Money, spending it, creating it through earning, has never figured on her CV
September 3, 2025
We return to the Establishment big mistake of reaching a certain level CS type job, or doing things for friends, that results in being awarded a gong….titled indeed!
September 3, 2025
She served as the president and vice chancellor of the London School of Economics from 2017 to 2023 which is not every encouraging!
I am with Milton Friedman:- “I am in favor of cutting taxes under any circumstances, for any reason, whenever possible” because, the real issue is government spending. He believed that reducing taxes constrained government spending by limiting its access to resources, and he saw tax cuts as the most effective way to control the growth of government. Plus government nearly alway spend and invest it very pooly indeed unlike the people they grabbed it off.
September 3, 2025
@Peter Wood, it would appear the MsM has seen those appointments differently “Starmer surrounded himself with high-tax fanatics Torsten Bell and Minouche Shafik, 30-year gilt yields soared to 5.7%.”
September 3, 2025
The pound down and bond yields high. People don’t want to lend as it’s obvious the country is goung bust.
We are in for more inflation as the pound drops, all according to plan. Next joining the euro will be our salvation according to the clowns in Westminster.
2TK os mooting digital ID, no doubt advised by ( words left out ed) Blair. Alk going swimmingly.
How will ID stop the boats. It will be counterfeited from day one.
We’re heading down the tubes and a series of power cuts this winter will be icing on the cake.
September 3, 2025
Remember what happened the last time the government tried to align sterling with European currencies.
September 3, 2025
Yep. All signs point to a cold wind blowing around the UK this winter. In fact autumn leaves falling due to the dry heatwave, doubt it will get hot in Downing St. Maybe a lot of backclapping as the economy moves into freefall.
September 3, 2025
Mark, as you say changing the advisors will not resolve the problems. When a football team isn’t performing new players don’t tend to help, it is the manager that needs to go.
Personally I will await the market judgement on Labour’s performance. They cannot spin that any more than they can spin illegal migrant numbers.
September 3, 2025
Labour spin ‘illegal migrants’ are now ‘irregular migrants’ ….and migrants out of hotels and moved to public/private rented housing ….and any day now we’ll return someone back to france under the one-in one-out deal ….I wonder how many foreign student overstayer there really are ?
September 4, 2025
Man U keep changing the manager with little improvement.
Sometimes a complete clear out is required.
This government certainly finds itself in the wrong league
September 3, 2025
Tax rises from the current hugely over taxed position will not raise more tax just further stangle the productive sector. Growth is what is needed but Reeves will not get growth with her anti growth doom loop policies. Her growth, growth, growth rain dance is absurd when all her policies are anti growth. Absurdly high taxes, a lack of any confidence in this government, endless red tape increases, the workers rights bill, the open door low skilled immgration, the war on Non Doms and insanely high net zero energy costs, rigged markets all over the place too – the NHS, schools, housing, energy, transport, banking, pension investing…
Her borrowing costs hit 27 year high and with a weakening £1 too. The lenders can see the folly of her, Ed’s, Rayner and Starmer’s agenda!
September 3, 2025
The lenders thus apply “a, this country is led by moronic socialists, large premium to their lending rates”. Another indirect tax we thus have to pay in our mortgages! Also another accelerator for the doom loop further killing investment and growth.
September 3, 2025
@Lifelogic – haven’t you heard increasing tax just to spend, increases GDP. Increasing tax to prop-up foreign governments lets Two-Tier believe he will be praised elsewhere. Not understanding that the economy is the money that government doesn’t have its hands on…
September 3, 2025
Even borrowing then spending the money doing net harms it seems like lockdowns, Covid net harm vaccines, Net Zero. the insane Workers Rights bill…
I have some sympathy with poor Angela Rayner over her tax issues I am sure she was using solicitors and advisors and the error was most likely made by them. The tax code is absurdly complex and is generally idiotic too. £70,000+ stamp duty is an absurly high figure or dead money to pay on a small flat anyway!
Rayners Workers Right’s bill and her housing bill however are totally idiotic and will be (and indeed already are damaging) to workers. employers, landlords, tenants and the economy and growth!
My lawyers cocked up in the other direction a while back paying stamp duty for two properties on a single title as if it were one house – so I got a £30K refund – eventually!
Stamp duty is an appalling tax even at 1% at up to 15% or so it is totally bonkers! Another wealth tax on transactions not profits or incomes!
September 3, 2025
@Lifelogic – I would guess, I stress guess, the UK tax is burdened with layer upon layer of intertwined facets and clauses that came about when each layer was found to penalise the wrong people so they had to get some sort of pass to relieve the burden. In the end we get an over burdened system that in all probability has 50% self imposed administrative costs. Steve Wozniak(one of the founders of Apple) many years ago suggested from his calculations if tax in the US was just a flat 6%( or some other very low amount, I think it may have even been 2.5%) the revenue(tax man) would collect more money
September 3, 2025
Lifelogic
It would appear and is alleged, that our Deputy Prime Minister, even with expensive Lawyer advice, would appear to be a little confused about the Gift with Reservation rules/details, and what that actually means.
It is after all fairly simple, if you give something away like a house and still have use of it, HMRC thinks perhaps you have not really given it away at all, because you still benefit from it’s use, unless of course you pay an open Market Commercial rent for it.
If the deputy Prime Minister is not aware of such simple rules, what on earth is the Prime Minister doing putting her in charge of Housing, let alone her suggesting and supporting new taxes and the like for everyone else.
September 3, 2025
How long before her profligacy catches up with her. Will her party allow the facing of reality. How long to the next general election. The country cannot indulge their precense much longer.
September 3, 2025
I have a sliver of sympathy for Reeves in that she tried to cut benefit costs – she didn’t change her mind on this objective the Party and PM forced her to change. She needs to get better at explaining the consequences of the extra spending (if she understands them).
September 3, 2025
PeteB
I tend to agree with you about her perhaps realising cuts are required, but found it impossible to get them agreed, however she was crazy to agree to push for further taxation to try and balance the books that way, which of course will never happen because her actions will/have stifles growth, productivity, and profit, so you actually do yourself net harm, collect less, and get further into debt.
She is now so clearly out of her depth, as is Starmer, who does not seem to have a clue whatsoever about economics or Human Nature, so it will all end in tears with even further debt and ever higher taxes as they chase an impossible dream with the wrong policies.
September 3, 2025
Thats why Complaints Depts never let you speak to humans. Email or use a response robot to complain, thus avoids getting nailed for total incompetence.
September 3, 2025
@Berkshire Alan – yet the team she is part of the Collective Responsibility of Cabinet with everyone appointed to the team by it Leader, the PM, they would all have sat there and agreed with the direction being taken. Government is not just one person it is a team in agreement. When there is not full agreement someone usually walks.
From memory Robert Jenrick resigned from being Minister of State because of a ‘strong disagreement’ he felt the team as they weren’t being tough enough with the illegal raiders of our shores. That’s more the norm, the team is either together or they are not
September 3, 2025
Good luck, the Labour backbenchers are away with the fairies. She will have to resign.
September 3, 2025
@Dave Andrews – while as with most I expect that is what will happen. But then look at the team, who would, who could replace her. She already has Torsten Bell sitting on her shoulders goading her tax more and more. If you read his papers while in charge of the Resolution Foundation – you will find unbelievable there would be worst to come. You would be lucky to be permitted pocket money for just one coffee a week in his new Socialist World..
September 3, 2025
Peter, There is no point in having sympathy for someone who on gaining office immediately uplifted the pay awarded to the Public Sector well beyond inflation. Then announced, hey, we have discovered a £22billion black hole ( I wonder where that came from) but no matter, the following day the Labour Party announce they are giving Ed Miliband, yes £22 billion to pour down his own black hole of carbon capture.
There is nothing worth supporting, in this Labour administration.
September 3, 2025
The “establishment of powerful economic advisers to the PM” is good news for the Chancellor apparently since their existence makes it less easy to make her the scapegoat for the forthcoming failures.
Starmer though is likely of course to make sure Reeves takes as much of the blame as he can foist upon her; it is after all only her due as she authored so many maladroit moves.
September 3, 2025
YES, she is fast being identified as a stepping stone for Starmer to skip across the swelling river of criticism – he’ll be lining up his next excuse to survive.
September 3, 2025
With these appointments – all hard-left tax-and-squander Socialists – all Two-Tier has done is ensured that as the First Lord of the Treasury, HE will be held to account when the inevitable happens.
September 3, 2025
@Donna – I think you will find Two-Tier will not be held to account for anything, but he will accept the glory should it ever pass his way.
September 3, 2025
Sir John, the lack of ideas coming out of the treasury is reflective of the vacuum that resides there. The lack of ability sitting in office not knowing what to do is frightening and not just for the markets.
When a government comes into office on the back of a stated clear policy to grow the economy, the electorate and importantly the markets, expect to see that policy put into practice. Sadly what we have seen is nothing advancing growth in Britain, with the possible exception of illegal migration and public expenditure increase to cover the cost of the endless stream of incoming dependent arrivals.
Nothing has been delivered to increase growth and consequently nothing is done to increase wealth. With that absence of policy implementation, coupled with policies designed to destroy economic growth, why would anyone be surprised when the electorate are frustrated and angry. Equally the markets are increasingly alarmed at the lack of fiscal control here?
Who wouldn’t be?
September 3, 2025
The only positive is that there is so very much fat in the state sector to cut out. So much of the state sector even does net harm so a win, win, wine to cut it out. Save on civil servant wages, releases them to get a productive jobs and the net damage they were doing stops. Start with Net Zero, HS2, the equality act, the VAT on school fees (tax breaks are what is needed), the net harm Covid Vaccines still being pushed, the dire NHS structures… so much insane red tape too another win, win. Alas zero political will to do this as yet!
September 3, 2025
Plus of course stop all the huge inducement that encourage more and more migrants and replace with deterrents to deter. The real deterrents for the real criminals to deter too.
September 3, 2025
Sir John,
Yes beware, lets call it what it is ‘Spin’. The Government has even spun the credentials of those that now get to advise. How can someone without experience – advise? How can being a left-wing tax things to obscurity thinker be what is needed, they are just political ideologues, engrossed in self-esteem. There is not one of them that could find themselves on the Board of any major company, let alone the board of UK.plc. Following their career paths, we have a gaggle of ‘Left-Wing’ talking heads that have never held any post longer than it took assess their abilities. Then those posts were not about, creation. What once we be called, ‘wide-boys’, ‘spiv’s’ ‘chancers’
All that was needed was people with real proven business acumen, that know how to create money, by creating earnings. Those that know that you spend as seed corn for money growth, that way the tax-take takes care of itself. Even those offerings, thoughts, are to deep for those that have wormed their way in to comprehend.
September 3, 2025
The costs to the Treasury of the state pension is once again in the news. Every year in September we hear that the “triple lock” will bankrupt us, as it’s “unaffordable” because the proportion of the population that are old enough to draw their pension increases.
Pensioners have paid NI contributions into the system all their working lives. Each year the state spends the money contributed on general expenditure. The state pension and it’s earnings related element known as SERPS have been used by many of those approaching pensionable age to calculate how much savings they need to put away whilst they are still working.
Why should the pensioners have their income reduced because successive governments need to pay for excessive inward migration and particularly, the boat people? Already, this government has tried to tinker with the pensioner’s winter fuel allowance.
The pensioners are not responsible for the profligacy of previous governments. If money has to be saved, the way to do it is to reduce the benefits bill for those who claim they cannot work, asylum seekers and their families and particularly the boat people.
September 3, 2025
I heard the new Green leader on NewsNight last night parroting the old chestnut that the UK has a sovereign (i.e. fiat) currency so has no need to fear the bond markets (the implications being it can print). This is the typical left (MMT) soundbite and it hugely dangerous. The Conservatives printed massive sums and Labour is borrowing like a premier league club that has a new middle Eastern owner.
As you mention in your article, stop spending so much. You have even identified some relatively easy wins such as the annual increase in benefits and net zero. But public sector pension contributions and staff levels are also easy wins as are returning illegal immigrants quickly and the swift repatriation of student visa over stayers or those using it to drive for Uber while the taxpayer supports their families.
The state is overly profligate, it’s not their money.
September 3, 2025
Also the longer this further punishment beating is put off, the more worried the markets will become about its potential damage. We might see a pre-emptive hit to the £ and bond prices, and the event postponed back and back.
September 3, 2025
The PM’s results to the taxpayer, from taking advice.. Advice he takes from his Cabinet, his technical advisors, the Treasury
‘Rachel Reeves will face a bill of up to £11bn for Ed Miliband’s North Sea shutdown, an energy executive has warned.’
The spin, the sound-bite our energy bills will come down by £300 per year. Down from what? How much money is going to foreign governments, they now supply the equipment and the power. £11bn is the tip of the iceberg.
What we hear from sound-bites from all the advisors, old and new, is there a need to raise the highest rate of taxes and borrowing in 70 years to keep paying for the give-aways that are nothing more than political ideology, they achieve nothing other than the opposite to the spin. Greater costs, greater uncertainty, more world pollution and loss of the country to the whims of foreign governments and the power they have over us
September 3, 2025
Yesterday, gold futures delivered their most impressive single-day performance this year, surging $83.40 to establish a new all-time record high of $3,602.40. This remarkable rally represents the continuation of a broader bullish trend, with gold futures advancing in six of the past seven trading sessions. The December futures contract for gold is currently fixed at $3599.50.
Gold’s rise reflects a fundamental shift in global reserve management strategies. This is being driven by unprecedented central bank accumulation worldwide. Foreign central banks now hold a greater percentage of gold than U.S. Treasuries in their international reserves for the first time since 1996 – except the Bank of England. Source; World Gold Council.
This flight to gold and now, also silver, coincides with recent data showing the U.S. industrial economy has been in contraction for six straight months. September/October is crash season. Watch out below.
September 3, 2025
In any walk of life when people are going for a job they have to pass the interview stage but unforunately we don’t have the same format for politicians seeking election – they just spin and tell lies to fool the people and then it later shows with the calibre of individuals rising to the top – all parties. Secondly there is no retribution or comeback for those who set out to deliberately lie with fantastical promises – our fault for not reforming the ststem and so we deserve the representation we get.
September 3, 2025
Just waiting for EU to catch up with more war talk and they can go down together while US waits it turn.
September 3, 2025
Last week Mrs Gold and I took a short holiday to France in the Tesla. We had the usual passport hassle at Folkstone, before being allowed to drive onto the LeShuttle train. You sit in the car during the journey, which only took 25 mins or so. Once we drove off at the Calais terminal there are prominent signs directing us to the Tesla Supercharger point, of which there are many in France. Interestingly, there was a good mobile signal on the train
Our destination was Brittany and the fine megalithic stone rows and circles. We found that there were also many Tesla Superchargers – though they are mostly in the coastal regions, with less in the interior.
We both like French food and Mrs Gold likes a glass of the local “Maison Rouge” with her dinner. We found the French hoteliers and the waiters delightful people who appreciated our attempts to speak French and who made our stay very pleasant.
When we arrived back at Folkstone, the Tesla was searched for illegal migrants by what looked like an armed gendarme. We saw many migrants carrying their possessions on the French roads near Calais. The prevailing view in France is that the boat people are our fault because we are an attractive destination to them
September 3, 2025
SG
Yes Tesla do have a good number of charging points in France, as they do else where to their credit, but few others exist for owners of other makes of cars.
Been going to France for an annual holiday for the last 30 or more years, usually drive to the South as almost always guaranteed decent weather, have driven to many other areas of France and indeed through it to other Countries as well, certainly not noticed much expansion of charging points at all in Europe in general.
Usually go by Ferry as you can have a good meal on board in the Club Lounge, and you can stretch your legs and enjoy the views during the 90 minute journey.
Yes have used Le Shuttle it’s a quicker journey (sat in your car seat), but waiting for boarding is the same as the Ferry, and the facilities in both the UK and France are poor, so any time gained you lose when you need to stop for a decent meal.
Toilets are much better on the Ferry than the train as well !
Plus point for the train, poor weather not a problem, but I would sooner be on a ferry if there was a fire, than a train in a tunnel.
Agree with you about UK pull factor for the illegal immigrants.
September 3, 2025
O/T ‘Out’ by Tim Shipman, ie the Johnson-Truss-Sunak years. Chapter 8 ‘Isaac, not Ishmael’ about the 2019 Tories-Brexit Party discussions is by itself well worth the £11.95 price of this 944-page book.
September 3, 2025
Well said Sir
September 3, 2025
The Markets as we call them, or at least what most of us think they are, is the trading platform where money is made. They love rumour and conjecture as it causes action/reaction. Yes, we sometimes get convinced that it is a reflection of an economy, but it has to be borne in mind the ‘markets’ make money not only on the way up but also on the way down. Then realise nowadays a lot of trading is just ‘trackers’ no one thinking just following the hoards. The thing to remember is that those in the market place only make money when there is movement, nothing happening no money being paid.
There is a confused situation in Government we have a Chancellor, therefore a Collective Responsibility Cabinet, thinking that interest bearing accounts are not investments in the economy. Hence the rumours with regard Cash ISA’s – how is the money used to create interest payments? Its invested
Its not the ‘markets’ we have to beware of it is those that think they can manipulate them with spin, forgetting the markets have seen it all before
September 3, 2025
Kemi should start PMQs asking the PM if he wants any telephone numbers for his team or indeed any of them for the Best Payday loans, websites for people in financial trouble, the IMF etc.
September 3, 2025
‘Labour lacks brainpower’ and Reeves had shown herself to be unfit in the role of Chancellor describing her as a “deadbeat” who “doesn’t get business and certainly doesn’t get growth” says Michael O’Leary, a proven successful businessman.
Now we have another pity poor me tearful unfit to be in the Deputy Prime Minister hoping we all ignore the hypocrisy on steroids team Labour.
Starmer is only faking defending them because the £ will drop and borrowing costs rise spooking the markets further to save his own skin.
Pitfalls for everyone foundations on sand so piling further and faster without a clue.
September 3, 2025
It sounds like it’s all going to plan. The “over £40bn/year” (NESO’s costing) for the Clean Power 2030 mission #4 (£8000/household) should help things along. Our financial position is of course unimportant if we’re saving the planet.
September 3, 2025
From Order Order, Guido
Governor of the Bank of England Andrew Bailey has offered his insights on the gilt yield crisis – ignore it. After Starmer surrounded himself with high-tax fanatics Torsten Bell and Minouche Shafik, 30-year gilt yields soared to 5.7%. The highest in 27 years…
Bailey told the Treasury Select Committee this afternoon: “It’s important not to focus too much on the 30-year-bond rate. It’s a number that gets quoted a lot. It is quite a high number but it is not what is being used for funding at all at the moment actually. There is a lot of dramatic commentary on this but I wouldn’t exaggerate the 30-year bond rate.”
Not sure the markets will be reassured by that… Liz Truss is not impressed either. Andrew Bailey’s instead warns POTUS Donald Trump that it is wrong to attack ‘Central Banks’
https://order-order.com/2025/09/03/watch-bank-of-england-governor-says-ignore-30-year-gilt-crisis/
Reply 10 year also gone up a lot where they are raising funds