The Bank of England writes another letter

The establishment  states that the Bank of England is independent and is responsible for keeping inflation around 2%. The authors of this relationship did foresee the possibility that the Bank would fail to achieve its single objective. Their remedy was to make the Bank write a letter to the Chancellor, who in turn was empowered to write back. We have just seen another example of the letter writing arts of the two parties. The constitutional position has in fact been that the key decisions of how much money to create and how many bonds to buy, the main drivers of Bank policy in the last 13 years, have been joint ones requiring Treasury sign off.

When you get to letter writing stage it is clear the Chancellor becomes part of the decision process, with the formal opportunity given by way of public letter to criticise, influence, support or reprimand. So far these letter exchanges usually show the Bank offering some excuses for failure to keep inflation down and saying something vague about how they might remedy it going forward. The Chancellor often agrees whilst placing more accent on the excuses or more emphasis on the need for future action depending on what he wants next. No-one can read these exchanges and seriously say the Bank is completely independent. They must accept the ability of the Chancellor to write a public letter invites him or her to influence analysis and policy at a time when the Bank has clearly failed to carry out its single task. If some other Governor in the future had wantonly failed to curb inflation the letter could be the last straw presumably leading to replacement of the poor performing Governor. The government after all owns the Central Bank and appoints its boss.

So what should we make of the latest round of letters? I was disappointed but not surprised that  neither side mentioned the fact that they had jointly agreed to create so much money and to go on buying up bonds for so long.  That might have affected inflation. Neither side mentioned the rapid rate of money growth during the intense Quantitative easing period or thought that  might matter. Neither side made any forecast of what might happen to credit and lending from here or what role the large savings balances of the better off part of the population might play going forward.No-one asked why Bank and OBR forecasts of inflation have been so hopeless.

Both accepted that the obvious large price rises in energy and food played a part more recently following the Russian invasion of Ukraine. Neither asked why China and Japan, large importers of fossil fuels themselves, still have inflation around 2%.

The inflation was mainly  fuelled by last year’s policies. This year policy is much tighter, and the Bank itself expects inflation to come down next year. If in the next few weeks inflation does not embed and inflation expectations do not climb, the economic policymakers will need to address a shift from too hot an economy to potentially too much of a slowdown.


  1. Mark B
    June 17, 2022

    Good morning.

    Perhaps it might be a good idea to introduce a, ‘three strikes and you’re out’ rule ? ie The third letter should be the Governors resignation letter.

    That should help improve things.

    1. Ian Wragg
      June 17, 2022

      Very interesting Japan and China. Neither pursuing woke green crap policies. Both not Importing vast amounts of foreigners and both not printing money.

      1. PeteB
        June 17, 2022

        Sir J could have included Switzerland too. In Europe, imports fuel and food yet has inflation of 2.9%.
        One other key difference in these countries – no magic money printing.

      2. Nottingham Lad Himself
        June 17, 2022

        Both not being run by anything like the Tories.

      3. Lifelogic
        June 17, 2022

        Indeed and no inflation problem in Switzerland either. Andrew Bailey at the FCA gave us one size for all personal overdraft facilities at about 39% APR this is not a many who understands banking. This, in effect, abolished use of personal overdrafts for sensible borrowers.

        He is totally unsuitable to run his own piggy bank. He even has the stupidity to suggest people should not push for pay increases.

        David Frost today:-

        “The Tory assault on buy-to-let will backfire on us all
        Banning no-fault evictions will result in fewer homes available to rent, and shift politics further to the Left.”

        Total insanity from this moronic tax to death socialist government.

        1. Hope
          June 17, 2022

          And let tenants have dogs and other animals! I know of a tenant who, against the contract, had a dog that urinated on the stair carpet and scratched oak flooring and doors! Tenants could not afford the repair and thought it was ware and tare!

          I wonder if this has anything to do with Johnson’s dog wrecking state owned properties because he cannot or will not or cannot be bothered to house train it. JR, we saw with covid, now with personal standards and with dogs he created policy based on his personal life! Running away from Afghanistan saw him put dogs before people according to civil servant giving evidence.

          Socialist Tories create many problems through its mass immigration problem and expect taxpayers to stump up the cost collectively and individually!

          As a party and govt you are all an embarrassment and disgrace to leave Johnson in office.

      4. Hope
        June 17, 2022

        Johnson claimed last October inflation was not a problem. Then we were told it was transitory and here it is embedded by Tory policies, not world events, other countries the sun coming up or any other mystical reason. Tory socialist print spend and waste policies.

        Mass immigration the cause of short availability for housing, public services overwhelmed particularly NHS and dentists. Again, not world events other countries but Tory mass immigration policies. EU through ECHR making a mockery of Brexit because of the oven ready deal Johnson signed. The lates Brexit bill ripped apart by Ben Habib as Johnson bottling it as only some clauses will become law.

        Tories could change BOE rules if it wished it could change anything with an 80 seat majority. Total abject failure of all major polices. Funny in contrast how Johnson wants to change all standards of conduct in public life, from Owen Patterson to minister codes to any form of ethics!!

      5. Everhopeful
        June 17, 2022

        Both highly controlled and compliant populations.
        They are the “desirables”.
        Don’t need beating into obedience maybe?
        The powers that be are reducing and diluting us naughty westerners.

      6. glen cullen
        June 17, 2022

        Good points – that will never be debated in the HoCs

      7. DavidJ
        June 17, 2022

        Interesting indeed and a lesson for Boris.

      8. Bill brown
        June 18, 2022


        Japan is printing lots of money

        Reply But has much less overall money growth than US or Euro area

    2. PeteB
      June 17, 2022

      Wouldn’t it be refreshing to have a truly honest letter:

      “We screwed up prior to 2008 by allowing commercial banks to over-leverage and become ‘too big to fail’ [translation: failure would be embarrassing and a vote loser]. The next 14 years of near zero rates encouraged excess borrowing by government and others. This was future spending brought forwards and a price now needs to be paid. I intend to solve the problem by inflating away the debt, robbing savers and devaluing the pound. Oops, did I really say that last sentence out loud.”

      1. DavidJ
        June 17, 2022


      2. anon
        June 17, 2022

        Wait until the bail-ins and the pension gating.

        I suggest performance related pay. e.g. missing your target by 8% means 16& reduction in your pay and pension entitlement. The letter may then be a bit more lively.

        The system is arguably weighed against the little guy, always was but now its serf time.

        Private sector workers forced to save via MPP. Into a market which is held at an overvalue by HMG policy.
        Some will just disqualify themselves from benefits or end up having it taken back , after a haircut. They will soon feel unemployment , with no honest recourse to state until any saved capital is ran down. Those in work will also not escape the economic downturn and extra workloads.

        How will the state respond when our recent guests demand more! I would not expect them to enforce or and the latter to obey the law, based on recent evidence.

        Boris & Parliament needs to get its finger out , all night sessions until we get legislation rammed through the HOL. Flood the Lords then abolish it.
        We know it can be done. Benn act style.

        We are going to poor can we at least have a less corrupt functioning democracy.

    3. Everhopeful
      June 17, 2022

      What a fantastic idea.

  2. Everhopeful
    June 17, 2022

    Actually I think that a lot of people should be writing letters.
    Johnson first of all, to apologise for the covid lark.
    For wasting billions on jabs that don’t work ( even for an insignificant virus) but which have caused a great deal of harm.
    The NHS for abandoning its paymasters ( yes, us!).
    Woke companies for rubbing our noses in diversity.
    All banks for closing down their branches and making us dependent on iffy technology.
    All the institutions that have destroyed our country in the name of GREENCR*PPERY.
    Yes…lots and lots of letters. Hallways littered with them. Crawling letters of apology.
    And I for one would not forgive.

    1. Lifelogic
      June 17, 2022

      Indeed – For wasting billions on ineffective and unsafe vaccines that often seems to have done net harm and are still doing so. Something the vaccine companies clearly should have known at the time (from their own often rigged and fraudulent) trials.

      1. Everhopeful
        June 17, 2022


    2. Lifelogic
      June 17, 2022

      Also for saddling so many with £50k + of student debt and interest at 7%+ for generally worthless degrees in often worthless subjects.

      1. Everhopeful
        June 17, 2022

        +Totally agree.

    3. Mickey Taking
      June 17, 2022

      do you have shares in Royal Mail? Could those letters be better sent filling their Inbox of emails?

  3. Philip P.
    June 17, 2022

    The ‘independence’ of the BoE is a worn-out cliche by now. Letters or no letters, the obvious fact is that it is the government’s policies that have driven up inflation. The lockdown policy together with the furlough scheme cost the country billions. The net zero policy with huge subsidies to the green lobby and restrictions on investing in fossil energy is costing a lot more. Creating international tension by sanctioning a major energy producer has massively contributed to energy price inflation.
    When the BoE was made ‘independent’, and tasked with controlling inflation, no-one in either party could have imagined the sheer reckless folly of Conservative government decisions in subsequent years, that has led to the worst inflationary crisis in my lifetime. Even in the Seventies, I don’t remember reading in the papers that one person in six was skipping meals.

  4. turboterrier
    June 17, 2022

    Whatever happened to the days when the bank would call you in to be told that there would be no further financial support until you addressed areas of their concern? Whether it be waste, lack of new business, production and operational costs all were taken into account simply because the banks wanted guarantees their money was safe. Wasn’t all bad in the old days.
    The Chancellor could learn a lot from that ideology when presenting his budgets. If departments are not proving they are really efficient they get less. Cannot carry on ignoring the waste that hemorrhages out of government operating procedures every day.

    1. Berkshire Alan
      June 17, 2022


      Clearly you remember the days when bank branches had a real manager, who could make decisions based on local knowledge without having to head office.
      Sadly all now long since departed, and replaced with tick box Computer criteria/programmes etc.

      1. Fedupsoutherner
        June 18, 2022

        Berkshire Alan. I remember the days when you were personally interviewed for a loan and a mortgage. You had to save with the lender too. Now you can get into debt easily from a lap top or phone in your bedroom.

      2. Dennis
        June 19, 2022

        Real managers won’t work as it would be ‘bank manager lottery’ as decisions would vary for the same service – can’t have that is our equal society. Algorisms treat all the same way however badly.

  5. DOM
    June 17, 2022

    Silence on systemic reform suggests acceptance of the status quo which John and his dead husk of a party appears firmly wedded too.

    Making life easier for the party in government that is dragging us all into the authoritarian abyss of Neo-Marxist BARBARITY is it seems the only thing that now matters and we the public will pay the full price in many ways

    ‘Legal but harmful’ is a phrase endorsed by Parliament. It is a phrase that should strike fear into the hearts of all free peoples. The Tory party has endorsed this poison. Shameful

    1. Nottingham Lad Himself
      June 17, 2022

      Yet again you insult those in Ukraine who are suffering from actual, not imaginary – if only – barbarity as we write.

      1. anon
        June 17, 2022

        To Ukraine consider declaring neutrality. Declare to respect the electoral wishes of the local population in border areas under dispute to join with Russia or remain in the Ukraine. Request a Russian ceasefire and withdrawal to the border area disputed. Request reparations for the rebuilding of lives, infrastructure and very damaged relationships with neighbours.

      2. No Longer Anonymous
        June 18, 2022

        Caused entirely by EU and NATO expansionism, NLH.

        1. Nottingham Lad Himself
          June 18, 2022


          Russian president Vladimir Putin said Moscow has “nothing against” Ukraine’s possible membership of the European Union. He made the comments on Friday after the European Commission recommended granting Kyiv candidate status of the 27-member bloc. “We have nothing against it,” Putin told Russia’s annual economic forum in St Petersburg. “It’s their sovereign decision to join economic unions or not … It’s their business, the business of the Ukrainian people.”

          So he now accepts that Ukrainians are a separate, sovereign people too, not just little Russians. I thought that he was tyrannical and brutal though not illogical, but now I really do wonder.

        2. Bill brown
          June 18, 2022

          Can we please have the historical facts to support this absolute nonsense

    2. Everhopeful
      June 17, 2022

      Dragging us…dragging us into the abyss.

  6. turboterrier
    June 17, 2022

    Can’t be all bad. In principle Boris has agreed £3,5bn to help Ukraine rebuild itself when the fighting finally ceases.
    Another £3.5bn we will have to borrow.
    He’s looking good on the world stage. Pity about at home.

    1. Shirley M
      June 17, 2022

      Boris will help anyone who wants to come to the UK, or anyone who isn’t in the UK, but Brits???? Forget it! We’re just the cash cows. We are expected to finance his global reputation of ‘saving the world’, and being the first to net zero.

    2. Dave Andrews
      June 17, 2022

      Particularly when you hear Ukraine is manoeuvring to join the EU, the block that’s funding Russia’s war machine against them.
      So when they have thrown off the Russian yoke, they will then surrender their sovereignty to Brussels.

      1. anon
        June 17, 2022

        Maybe this always was US policy.

      2. Fedupsoutherner
        June 18, 2022

        Dave. And then join forces in making life difficult for us with Macron at the helm.

      3. Clough
        June 18, 2022

        What would Ukraine ‘throwing off the Russian yoke’ look like, I wonder? It is unable to stop the Russians and the Donbas separatists from gradually destroying its army and taking yet more territory. The only way for Ukraine to have any chance of winning would be for NATO to become directly involved with troops on the ground. I think we know what that would look like.

        EU leaders and now Johnson have gone to Kiev to tell the Ukrainians it’s over, and they have to agree to a negotiated settlement before losing any more territory, e.g. Odessa. That’s assuming the Russians are still interested in a negotiated settlement, which they may not be.

      4. Bill brown
        June 18, 2022

        Dave Andrew

        We also buy Russian energy

    3. IanT
      June 17, 2022

      I would have thought one of the world ‘courts’ (ECHJ?) could be busy working out how to award the Ukraine damages against Russia for all the harm being caused, to be paid for by the money currently frozen in western bank accounts. They’ve seized oligarchs yachts, why not sell them and add that to the fund – and the money from Chelsea FC too?

      1. R.Grange
        June 18, 2022

        Don’t worry, Ian: the US froze (= stole) hundreds of millions in Russian state assets months ago, and there has been discussion of doing as you say with that money.

        Problem is, there may not be much of an independent Ukraine to reconstruct when the day comes, and Western firms may not get the contracts. It will probably be Russian and Chinese firms.

    4. Mark J
      June 17, 2022

      The UK seems to be very good at helping everyone – except their own citizens.

      Happy to chuck our money at war torn countries, happy to house illegal migrants in 4* hotels at our expense, happy to still give billions of our money away in foreign aid. However are utterly useless at doing things to help people who are severely struggling at present.

      A situation that will get even worse.

      My vote is already cast for the 2024 election. I can tell you it won’t be for The Conservatives, Labour, or the Lib Dems. All are utterly useless and only listen to those that fit their agendas.

      I’ve previously voted Conservative.

      Boris has the opportunity to do great things with his majority, but has continually wasted this opportunity to do anything of any significance.

    5. Wacko
      June 17, 2022

      I’ve there was ever any doubt about his faculities well we can clearly see now – and not alone by his skipping off to Ukraine playing catchup to the European leaders who pipped him at the post but to chose that action over a visit to the fine people of Doncaster and the North at this particular time beggars anything you like – in irish speak it amounts to ‘GUBU’ grotesque unprecedented bizarre unbelievable

  7. Sharon
    June 17, 2022

    I don’t know anything about how the economy of a country works, but I’m learning fast. Listening to Liam Halligan talking on GB News last night, I detected real anger in him at what the Treasury and Bank of England are doing to this country. He said three outside and nine inside economist’s talked about what should be done last year about interest rates… the nine civil servants’ advice was taken!

    So much harm that has been done to this country can be tracked back to Tony Blair’s policies, but why are the conservatives still following labour policies?

    As Liam Halligan pointed out there’s outside advice available- why is it not taken?

    It was the same with Covid – only a narrow minded few had their advice taken – and look where that’s got the economy.

  8. Richard1
    June 17, 2022

    Nor is it just Asian countries which have escaped inflation. In Switzerland it’s also v low. Perhaps a good idea to look at Switzerland and ask why it’s so prosperous and whether we could pick up some ideas. Low and competitive taxes which don’t constantly change on a political whim. Budgets in balance. Free markets with (contrary to popular belief) relatively light regulation. State / GDP c 30%- lowest of any major economy in Europe by a wide margin. Sound money which means low inflation (& an attractive environment for investment). A responsive and accountable democracy.

    Given we have a ‘Conservative’ govt we ought to be doing the same. In fact we’re doing the opposite.

    1. Original Richard
      June 17, 2022

      Richard1 :

      I think the people of Switzerland’s big advantage are their frequent referendums.

      These gives them a lot more control over their laws and policies, whilst in the UK it seems the civil service led governments are quite happy to ignore even their own manifesto pledges.

    2. Dennis
      June 19, 2022

      Richard1 – population of Switzerland – 8 million. I don’t think they are crying out for 70 million.

  9. Javelin
    June 17, 2022

    The first lesson here is not to have let Angela Merkle (and WEF politicians) run the EU energy policy of Net Zero and Mass Migration policy.

    The second lesson here is not to idolise a petulant teenager.

    The third lesson here is not to trigger an energy crisis by going to war with Russia.

    The fourth lesson here is not to trigger an interest rate crisis by creating over priced houses and depressed incomes from mass migration.

    The fifth lesson here is to have let the WEF and their crazy politicians get into power and run a top down, centrally planned economy that has nothing to do with the laws of demand and supply.

    1. Javelin
      June 17, 2022

      We used to listen to the laws of nature. The laws of God.

      Today we listen to science. Today we listen to Davos man, Chris Whitty, Angela Merkel and a petulant swedish teenager.

      Now understand why we have reached an economic crisis.

      1. Original Richard
        June 17, 2022

        Javelin :

        Davos man, Chris Whitty, Angela Merkel and a petulant Swedish teenager are NOT “science”, rather the complete opposite.

        They have all given science a very bad name and are simply used by the stemphobics in our ruling elites/civil service to drive their Marxist climate change scam against CO2, the very basis of life on our planet.

    2. Mickey Taking
      June 17, 2022

      The sixth lesson is not to elect a fool often making us laugh expecting him to change into the real deal Leader once made PM.

    3. Richard II
      June 18, 2022


  10. Donna
    June 17, 2022

    This inflation has been caused by:

    1. The banking crisis of 2007/8; bailing out the banks and the resulting QE
    2. The hysterical Covid restrictions and even more QE
    3. The Net Zero lunacy
    4. The Ukraine War
    5. A Socialist British Establishment which now spends 42% of our GDP and wastes at least half of it

    And this is under a supposedly Conservative Government. Whilst it’s difficult to imagine, Labour would be even worse.

    I won’t be voting for any of them; none of them deserve it. I am doing what I can to shield my own family from the consequences of the Government’s idiotic and destructive policies.

  11. Nigl
    June 17, 2022

    Just like Johnson’s reply to his ex ethics advice. Coming up with some nonsense about steel importation to obscure the real reason he resigned.

  12. Mike Wilson
    June 17, 2022

    So, Bank of England – useless.
    NHS – useless.
    DVLA – useless
    Railways – useless
    Home Office – useless
    Government – useless
    It’s all going so well.

    I read yesterday about an elderly gentleman who had a fall. He couldn’t move and phoned for an ambulance. Despite repeated calls the ambulance took 8 hours to reach him. On the last call he told them he was dying. He died. We don’t appear to have the money or wit to look after a man who has paid tax and NI all his life but we have the money to send boats out and put people up in hotels. The government seems to hate us.

    1. Mickey Taking
      June 17, 2022

      just a thought – surely when the 999 response admits ambulances are in a VERY long queue, and the need is VERY urgent to a person alone – can’t they pass to Police or Fire Brigade to make access to the home?

    2. anon
      June 17, 2022

      No we are in a post democratic age. This is just raw power saying , you just don’t really matter. You are resource to be exploited, used and disposed of when it suits.

      1. Nottingham Lad Himself
        June 18, 2022

        The Tories new voters don’t care, as long as it all gets under the skin of those who actually paid attention in their classes back in their schooldays, it appears.

        Peter Hitchens recognises this, and it is why he avers that democracy with such widespread attitudes is pointless.

    3. Fedupsoutherner
      June 18, 2022

      Mike. So many people truly despise what they are and what they stand for.

    4. Otto
      June 19, 2022

      Putin doesn’t have to attack and destroy us, we are experts of doing that ourselves.

  13. Bloke
    June 17, 2022

    Letters between Treasury and BoE are a PR sham. Whispers between employees on both sides exert the force.

    Gordon Brown started so-called ‘Independence’ pretending he had a good idea. It led to George Osborne importing Mark Carney and the skidmarks he caused. OBR was another brainchild, whose errant ways should have been prevented prior to birth.

    ‘The First Lord of the Treasury’ embosses the PM’s letterbox, but might signify a berk. He claims he is in control, and does exactly what it says on the brass.

    Margaret Thatcher had her own way. She appointed Alan Walters.

  14. Nigl
    June 17, 2022

    And in other news instead of complying with the Ministerial code Boris wants to abolish it. Far easier to have no rules then you never have to worry about breaking them.

  15. Berkshire Alan
    June 17, 2022

    Many of us on this site have said for years that a day of reckoning will eventually come to pay for all of the money printing and false low interest rates which fuelled ever more borrowing that people eventually would not be able to afford when normality returned.
    Its taken a long time to arrive, but now it is here it will be with us for longer than many expect, sad that those in charge of policies over the past decade could not see it, now we are all going to have to pay the price, and for some it may be life changing with mortgages and loan repayments going through the roof, on top of the Green crap costs and high tax rates, which again were self imposed.
    Unfortunately for many, the very basics of life in the form of heat, light, power, fuel and food are rising rapidly at the same time.
    The solution will not be pleasant.

  16. No Longer Anonymous
    June 17, 2022

    We are not asking the Chancellor to cut tax but to give us back the windfall he is taking from us in rising fuel prices. To let us breath.

    Alas yours is an economically ultra socialist party coinciding with ultra woke and ultra greenism.

    The Tories are a lethal threat to our civilisation.

    1. No Longer Anonymous
      June 18, 2022

      My small (zero VEL) car took £36 to fill up half way today.

      I realise that the vast majority of that was TAX. To get to work to pay TAX !!!

      Then VAT on parts and repairs to get to work to pay TAX !!! Out of taxed income. To pay for people who don’t pay TAX !!!!

      TAX TAX TAX !!!!!!

      1. Bill B.
        June 18, 2022

        Reform UK will cut taxes and get Britain back to work, says Richard Tice. How utterly unoriginal of him. Pinched from…. Conservative policies (when there were Conservatives)!

  17. glen cullen
    June 17, 2022

    SirJ your comments today don’t infer or mention anything about the policy of net-zero that could have unintended long term inflationary pressures and short term direct cost implications…..why aren’t MPs discussing repealing the net-zero policy and the climate change act
    While it’s the duty of the BoE to control inflation, (limited tools ie interest rates), it’s the government duty to change policy to control eternal influences that effect inflation and growth

  18. Lester_Cynic
    June 17, 2022

    Off topic

    There seems to be a vacancy for an Ethics advisor?

    A. He doesn’t think that he needs one

    B. I’m guessing that it’s a post that no one is going to be rushing to apply for?

  19. miami.mode
    June 17, 2022

    The governor of the BoE still has 8 years of his term to run – probably longer than Rishi Sunak’s career in high office.

    Beware a return to the 1970s and the demise of Ted Heath’s ambitions. Huge increase of the price of oil in 1973, high inflation, strikes by key public sector workers, 3 day week and blanket speed limit of 50 mph. Election called for early 1974 on the basis of “who governs Britain?” and the answer – “not you mate”.

    Get a grip on energy prices which are a basic ingredient of our lives as support schemes are temporary.

    1. miami.mode
      June 17, 2022

      My mistake – 6 years left of an 8 year term.

  20. John Miller
    June 17, 2022

    The Government needs a strong leader to cultivate a “no blame” culture. Blaming people for what in hindsight seem poor decisions stops good decisions ever being made. The Bank has made poor decisions because they had the example of the USA to teach them. When the demented Democrats printed trillions of dollars it was obvious even to a retired old accountant what was going to happen. I asked my financial adviser to transfer money out of savings accounts to high risk investments. I told him I was worried about inflation to which he replied “The BoE says it’s going to be temporary”. I think otherwise…

  21. Denis Cooper
    June 17, 2022

    Off topic, JR, are you planning anything special for next Thursday, June 23rd?

    Should this be made a public holiday, to be celebrated for all time to come?

    1. Bill B.
      June 18, 2022

      Public holiday, Denis? What, just because the Tories lose a couple of by-elections on that day?

      1. Nottingham Lad Himself
        June 18, 2022


        1. Denis Cooper
          June 19, 2022

          You’re easily impressed.

  22. MWB
    June 17, 2022

    What phoney inflation rate figure will be concocted in September when the percentage increase for state pension will be calculated ?
    Will Johnson and Sunak make good for their theft from the state pensions this year ? Thought not.

  23. Ralph Corderoy
    June 17, 2022

    Doesn’t the Government have too much debt to afford higher interest rates? Paul Volcker may have whacked rates up under Reagan to bring inflation under control but even he had to wait quite a while for debt to be sufficiently eroded that it was affordable. And the USA debt-to-GDP ratio was much lower then than GB’s now.

    So the Government’s other option is to cause a recession, e.g. tax rises, and hope that knocks inflation down rather than end up with stagflation: low growth but high inflation.

    1. Mark
      June 17, 2022

      The interest bill on much of the debt is fixed. Using data from the DMO on gilts in issue I have analysed as follows. Interest paid on index linked gilts is itself index linked, but the coupons are very small, so it is not a big item: the total interest paid on index linked gilts is about £3.9bn p.a. which will rise with inflation with a 3 month lag. The debt that matures for redemption has to be refinanced at prevailing market rates. That is running at about £120bn a year in the next 3 years. Mostly, the expiring debt is at low rates, averaging 1.44%. If we assume that it is on average replaced at 3% the interest bill on this element would increase from £5.2bn to £10.9bn.

      On top of that would be any new debt that has to be financed to cover the government deficit. The current interest bill on conventional gilts is £34.1bn in total, so with the index linked element that is £38bn – about 1.76% on average across the whole portfolio. I have not included short dated Treasury Bills and other financing e.g. NS&I) in the analysis. Obviously, an additional £100bn of borrowing at 3% would add £3bn to the interest bill for each year it applies.

  24. Pauline Baxter
    June 17, 2022

    Do you remember, Sir John, the 1960’s big fights between Price Control and Wage Restraint?
    One would have thought by now our ‘Experts’ would have grasped the obvious remedy.
    Grow as much as possible of our own food. (Scrap the green nonsense of rewilding for instance.)
    Use our own fossil fuels (and nuclear power) to efficiently increase our own manufacturing capacity.
    Surely the less distance things have to travel, the less they will cost.

    1. Original Richard
      June 18, 2022

      Pauline Baxter : “Use our own fossil fuels (and nuclear power) to efficiently increase our own manufacturing capacity.”

      Our civil service led governments have wished to reduce our manufacturing capacity and make us dependent upon hostile nations such as Russia and China as evidenced by curbing our own fossil fuel production, intending to electrify transport and heating, and closing down our nuclear power plants.

      By the decarbonisation date of 2035 we may have just Hinkley Point C (if finished) and possibly Sizewell B if its life can be extended. A possible maximum of 4.4GW out a predicted demand of 60GW. This is despite nuclear being the only low carbon energy which is affordable and reliable and the CCA being passed into law in 2008. The nuclear plants in the “one nuclear reactor/year promise, will only come online starting in 2043, 8 years after the decarbonisation date!

  25. MWB
    June 17, 2022

    What inflation figure will be concocted this September, when the state pension increase will be calculated for next year, 3% perhaps ?
    When will this government refund the money stolen from state pensioners this year ?
    I posted this comment a short time ago, but surprisingly it has disappeared.

  26. Original Richard
    June 17, 2022

    A bit of inflation is a mere trifle compared to the two twin evils of massive immigration and Net Zero driven by the Marxist fifth column in our ruling elites, bureaucracy, judiciary, corporates and institutions.

    Net Zero is designed to destroy the economy through expensive and intermittent wind generated electricity causing rationing of energy, food and transport.

    Completely pointless as China and India will continue to burn 5.6bn tons of coal each year.

    Completely unnecessary as the historical records show no long-term correlation between CO2 concentration and temperature. No CO2 reason can be given for why the planet warmed after the last ice age which ended just 10,000 years ago. In fact our burning of stored energy (coal, gas and oil) and releasing stored CO2 into the atmosphere has saved life on our planet as CO2 levels had been dropping for 150m years and at the last ice age was down to just 180 ppm only just above the 150ppm below which plants cannot survive.

    1. glen cullen
      June 17, 2022


  27. margaret brandreth-jones
    June 17, 2022

    Letters.. evidence for prosecution and defence only…self protection strategy and with aforethought at possible outcomes of their own position in relation to ‘the job’ an attack system!

  28. mancunius
    June 17, 2022

    It has been said (and often repeated) that Andrew Bailey is a WWI general wrongly picked for a WW2 conflict.
    He really seems more like an 18c Revolutionary War British general picked for a 21st century tactical nuclear war.

  29. lojolondon
    June 18, 2022

    Dear John,

    I thought you may enjoy this presentation released by House Republicans – demonstrating that the global oil and gas shortage is 100% Joe Biden’s strategy, and 0% Putin’s fault.

Comments are closed.