The Bank tries various sets of forecasts

After the collapse of its famous 2% inflation forecast for this year the Bank has gone over to providing a range of forecasts. These at least accept the uncertainties of the world and the difficulties of accurate spot forecasts. On one of their scenarios inflation tumbles well below target over the  next two years and on their base case after inflation yet again higher for longer than past estimates, it too subsides to target in two years. On all of the scenarios there is a big hit to real incomes and GDP from the fourth quarter of this year.

The Bank makes it more difficult for itself in  forecasting by assuming no fiscal policy changes and assuming no new shocks in either direction. The Bank’s mandate is primarily to keep inflation around the 2% CPI target, but it also is required to take growth and employment into account. The Bank’s rationale for tightening money policy so much that a recession is likely is that they need to stamp hard on the inflation now to stop it running away with them. They are right to want to arrest any wage/price spiral. If they look at the data there is no sign of that  happening, with wages lagging prices by a wide margin leaving many more people worse off. This is likely to be followed by falls in inflation as a result. The inflation in the UK has been delayed and extended by the energy price controls which mean there is more bad news to come this autumn when the price cap is lifted again.

Markets expect the Bank to carry on increasing rates this year all the time there is still plenty of inflation around, but expect them to have to cut again next year as recession sets in. It is a depressing boom/bust policy all over again. The Bank fails to forecast big issues ahead, follows the wrong path, then corrects retrospectively. It should instead be looking ahead more. The  main problem is shifting from inflation to recession at the  very moment the Bank wakes up fully to the inflation.

In May 2021 the Bank forecast 2.3% inflation for Q2 2022  and 2.0% for Q2 2022 with rates at 0.1% then 0.3%

In August 2021 the Bank forecast 3.3% inflation for Q3 2022 and 2.1% for Q3 2023 with rates at 0.2% and then 0.4%

106 Comments

  1. Lifelogic
    August 6, 2022

    Indeed.
    Price controls on energy are indeed a very large mistake. Far better for people to adjust to the new energy costs but then net zero and the endless market rigging that has pushed up the cost of energy so hugely is also a huge mistake. When I was young we had only one warm rooms with a wood or coal fire and wore more jumpers. It also gave a bit of hot water to bathe occasionally. It is not hard to adjust to lower energy use if needed. With modern LED lighting and laptops, TVs & tablets the electrical energy use for these can be very low indeed. Far better to give tax cuts and let people spend their money as they wish on energy or on thermals, jumpers and other things.

    One of my businesses was quoted nearly 50p a KWH for its electrical energy renewal. Yet even on a small scale one can generate electricity from coal or wood (young coal) for circa 10p a KWH. Quite some government market rigging going on here with large companies trying to charge 500% of the cost of production before the tax and the idiotic government’s net zero market rigging.

    1. Lifelogic
      August 6, 2022

      The Telegraph has a good comment section today.

      Juliet Samuel – Andrew Bailey has overseen the Bank of England’s descent into a second-rate, politicised failure
      Buffeted by the political winds, and stacked full of ex-Treasury officials, the institution has got its one real job badly wrong.

      Together with Sunak of course.

      Then a good piece from JR – Liz Truss’s tax cut plan is perfectly Thatcherite
      Her targeted measures are needed to ease the squeeze on family budgets, especially as global energy prices go up.

      Then a good piece from Simon Heffer telling us how poor he was at maths/sciences O levels and defending a classical education. Fine but please do not put so many of these types and indeed lawyers in charge of transport, energy, the economy, business, the net zero religion, designing bridges, aircraft, cars, safety…most do not have a clue in these areas and are incapable. The government dopes even state that walking, bikes and drax produce no CO2!

      Then the excellent Douglas Murray.

      1. X-Tory
        August 6, 2022

        Sir John’s excellent piece in today’s Telegraph makes the point – which the stupid Truss has not made once, God knows why! – that her proposed cuts to energy prices (by suspending the ‘green levies’ and removing VAT) will “make a direct reduction in energy prices to help push inflation lower”; it will also reduce the cost of living squeeze on the public, help industry survive and compete internationally and help the Conservative Party electorally. But if cutting energy prices is such a good idea – which it is – why not do more of this? Why not, as I have suggested previously, CUT THE CARBON TAXES which are raising energy prices at their source? This is the most sensible and logical and effective course of action of all.

        There are only 2 possible reasons why she is not promising to cut the Carbon Taxes: (i) she is too ignorant and stupid to understand the issue, or (ii) she is as mad as Boris in her fervour for Net Zero national self-flagellation. I wonder if Sir John knows which is the reason for her unwillingness to do what is needed? If it is that she wants to continue to worship at the church of climate change idiocy perhaps our host and hero might explain to her that net zero should be achieved (if at all!) NOT in a linear fashion, with year-on-year progress towards this holy mecca, but in a series of steps and plateaus. Our next step should be when we switch to electricity produced by the RR SMRs. Until then, no further action is needed. This is especially the case since the UK accounts for OVER 2% of global GDP, but UNDER 1% of global greenhouse gases. We are already therefore more than TWICE as ‘saintly’ as the global average in our fervent obeisance to the new religion and should now focus on our national interest!!

    2. No Longer Anonymous
      August 6, 2022

      Lifelogic

      Are the Tories EVER minded to take on corporate profiteering which is also inflationary ? Or is their one and only solution to tell us (the people who actually voted for them – not the corporations) to lower wage expectations and conditions and to tighten our belts ?

      I really wouldn’t be raising this point if the Tories were even handed but they aren’t.

      They are also scared of the underclass. After 13 years of Tory rule (several with an 80 seat majority) the police are still cowering before the anti-social and working people being terrorised by them are living in fear of losing their jobs and possessions if they take the law into their own hands. (I have had to file a report with police and with my employers just this week. As if things aren’t bad enough already. This really does feel like a country falling apart.)

      1. Lifelogic
        August 6, 2022

        We need fair markets and real competition and freedom for people to choose how they spend their own money. But we have government rigged markets in energy, transport, schools, universities, housing, banking, money, water, NHS/Heathcare, Social Services, the legal system, planning… so we end up with dire state monopolies and crony capitalism.

    3. Denis Cooper
      August 6, 2022

      You came to mind while I was reading this paper by Lord Frost:

      https://policyexchange.org.uk/wp-content/uploads/V6-Holy-Illusions.pdf

      I can recommend it, without necessarily agreeing with all of it.

      1. Lifelogic
        August 6, 2022

        +1

      2. hefner
        August 6, 2022

        DC, thanks for giving access to this very relevant document.

    4. Dave Andrews
      August 6, 2022

      If there was a change of heart in government, and coal mining came back on the agenda, shall I tell what would happen?
      The coal mining companies would tell the government how risky the operation would be financially, how much they needed to invest to make the project worthwhile, so the government that doesn’t understand the value of anything sells the mining rights for the coal very cheap, as they will do anything for a quick buck to make the economy look a little better.
      The coal mining companies proceed to exploit the resource, making vast profits for themselves, selling the coal to the highest bidder. The benefit to the UK person will be zero.

      1. No Longer Anonymous
        August 6, 2022

        The sort of thing that happens in third world countries.

  2. DOM
    August 6, 2022

    Compared to the catastrophic economic, fiscal and libertarian cost of the Marxist policy of lockdown which most members of Parliament heartily approved and indeed unsurprisingly the dependent State class the hopeless and sometimes politically motivated actions of Bailey and the Treasury are almost trivial in comparison

    John may express his frustration about Bailey and Roxburgh’s actions but his party’s pandering to Washington, the WEF and Labour’s unions has cost this nation’s taxpayers upwards of over $500bn.

    The fundamental problem isn’t the BOE or the Treasury, it’s the Tory party’s desperation to maintain the status quo while protecting itself from harm sacrificing all before it in the name of party interest

    All that we are seeing is contrived, constructed, planned and viciously imposed

    The Tories have a decision to make. Do they put freedom and liberty first or do they decided to put party before all else and throw their lot with Marxists and despotic minded lunatics

    1. Lifelogic
      August 6, 2022

      Indeed.

  3. Mark B
    August 6, 2022

    Good morning.

    One has to ask, “What is causing this inflation ?”

    The cause is the printing of more and more money. Mad energy policies (ie deliberately making energy scarce so as to increase prices) and over importation of food and goods, some of which could be produced here, coupled with a falling Pound. We also have higher than necessary demand due to an increase in population. This increase is designed to both combat inflation (I am quite serious on that despite its obvious failure) and to prop up the the housing bubble / market. Quite important that last one as the government make a lot of money out of the quite scandalous Stamp Duty / Tax.

    Perhaps events are for the good. It will force people to make some serious decisions, personally, financially and, hopefully, politically.

    1. No Longer Anonymous
      August 6, 2022

      And over-profiteering and offshoring of those profits by corporations. It clearly isn’t being caused by wage inflation – yet that is the one and only thing the Tories want to take on. They’re even too scared to start fracking because of people who would never vote for them.

      Their useless water companies charge me nearly a thousand pounds a year yet for much of the summer I can’t get much water. The Tories won’t demand that the water companies fix leaks or build reservoirs, despite this Government letting in record numbers of people to live here.

      By 2024 things are going to be grim. Really grim.

      1. Jackie
        August 7, 2022

        So grim indeed that it’s possible that Labour under Starmer will not want to win the GE and will instead leave it to the Tories.

    2. Lifelogic
      August 6, 2022

      +1

  4. Javelin
    August 6, 2022

    I’ve posted many times that the green zealots want to destroy our energy industry and take us back to the stone age, but I never made the OBVIOUS prediction that as the supply of energy diminished its price would go up to levels that would bankrupt millions of families.

    So I don’t really blame the Bank of England if myself and EVERY politician in Westminister was also unable to make this basic prediction.

    However what I also didn’t predict because many other people have predicted it is that reversing this green lunacy will take a decade or longer.

    Now I’ve woken up to the intermediate prediction of bankruptcy and starvation before the stone age thing happens, I will make this prediction. Not only will the green agenda drive the whole world into a recession, it will also cause “green riots” as people are unable to pay for food and life giving essentials and politicians will be unable to do ANYTHING about it for years.

    I also predict this will cause a steep rise in nationalism as politicians try to placate their populace by reversing the green lunacy and hoard energy.

    Whilst politicians come under fire for destroying the lives of the whole world in the name of their pet virtue signalling green project driven by a stroppy Swedish teenager, they might also like to consider the same conspiracy theorist type people who have been predicting an even worse disaster caused by virtue signalling around mass immigration.

    So NO I don’t blame the Bank of England because woke-think is out of control amongst politicians as well.

    1. No Longer Anonymous
      August 6, 2022

      I made that prediction but nobody listened.

      1. Mark
        August 6, 2022

        I also warned just how damaging the restrictions on fossil fuel development would be after Carney was appointed UN Special Climate Envoy in late 2019. I have offered plenty of advice on mitigation measures. Some of those are finally beginning to be implemented, but too late to prevent disaster. BEIS have been dithering for over a year since they were told what they needed to do.

        Part of the problem is that those responsible are so wedded to the climate agenda that they are incapable of understanding the problems and solutions. That also applies to a large slice of the public, who have been sold propaganda lies. That sets the stage for disagreement which will make solving the problems much more difficult. We already have disruption from XR types. I suspect that will lead to clashes on top of civil unrest as people are unable to afford their bills. It will be important that the police do not aggravate the situation by allowing XR their heads. It appears at least that Truss understands that, if not how to resolve the energy shortages and consequent prices.

      2. anon
        August 6, 2022

        A number of voices did. It was insane or recklessness to put beyond use perfectly good plants andor close early any plant except of safety grounds. All should have been mothballed , to enable the UK to surge production above demand and the maximum interconnector outflow.

        Laws limiting coal/gas energy production in the UK for existing plant need to repealed,immediately along with go-ahead to produce any needed coal within the UK, UNTIL we have cheaper reliable alternatives.

        We need to remove any obstacles to subsidy free renewables , some which only require permissions.

        But we need to insist on matched storage tech. Be it hydro- closed loop, liquid air, battery, high density liquids etc.
        Instead of super connectors to Germany why don’t we have a super grid ring around the UK linking all to our growing renewable resource.

        Extra water storage should also be built into new hydro developments.

        I don’t believe the BOE and HMG. They would have been warned and ignored the warnings. The 2% target was probably just gas lighting, along with manifesto promises.

  5. ignoramus
    August 6, 2022

    There is a very interesting article in the Economist on this.

    Apparently the BoE is in a particularly difficult position . It is caught between inflation and politicking. Truss’s suggestion that the bank should target money supply has been discredited since the 80s, when the relationship between inflation and money supply was found to be too unstable to work.

    Essentially the politicians will push for growth, possibly introducing tax cuts, while the BoE is raising rates to try and deal with inflation, which is already being baked in through wage increase.

    Muddle though appears to be the only option here.

    1. No Longer Anonymous
      August 6, 2022

      Will somebody please ask Ms Truss what the hell she means by “*Keep* taxes low.” ???

      If she means her corporateering chums then she’s right. If she means the Tory voters they’ve never experienced such high taxes ever !

      My lads tell me that student loans are expected to have interest rates of 17% soon. So by the time both STEM graduates reach a mortgageable salary they will be in a high tax band.

      They are both paying through the noses to live in HMOs in their mid twenties. Their unemployed cousin who got herself banged up aged 17 has never worked because she raised an ADHD kid is fine in her two bed house with her emergency credit card for white goods and tvs etc though.

      1. Lifelogic
        August 6, 2022

        Indeed this while new junior doctors (who started this week) earn circa £ 29k having given up 5 or 6 years unpaid to train & often have student debts of £250k. Interest on this at 6% is £15k tax and NI (after the Sunak manifesto ratting) on the salary circa £6k, travel to and from work perhaps £2K leaving them just £6k to live on. For rent, energy, food, holidays… Meanwhile lawyers can start after three years on over £100k+ with far less student debt. Is it any wonder only ~ 50% of UK trained doctors stay with the dire NHS and that the NHS is so short of competent medical staff? Many leave the profession other go to Australia, New Zealand or other. Rather a waste of expensive training and talant.

        1. anon
          August 6, 2022

          Training a good doctor or nurses etc, as long as they practice, i cant regard as a waste. Even if they emigrate. Just deduct it off foreign aid. What is a waste is not using the talents of the UK population who have a vocation and need training.

  6. Nigl
    August 6, 2022

    The Government hired and was in total thrall of (WORDS LEFT OUT ED) Mark Carney whose Green obsession we are still paying for today with the Bank required to include Net Zero as one of its policy considerations and Andrew Bailey whose FSA severely let down people whilst under his watch, they stuff it with ex Treasury ‘patsies’ and require it to buy vast quantities of Gilts to fund its deficit.

    With interest rates so high I guess those will incur a large loss when sold.

    Yet by the magic of politics their and the Treasury’s incompetence is nothing to do with the Government despite its fingerprints all over both of them.

    1. Lifelogic
      August 6, 2022

      The “words left out” were probably rather accurate. The net zero insanity is hugely damaging the words probably apply equally to May, Carrie, the new alarmist post Carrie Boris, Lord Debden, Ed Milliband indeed all the deluded fools who nodded through net zero or voted for Ed Miliband’s moronic climate change act.

    2. acorn
      August 6, 2022

      Gilts do not fund the deficit, they are savings Bonds that pay interest for Insurance and Pension funds. The government spends long before it pretends to “borrow” with Gilts; or, before it collects taxes. The DMO and HMRC respectively, could go on strike for months and it would not stop the government spending as normal, it would just increase its deficit financing from the National Loans Fund which it owns. As it did in 20/21 when it advanced itself £371.9 billion. See “Performance analysis” in the Consolidated Fund Account.
      https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1018479/CCS0921300720-001_HMT_Consolidated_Fund_CF_Web_Accessible.pdf

      That’s the reality of a sovereign fiat currency system.

  7. Nottingham Lad Himself
    August 6, 2022

    Yes, many forecasts are wrong. We cannot see the future.

    However, the suffering of those adversely affected because things are worse than forecast is absolutely not the fault of the forecasters, is it?

    Those who have relentlessly pumped the property bubble for the last twelve years are indeed to blame for the suffering of those who now cannot afford the interest on their loans, on the other hand.

    1. Peter2
      August 6, 2022

      If people cannot afford their loans when interest rates have only gone from 1% to 1,75% then there is something very wrong with their household budgets NHL.

      1. hefner
        August 6, 2022

        At present a £300k with a £50k deposit for a first-time buyer can be obtained from Nationwide
        – for 3.74% fixed for two years with APRC of 4.7%
        – for 2.74% for a two years base rate tracker with APRC of 4%
        – for 3.74% fixed for three years with APRC of 4.6%
        – for 3.79% fixed for five years with APRC of 4.4%
        – for 4.09% fixed for ten years with APRC of 4.4%
        APRC: Annual Percentage Rate of Charge = total cost of mortgage including fees over the entire term of the loan.

        1.75% that’s the BoE base rate!

        1. Peter2
          August 7, 2022

          Yes I realise that heffy.
          As usual you are stating the the obvious.

          It’s about the increase in base rates.
          NHL thinks everyone will now be unable to afford their loans.
          Which is ridiculous.

    2. No Longer Anonymous
      August 6, 2022

      +1 and Help to Buy turned out to be no such thing, as I predicted it would.

    3. outsider
      August 6, 2022

      Dear Lad, You are right here. The bubble is the result of banks being pumped full of cheap money by the Bank of England/Treasury and the banks searching for loan opportunities that are well secured. Fortunately, the BoE is now again free to instruct lenders not to penalise or foreclose on borrowers who maintain current payments as interest rates rise. When rates rise repayment mortgage debtors have traditionally been offered the option of not raising monthly payments so long as the debt was lower than the original principal. The BoE now needs to offer further protection for recent borrowers, on loans taken out, say, before July. Banks that learnt the lessons of the financial crash and sourced funding responsibly should have no trouble absorbing this.

    4. Mickey Taking
      August 6, 2022

      so Martin, if you should want or need to sell one of your properties, will you sell at value 12 years ago?
      Thus avoiding taking profit from the activities of ‘those that pumped the bubble’?
      Just asking….

    5. Fedupsoutherner
      August 6, 2022

      Try 14%. That’s what we had to live with abd a recession like no other in recent times. Even HGV fitters were being made redundant because lorries weren’t on the rpads. Nobody was buying goods so no need for delivery vehices. Dire times.

  8. StephenS
    August 6, 2022

    I’d have more confidence in an elected politician than this cabal of experts who always seem to reach the wrong decision on the basis of poor projections and are invincibly unaccountable by and large. Bailey comes across in interviews as a terribly evasive yet prickly and truculent individual who the common man in the street facing poverty and inability to do anything but add to unsecured debt which increases in costs to keep his family afloat will find vomit inducing against the prospect of a recession and loss of their business and livelihood. Time to dispense with this central bank independence experiment and bring decision making back to an accountable politician with their electoral feet held to the fire.

    1. SM
      August 6, 2022

      +10

    2. Lifelogic
      August 6, 2022

      While Bailey was at the top of the FCA they regulated to introduce one size for all personal overdrafts by bank regulation nearly all now at 39%. If this does not show how incompetence the man is what does? Unfit to run his own piggy bank. This in effect abolished overdraft for sensible credit worthy borrowers. A tax on the creditworthy to subsidise the reckless.

    3. anon
      August 6, 2022

      Time to link their pay & pensions to perfomance, the value of the GBP and the target miss.

  9. Ian Wragg
    August 6, 2022

    The BoE forecasts give credence to astrology.
    Bailey has no idea what he’s talking about and as for Soinak, he’s a disgrace.
    What are you going to do about energy bills other than build lots more useless windmills.
    Are we going to get frackior open the Cumbrian coal mine.
    No, thought not. Net zero ploughs on regardless.

    1. Fedupsoutherner
      August 6, 2022

      Not only net zero ploughing on regardless but HS2 also. The line is steaming through so many ancient woodlands and nature reserves with no thought to what they are destroying never to be replaced to shave 7 mins off the time to London. They will sell the land left over to developers for more housing to be built. It’s a travesty and if I hear one more person saying that wildlife is suffering because of climate change I think I’ll scream. NO! It’s the greed of a few people and I wonder just who have their noses in the trough. They should all hang their heads in shame.

  10. Nigel
    August 6, 2022

    The Governor of the Bank, in an interview, gave several reasons for the inflation that we are seeing now.
    Notably absent from his explanation was the fact that if you print money it will cause inflation, and the more you print the more inflation you cause.

    1. acorn
      August 6, 2022

      (1) The only time the BoE “prints” money is in the form of paper/plastic Pound notes, when high street Banks request them for their ATMs and Branch tills. Those banks buy them from the BoE with “reserves” in their BoE accounts. The sum total of all forms of Sterling in the economy does not change, it just changed its form.

      (2) Gilts being exchanged back into “reserves” by QE also does not “print” any money unless the seller of the Gilt that in exchange, received a deposit in his Bank account, wants it turned into cash notes by his Bank; see (1) above. Again, the sum total of all forms of Sterling in the economy does not change, it just changes its form.

      1. Peter2
        August 7, 2022

        I think every one realises, except you acorn, that when people talk about printing money it is generally just shorthand for creating money.

  11. Rhoddas
    August 6, 2022

    The wrong energy strategy and policies for decades have now caused most of the inflation.

    There is a short squeeze on gas particularly and thus high global spot prices. Frack baby frack! This can be a tactical solution until the SMRs come on stream.

    Switzerland’s inflation was 3.4% in June. They have energy security. QED…

    1. Dave Andrews
      August 6, 2022

      What good will fracking do? Just a bit more gas in the global marketplace. Given the UK government’s policy of selling resource cheap to the energy companies, the gas will be sold by whoever extracts it at the going rate. UK households will have to compete with what Europe will pay.

      reply On that argument no one need bother to supply gas

      1. Mark
        August 6, 2022

        There is only a limited capacity to export gas. It is currently being filled by imports made to make use of it, since the Continent lacks capacity to land the gas itself. There is currently a huge differential in prices between TTF and NBP gas of about €50/MWh, and no possibility of exporting more gas. The profit goes to whoever has bought pipeline capacity and the pipeline owners, not to a producer.

        Added production backs out some imports, improving the balance of payments. Backing out the long haul cargoes reduces the cost of imports (there is currently a cargo from Peru discharging at Milford Haven), because imports price on the marginal supply. Shorter haul is cheaper because it is less costly.

    2. Fedupsoutherner
      August 6, 2022

      It’s all too bloody obvious to the numpties in charge of our downtrodden country.

  12. Berkshire Alan
    August 6, 2022

    I guess if you make enough different forecasts then one is going to be close, after all a broken clock is right twice a day.
    What a farce.

  13. hefner
    August 6, 2022

    Sir John, did your forecasts of May 2021 and August 2021 foresee Putin’s invasion of Ukraine?

    Reply Of course not, but I did forecast correctly that revenue would be much higher and the deficit much lower 2021-2 thanks to growth in the economy than OBR versions, and correctly warned of inflation which rose substantially before February 2022. I only expected a Russian invasion when I read and believed the early warnings from US/UK defence sources in the media ahead of the event.

    1. Mike
      August 6, 2022

      Only goes to show – taking back control – has amounted to very little in the grand scheme

  14. No Longer Anonymous
    August 6, 2022

    Acknowledgement that wages are not causing rampant inflation, thank you Sir John.

    I fully understand your party’s fear of a wage rise/price spiral but this is not the problem at the moment. The plain truth is that out of control inflation can happen with over a decade of the wage freezes that we’ve seen. Had wages simply kept pace with inflation over the past thirty years the average worker would be on £600 a week.

    The Tories’ only actions seem to be to keep their boot on the workers’ throats and to keep ramping up house prices and NEVER to take on the corporations and their excessive profits, their abuse of taxpayers’ money via offshore tax havens, their abuse of furlough and furlough fraud by criminals.

    You are elected by the people.

    You are NOT elected by corporations. They are NOT your bosses.

    When I said your failures with an 80 seat majority proves you must hate us yesterday I did not mean some base dislike of the working class – what I meant was that our very existence (except at election time) must be a bloody inconvenience for you. Otherwise things would be going swimmingly – the very people who DIDN’T elect you are raking it in as never before and you’d be joining them at the party were it not for us. By the measure of corporate offshore profits you’d be the best Tory Government to have existed.

    PS, An off topic point raised yesterday which highlights another Tory Party con which no-one but me has spotted. People who have spent a life on the dole become categorised ‘pensioners’ at 65 and thus vast swathes of the unemployed are hidden – they should stay classed as ‘unemployed’, as far as govt stats go, for the rest of their lives. They have NOT contributed to the pension system so should not be called pensioners.

    Reply A silly and inaccurate rant

    1. No Longer Anonymous
      August 6, 2022

      Reply to reply

      Your party is against wage rises. It wants ‘modernisation’ ie Uberisation. It seems to do nothing against corporate abuse.

      It is also a fact that the long term unemployed have not contributed to their pensions so how can they be called pensioners ?

      I visited YouTubes of Eddie Dempsey and Mick Lynch expecting to see the stereotypes described by the Daily Mail only to find myself utterly converted by them.

      If you won’t take them on publicly then I can only conclude you fear doing so.

      It is no good you calling people like me silly whilst ignoring incontrovertible truths told by these men. These guys are way above Scargill and your lot are way below Thatcher. You need to deal with them.

      Reply My party does not oppose wage increases and proposes a better skilled and better paid workforce. All people retired on a state pension with or without income benefits benefits are pensioners.

      1. No Longer Anonymous
        August 6, 2022

        Reply to reply

        On benefits recipients over retirement age who have not contributed. They should not be lumped into the group called State Pensioners. They are on welfare.

      2. anon
        August 7, 2022

        Really 65? and they wont even upgrade the pensions of real contributors overseas because of arbitrary laws they passed.

        There should be laws to protect us against these laws passed by self interested uniparty governments. That might be rights of recall or direct democracy.

    2. Dave Andrews
      August 6, 2022

      Is it silly and inaccurate? I also observe wealthy individuals can squirrel away their wealth into tax havens (cue Panama Papers) and multinationals can pay next to no corporation tax on their UK operations. I can only think this continues because influential people have the ear of government and like to keep things that way.
      Government always seems to obsess over inward investment, and that is the reason why they don’t want a level playing field for UK business. When can they start putting confidence in the ingenuity of British people to invest and create wealth, if only it wasn’t taxed away so efficiently?

      Reply The U.K. government does not control rich people who live elsewhere and are not U.K. resident taxpayers.

      1. No Longer Anonymous
        August 7, 2022

        Reply to reply

        No. The Government does not control rich people who live elsewhere and who are not resident taxpayers. But it DOES control the contracts awarded to their companies to provide public services in the UK. (Where are our new reservoirs ???)

        Their profits are far more inflationary than the vast majority of wages in this country, yet your party never mentions it. All it bangs on about is the wage/inflation spiral (which doesn’t exist at the moment) You call people who try to achieve inflation proof price rises ‘wreckers’.

        You purport to stand for a higher wage/higher skill economy but where it does exist you seek to ‘modernise’ (aka Uberise) it. Which means strip out the wages, strip out the conditions and strip out the pensions … whilst, incidentally, classifying people who have claimed dole all their lives as ‘pensioners’ when they reach retirement age.

        1. No Longer Anonymous
          August 7, 2022

          Correction: You call people who try to achieve inflation proof *wage* rises ‘wreckers’.

          1. Mickey Taking
            August 7, 2022

            Ah. But do these people need an inflationary wage rise? It seems to me they are the very people who should be rather content with their way above average pay!

  15. Paul Edwards
    August 6, 2022

    The current economic situation has been brought about by Brexit, a double edged sword that provides some opportunities but reduces labour flexibility; Covid, with the enormous increase in government spending unmatched by reduced productivity; and the Ukraine war creating price hikes in energy. The first of these is done and we must accept the consequences, the second must be paid for by balancing the books in the longer term (Sunak’s response) and the third is the hands of a megalomaniac who we cannot control. Realism requires us all to knuckle down and accept some pain. We should not have increased NI but instead increased income tax accordingly. Corporation tax (paid out of profits) is a red herring and green levies are fairly irrelevant. Growing the economy is in the hands of entrepreneurs, investors and businesses and is largely irrelevant to government policy.

    Reply Nothing to do with Brexit. EU countries have a worse problem than us over energy and several have higher inflation.

    1. Paul Edwards
      August 6, 2022

      Brexit is responsible for many of the labour and productivity issues- fruit, vegetables and flowers unpicked, hospitality and health lacking staff and inflationary pay demands by some work groups. Why do you insist that Brexit is only positive when there are clear negatives?

    2. Denis Cooper
      August 6, 2022

      You have your three factors in the wrong order, it should be:

      1. Covid
      2. Ukraine
      3. Brexit

      But then we know that for those who are against Brexit it will always be the root of all evil.

      https://www.brexit-watch.org/how-the-rejoin-eu-campaign-aims-to-destro-brexit-by-2025

      “Back in 2018, Best for Britain’s Campaign Director, one of Nick Clegg’s acolytes, made it clear to us all sitting in his audience just how dirty they were prepared to fight and that they were prepared to fight for as long as it took. ‘We have to connect EVERY problem with Brexit’ were his words as he explained the approach that should be taken to convince the UK electorate that Brexit was a mistake and one that must be reversed.

      Regardless of the facts, regardless of how slim or tenuous the connection might be, the task was to connect any negatively perceived outcome with Brexit: If a business failed it was due to Brexit. If prices for a particular product, or service increased it was Brexit. If there were supply shortages or over-supply problems it was Brexit. If interest rates went up making mortgages more expensive it was Brexit. If interest rates went down reducing income from savings it was Brexit.

      Whatever it was that happened, which affected particular groups of people negatively, it had to be connected to Brexit. The objective was to get as many people as possible, for as many reasons as possible, to believe that Brexit was resulting in negative outcomes for them and others.”

      1. Dave Andrews
        August 6, 2022

        Can you add “net zero agenda” to your list, and perhaps put it at the top?

        1. Lifelogic
          August 6, 2022

          Indeed plus it was not so much Covid as the long extended lockdown response to Covid that did most of the damage. Together with the vast cost of this, test and trace and the rather ineffective and dangerous “vaccines”.

        2. Denis Cooper
          August 6, 2022

          That will be more long term and insidious in its destructive effects.

        3. Fedupsoutherner
          August 6, 2022

          Defo Dave. Big big mistake.

        4. Mark
          August 6, 2022

          Indeed. It has created the perfect storm that has allowed Putin to turn the screw, which was already turning before he acted.

    3. R.Grange
      August 6, 2022

      A disease with a ‘low overall’ mortality rate (British government announcement, 19th March 2020) could not bring about a disastrous economic situation, Paul. It was the lockdowns that did that, and as you say led to enormous increase in government spending, with reduced productivity. This is not just a question of terminology. Blaming it on a disease lets the government off the hook for their repeated decisions to go on damaging the economy, taking advice from a far too restricted range of ‘experts’.

  16. cuibono
    August 6, 2022

    I always used to get out my crystal ball when making Yorkshire pudding.
    Ratio of flour to egg this time?
    Milk …let’s try double? And loads of salt.
    I could see it all swirling in the glassy mists of the magic ball…talking to me even.
    And as for oven temperature…well I was even told….
    No Oven.
    I was surprised that my puddings were either raw, burnt and frankly inedible.
    THEN I FOUND MY GRAN’S RECIPE BOOK!

    1. Mickey Taking
      August 6, 2022

      gran’s all did it by eye surely – no weighing scales, or measures!
      But usually great outcome.
      What did it say? Some of this some of that, whisk it, add some whatsit, pour into ‘yorkshires tin – not too full.
      Put in oven..check for rising -when browning turn off – wait a bit – take out?

  17. Richard
    August 6, 2022

    Good analysis by Juliet Samuel, a perceptive economic journalist, in the telegraph. Apparently the BoE is stuffed with ex-treasury officials, and lacks any top economists. All 3 deputy governors (why are there 3 and not 1?) are ex-treasury officials. The latest addition to the monetary policy committee is a junior academic with no obvious qualifications. The BoE apparently uses (pays public money to?) the leftwing identity politics ‘charity’ stonewall, purveyor of pernicious and divisive rubbish. Despite the fact that they might be straight white men I’d suggest senior officials and MPC members are appointed on the basis of their ability, their willingness to challenge conventional orthodoxy and their record, even if ‘diversity’ boxes can’t be ticked. Let’s have some business people in there as well.

    Following his dreadful and repeated failures, how about retiring Mr Bailey with a knighthood and appointing eg Patrick Minford?

  18. William Long
    August 6, 2022

    Your article, and that of Juliet Samuel in todays Daily Telegraph between them seem to have the matter pretty well wrapped up.
    Incidentally, my day was given a good start by our paper delivery man, who has a severe speech impediment, handing me my Daily Telegraph with the cover photo of Liz Truss prominently towards me, and his other hand extended with its thumb raised!

  19. formula57
    August 6, 2022

    “The Bank fails to forecast big issues ahead, follows the wrong path, then corrects retrospectively.” – is it any wonder that Liz wants to look afresh at the Bank’s mandate!

  20. Des
    August 6, 2022

    Clearly nobody in the BOE has been near a supermarket in decades. Real inflation is 15% or more entirely because of massive money printing and supply line shutdowns. What must it be like living in the government bubble I wonder? No idea of what is going on in the real world, falling for every delusional fantasy cooked up by the media or other assorted crazies, thinking that the economy will recover in a few months.
    No wonder so many millions of people can now see through the BS.

    1. Mickey Taking
      August 7, 2022

      Truth! a breath of fresh air from Des.

  21. None of the Above
    August 6, 2022

    Our Country seems to be suffering from a form of groupthink created by a triumvirate of timid Government, a narrow minded Treasury orthodoxy and a technocratic Bank of England.
    Didn’t someone once suggest that sanity could be hinted at by changing a process that didn’t work? It would be more than a little refreshing if something (relatively new) could be tried.
    Looking back, I believe that Gordon Brown’s proposal to make the BoE independent was in line with the EU theory of substituting technocracy for democracy and I believe it should be taken back under democratic control. Suella Braverman’s proposal to review the bank’s mandate is welcome as is the suggestion that your advice might be sought by Ms Truss in the event that she becomes PM.
    I am tired of reading the views of so-called experts whose solutions sound depressingly familiar. I am cautiously enthused by Liz Truss’ modest economic measures.

  22. a-tracy
    August 6, 2022

    How much is Homes England spending for the last few years? How many homes has it built?
    How much taxpayers money has been spent on Affordable Housing Projects? How many homes has it built?
    How much taxpayers money has been given to Housing Associations (independent companies) to increase their housing stock?

    1. a-tracy
      August 7, 2022

      We are being told that housing is one of the keys to solve inflationary problems. Homes England, affordable housing projects funded by government aren’t very transparent, information should be given in an annual statement by each Council. We should be told how the low cost housing is allocated. So many tiny 2 bed terraces and flats are being built on the edge (usually the flooded area, or right next to traffic lights at the road edge) to fit the affordable housing brief which cannot support growing families for long is the current plan, so are retired people in large council houses that have kept their homes and gardens well for many years offered them first and if not why not?

      Everyone on the new Estate is paying a little more per house to fund the builders obligation in making these cheap as chips, thin walled properties, but who decides who gets the golden tickets? The government is just handing over money to housing associations to pass to ex-council staff (in large wages and pension benefits) to sit at home right now spending money not creating new homes or making money, building new properties on land they have or bringing properties back into use – we reward people to spend, ration and dictate to council tenants how they should live, rather than develop and grow their estates, whilst these same housing associations are not funding the repairs and replacements they should have done and promised when they took them over 20 years ago for under £7500 per home. They own shops that they have left to go to rack and ruin, many with boarded up windows in the empty upper levels. They take two bungalows out of action for social centres rather than putting the social centres in their empty shops and half used family centres that already exist and re-letting the bungalows to tenants waiting for them that could then free up 3 bedroom houses.

      Why should only the private sector be facing all these problems alone, just because we don‘t have a collective union working in step with government to protect our interests, instead they only protect their own pay, pension and benefits packages.

      Shouldn’t we expect the tightening of belts to start where the big impacts could be made. Everyone is expected to pay more taxes to social care when the social care providers aren‘t asked why they are wasting so much money for people who are getting mobility allowances and then taxis provided free on top? Why aren‘t social care homes built next to hospitals for people who are convalescing.

  23. Bryan Harris
    August 6, 2022

    How is it that these alleged experts can get economics so badly wrong…?

    With a vast potential for analysis of what is happening in the world, they still fail to provide answers that would allow the UK to ride out the storms to come.
    They should be working on making the UK a country of economic stability – to at least set an example to other countries. In stead they introduce uncertainties to muddy the water even further.

    It would appear that national economics is still a mysterious art – which brings it on par with with most doctrines on this planet. Talk about hit & miss complacent incompetence.

    1. Cuibono
      August 6, 2022

      Possibly they follow mantra-like decrees from various global masters.
      Not really based on anything but woke group think.
      eg “Over the next ten years interest rates will be ultra low”.
      ( So govts can borrow up to the hilt and spend, spend, spend!)
      Then they think that if they repeat that enough times it will come true.
      A bit like a magic spell really…..
      Or a satanic ritual.

      1. Bryan Harris
        August 6, 2022

        @Cuibono – Indeed………………. Hardly scientific by any means, as we are led to believe

        1. cuibono
          August 6, 2022

          +1

  24. a-tracy
    August 6, 2022

    Inflation – isn’t ‘fuel/energy’ driving everything up and up?
    Pay inflation- what did the government expect when it drove the NLW up by 7% and dropped the age you can get it to 23 years? People want their differentials and pushing up and up the bottom will push up everything in line so no one ends up better off. You know this so this created inflation must be wanted to bring in higher taxes and reduces the debt.
    I read the UK has increased its self sufficiency in dairy, cheese etc. and is also exporting more of it to new markets.
    That we are supplying more of our own meat?
    Perhaps people should be told what food we are importing that is pushing up overall inflation, and we could decide to reduce those product imports in our collective diets or look for new world suppliers, or check if we can create it here in the UK next year?

  25. Original Richard
    August 6, 2022

    The actions of the Bank upon our finances will be irrelevant so as long as we continue with the insane Communist driven CAGW/Net Zero cult and massive immigration.

  26. a-tracy
    August 6, 2022

    People that I know haven’t replaced their lease/hire cars and have instead bought much lower cost second hand vehicles, they have also tried to cut down on vehicle fuel use but then the buses have been on strike for three weeks so they are having to give essential lifts to work for other family members, train services have been culled, so instead everything is grinding down, weekend events can’t be attended culture and sport will lose out with people working in those sections already struggling to survive no 8% increases and inflated pensions for them, family visits by train are off the cards, people are getting lonely. If this is the big plan than people are going to start getting very depressed when the cold weather starts, it is a continuation of lockdown without calling it lockdown.

    Credit card interest inflation is starting to kill people that have been used to just passing debt onto 0% deals every six months💥. Price Comparison Sites told people how to do this shopping around and now stands back when the plates stop spinning and blames the government for people taking on too much debt often with nothing to show for their spending on holidays and clothes, expensive cars and timeshares! Enabling bad behaviour in my opinion. Basically with these power companies – keep switching – keep switching – it was all a house of cards, established and safe companies lost clients to jack-by-nights who have now all sunk, so at the end of the day someone has lost a lot of money and it isn‘t these expert advisors. Things are going back to how they used to be, no heating on upstairs just an hour before going to bed and to get a hot wash, only one room heated downstairs put on more jumpers indoors, buy a fleece or electric blanket to sit for hours watching tv, heating on for an hour in the morning to heat the water or boil a kettle as my aunt does and not have the water tank on at all.

    1. Mickey Taking
      August 7, 2022

      Who is putting heating on?

      1. a-tracy
        August 7, 2022

        MT – a high proportion of people pay for their energy by direct debit, they spread the cost of heating out all year, in anticipation of higher rates they have doubled people‘s direct debits so that in summer even though they have not required the central heating on they are pre-paying the increase without any transfer deals available. Those that cancelled their direct debits are threatening to also not pay their bills in autumn. I believe there are rules that people with children and the retired can‘t have their energy cut off. So the middle and top will be paying this extra cost too.

        Citizens Advice – [If your supplier has signed up to the commitment, they won’t disconnect you between 1 October and 31 March if you live with children under 16. They also won’t disconnect you at any time of year if you: are disabled.]

        1. Mickey Taking
          August 7, 2022

          So you were predicting behaviour this winter, rather than suggesting people were putting heating on now!

          1. a-tracy
            August 8, 2022

            MT, Yes, bad grammar, things are going to go back to how…

  27. miami.mode
    August 6, 2022

    If the governor of the BoE blames energy costs for blowing his forecasts off course why doesn’t he exhort government to explore each and every opportunity to increase the supply side to assist him in getting to his 2%?

    1. Mark
      August 6, 2022

      Because it was his predecessor’s work that has done so much to cause the energy shortages and high prices. Cutting off bank financing for fossil energy means that companies have to finance investment entirely from cash flow, which requires much higher profits to provide it.

  28. paul
    August 6, 2022

    How do you know that your not alreay in a recession.

  29. Denis Cooper
    August 6, 2022

    Now that we have left the EU, albeit at present only partially as far as Northern Ireland is concerned, it would be a good idea to carefully reconsider both the Bank’s remit and the degree of independence that it should have.

  30. acorn
    August 6, 2022

    Trussonomics is sounding like a reprise of Reaganomics. Sunakonomics is bog-standard neoliberal. Lizzy should read Stephanie Kelton’s book “The Deficit Myth”, then hire Stephanie to teach her and the next Chancellor, how to use a sovereign fiat currency properly, to maximise the use of what resources the UK has left, that we haven’t yet sold to foreign owners and operators. Fiscal Policy is the only tool that works at times like this. BoE monetary policy is doing more harm than good.

    1. Mickey Taking
      August 7, 2022

      I’m bored with electiononomics…

  31. Jason
    August 6, 2022

    Lucky for Mark Carney that he’s no longer around – for if he were I’m sure by now he’d be feelig the full weight of our host’s wrath.

    1. rose
      August 6, 2022

      Didn’t he feel it at the time?

  32. Narrow Shoulders
    August 6, 2022

    Sir John you mention wages lagging behind inflation in your article. Many times wages and pensions have been ahead of inflation. It us swing and roundabouts and politicians need to be able to tell the electorate to hunger down, it’s going to be unpleasant.

    By trying to sugar coat it, the nanny state is encouraged and everyone expects a £400-£1650 handout every year.

    Sometimes life is a bit crap. Survive and come out the otherwise leaner.

    1. wordsmith
      August 6, 2022

      “hunger down ” I like it .

      1. Mickey Taking
        August 7, 2022

        if only our hunger was down, we wouldn’t be buying imported food – and possibly helping a desire to lose weight.

  33. David Fellows
    August 6, 2022

    The BoE Governor makes no secret of not anticipating Govt policy – why doesn’t the BoE make their computer model available to other institutions for them to exemplify the effects of various policy options – of course the Treasury could join in to encourage debate if the Chancellor was so minded and that could start to shift the dynamics of BoE/Govt relationship

  34. outsider
    August 6, 2022

    Dear Sir John, the current central bankers’ orthodoxy, a sort of mishmash of Alan Greenspan and the Bank of Japan, is discredited and should be abandoned.
    If inflation is the problem, the Bank should tackle it head on. It was initially caused by pumping in too much ultra-cheap money This has partly been addressed, in that pumping has stopped and money is now only very cheap. But the multiplication of gas, oil and electricity prices and wholesale basic foods, which has turbocharged inflation via living costs, has not.
    Since nearly all these markets are priced in dollars, the direct response should be to raise money interest rates to a level that pushes the pound back to $1.4 , where it traded twelve months ago.
    If this action is complemented by staying the green levy on electricity, the recession can be very short. On our present course it is likely to be long and painful, as consumers are forced to slash other spending and wage-earners struggle to recoup inflation via earnings and entrench what could otherwise be a brief inflation spike.

  35. Nudge
    August 6, 2022

    Don’t think the campaign to not pay electric bills is good, or well meaning.
    I managed to get my DD lowered by using the online form once I had found it tucked away in the hearing impaired section.
    When the little box popped up afterwards with the smiley faces asking ” How have we done”
    I said the way your online form is hidden puts me in mind of the government Nudge Unit.
    The form is now back where it should be.

  36. Mickey Taking
    August 6, 2022

    Almost 4 in 10 Channel migrants are from Albania, where there has not been a conflict for a quarter of a century, a military intelligence report reveals. Last Monday, 696 migrants crossed the Channel – a record daily figure for this year. The document, marked “official sensitive”, shows that almost three times as many migrants arriving in the UK from France came from Albania than any other nation.
    The report, seen by the Mail on Sunday, reveals that of the 2,863 migrants transported by nine separate people-smuggling gangs between June 1 and July 12, 1,075 – or 37.5 per cent – were Albanian.
    Although Albanians face economic hardship in their homeland, particularly in the north, it has been a largely peaceful country since a civil war in 1997 in which more than 2,000 people died. The total number of migrants from Albania was far higher than from other nations. Iranians made up the next highest number, with 373 migrants, or 13 per cent of the total. There were 363 migrants from Afghanistan (12.7 per cent), 217 from Iraq (7.6 per cent), 162 from Syria (5.7 per cent) and 163 from Eritrea (5.7 per cent).

  37. Lindsay McDougall
    August 7, 2022

    The Governor of the Bank of England is excusing himself by saying that the expansion of QE and ultra-low interest rates were necessary to fuel the UK economy’s post-pandemic recovery. I’m not at all sure that a recovery based on inflation is worthwhile; certainly, it cannot last. Other people are saying that inflation is a global problem. That’s only because the USA Fed, the ECB and the UK BoE have all been behaving irresponsibly simultaneously. I don’t think that Japan, for example, or even Russia, have had the same problem.

    Inflation is a monetary problem; price inflation and wage inflation have the same source, namely excess money. Inflation appears to be caused by rising external energy prices and commodity prices. However, if we didn’t have high energy prices, other prices would rise instead. There would be just as much inflation in aggregate. If the Governor of the Bank of England wants to know who is responsible, he should look in a mirror. And if the Chancellor has been twisting his arm, he should say so.

  38. Lifelogic
    August 8, 2022

    Indeed gross incompetence by the BoE. The man who headed up the FCA when they moronically gave us one size fits all 39% personal overdraft rates. Unfit to run a piggy bank.

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