The headlines from the IMF were a relief to the government. By their low European standards for growth the UK is forecast to do OK, at 1.2% this year and 1.4% next year. No one seems to think Europeans can or should do anything about the ever growing gap between US and European outcomes. Because the large deficit is to do with increases in spending rather than with tax cuts the IMF excuses instead of condemning. Their permanent bias to larger government and more state intervention shines through even though all the evidence shows the more of those you have the less well the economy performs.
The IMF does however contain some warnings in its text, probably recognising the likelihood they are being too optimistic. They say the risks to the forecast are “ to the downside” . They say the Bank need to watch stubborn inflation though they expect rate cuts. They accept that spending pressures are pushing up borrowing. They worry about the government’s scope to borrow. They praise the idea of the government borrowing for short terms given the way the cost of borrowing longer has shot up since the budget.
On the day of the LDI pension crisis in October 2022 the 30 year bond got to 4.8% and the 10 year to 4,38%. The Bank and Opposition blamed Truss but the big sellers of bonds driving the bond prices down to drive the interest rates up were the bank of England and the Pension funds. Recently the 30 year has been 5.5% and the 10 year 4.7%. Both rates have been well above the October 2022 spike all this year so far. Markets are worried by the big increase in spending and borrowing the government put through in the budget and are not in a mood to take much more increased spending.
May 29, 2025
Good to see an explanation of events in October 2022 that does not blame Lizz Truss. The poor woman was never allowed to get onto the business of cutting public expenditure even though she had always said spending cuts would come next, after the good news.
May 29, 2025
Agreed. But she could and should have set out her programme to reform the tax system better than she and her Chancellor did at the time.
As for the current government the bond vigilantes are starting to have their say. With luck they might even bring it to its knees and end the ignorance and stupidity which appear to in control of the national finances.
May 29, 2025
Yes, it is the bond market that decides how much money the government will have available. This truth, as it always has been for a government running a budget deficit, is only now seeming to be understood by this administration. QE, the way round it, would/will be see as a government giving up on good administration.
Are we at the borrowing limit yet, as Sir J. says, look at the yield changes over the coming weeks, if they rise quickly then we’re at the limit. The better alternative is to cut wasteful spending. Raising taxes looks like it will precipitate a recession and even lower tax receipts. Reeves is in a tight place.
May 29, 2025
Liz Truss had a plan which didn’t fit into the WEF playbook so the blob got rid of her in favour of their poster boy Sunak.
Inflation at nearly 4%, immigration at circa half a million annually and growth( optimistically 1.4%) even for the thickest economist, and there are plenty means a serious per capita drop in wealth.
American strides on with real increases in disposable incomes and we get poorer.
Until the pariah state is reduced by 50% and immigration is down to zero, the net stupid cancelled we will continue to be worse off. Just like Agenda 30 envisages.
Win win for he commies in power and the tories before them.
May 29, 2025
Indeed and the incompetent BoE largely to blame for the mess blamed on Truss. Good old tax to death Sunak and the equally dire Hunt both PPE dopes. Sunak who abandoned ship 6 months early to give us the appalling Starmer. Has Sunak corrected his “Covid Vaccines were unequivocally safe” statement to the house yet. They have very clearly done huge net harm see the Czech Republic figures on live births by vaccine status and all te other abundant evidence of vast damage. Boris & Sunak’s moronic lockdowns and vast borrowing also did huge net harm too.
May 29, 2025
@Ian +99
Exactly
May 29, 2025
Yes the massive and seemingly relentless growth in the parasite bureaucrats living on the State rivals the unemployed drain on the economy. When will the WEF realise they are lowering the living standards of countries, not building up the poorer ones?
May 29, 2025
And we need to go back to reading the Greek myths.
Like ICARUS who was full of ambition but lacked the talent and humility (not saying Lizz Truss is not humble but she lacks the talent). And so he crashed into the sea and drowned.
May 29, 2025
And we’re very much living in the age of Icarus today. People have big plans but lack the talent and / or hard work for those plans. They just want things on a plate.
May 29, 2025
Icarus was also a bit Don Quixote or quixotic. The two overlap. Both delusional to a degree. Icarus with his ambition. And Don Quixote for his romance for life (although both ambition and romance for life healthy and vital – but in the right context!)
May 29, 2025
Indeed the mess was left by Boris and Sunak as Chancellor who had pissed vast sums down the drain on the net harm lockdowns and vast net harm “vaccines” and left a huge increase in public debt. This made even worse by the net zero insanity, vast tax and regulatory increases and gross incompetence of the Bank of England or was it rather more than “incompetence”?
Truss and Kwasi made some obvious errors though. They should have emphasised more cuts to the vast government waste first, called for vast deregulation and the ditching of net zero to get energy costs down. This instead of her foolish energy subsidies agenda (people know how to spend their own money better than governments). I tend to think the claims by Truss of the stitch up we largely correct! Even if she did read PPE and was a LibDim at Oxford! She is broadly right now!
May 29, 2025
Spending cuts ARE the ‘good news’. She blew it. She could have had JR as Chancellor and spared us both Starmer and Farage.
May 29, 2025
Given the Blobs reaction to Liz Truss , what anti democratic elephant trap are they prepared to employ against a Reform victory in 2029 or sooner.
Anne Widdicombe on politics past, recent, and future is excellent viewing on You Tube for those with an hour to spare. Calm, considered and logical, thank you Anne.
May 29, 2025
The IMF has the left wing, anti-UK and Globalist Government it wanted so Rachel-from-Complaints will get the “free pass” which was denied to Liz Truss.
Whilst I have no time for the OBR, which has never got a prediction right and uses flawed models to promote mass immigration and justify policies the left-wing Establishment wants, the IMF’s statement which was reported in the DT yesterday (“Rachel Reeves has been urged by the International Monetary Fund to curb the power of the Office for Budget Responsibility by “refining” the fiscal rules…) has given her a green light to ramp up borrowing, State spending and the national debt.
The OBR costs us over £4 billion a year (and has never got a prediction right). Since the influence they have on the Government is to be downgraded with the IMF’s blessing, we might just as well scrap it.
May 29, 2025
@Donna
+9
May 29, 2025
£4.566 millions in 2023-24 ! Only a O(10*3) factor off.
And do you think Sir John would correct this level of mathematical incompetence?
May 29, 2025
Thank you for strengthening Donna’s point for her.
In the end the Market trumps all the 3-letter Agencies.
May 30, 2025
Well, I’m surprised that you too are confusing millions, billions and trillions. It shows how deluded the average contributor to this blog is.
But really was I expecting more from someone pushing Putin’s policies than from someone explaining the present situation with reference to WEF, IMF or WHO influence?
But living for years within a freenations™️ state of mind obviously leaves some marks on the brain.
BTW, did you benefit from PotUS’s multiple in-and-out decisions? The volatility of the markets these last two months really provided a textbook case for such buy-and-sell operations.
May 30, 2025
You never avoid an opportunity to tell us how superior you are hefner.
Now branding the average contributor to this blog as deluded.
Dreadful behaviour.
May 30, 2025
Well deserved reprimand. And for my repentance I now wear a cilice.
May 30, 2025
Pull it as tight as possible please.
May 29, 2025
Yes, but what does OBR cost us through their grossly incompetent analysis indirectly vastly more surely?
May 30, 2025
but the damage the OBR advice has inflicted has probably cost us more than £4bn…..!!
May 29, 2025
The Labour Party are starting to pay the price or more correctly they are making the tax payers pay the price for their ready acceptance of inflation busting pay settlements in the public sector. The other side of the fiscal balance forces them to impose crushing tax burdens on the private sector to cover their spendthrift socialist habits. The result is businesses closing high wealth individuals leaving and low to no growth other than migrant induced inflation. The socialist experiment where only the state and friends of the state are rewarded has been run many times already Zimbabwe, Venezuela, being two stand out cases in recent years. Labour does not have to run the fiscal experiment again, we already know what the result will be.
May 29, 2025
@Rod Evans. I read that junior doctors were asking for a 25% pay rise. I’m not an Economist, but I even I can see that if this sort of thing takes off we are in deep trouble.
On the other hand, if they give us all a 25% pay hike then things will be rosy!
May 29, 2025
Total global debt was about $308 TRILLION in 2024, which included America at over $36 TRILLION and the UK at $2.8 TRILLION. The global debt system now demands high interest rates in excess of 5% to lend to America for the increased risk of default, particularly long term debt
A systemic debt crunch is not far away, where the bond vigilantes will demand government spending cuts and/or tax rises. Inevitably, this will slow, or even halt, global economic growth, leading to the mother of all recessions.
Unlike “money” governments cannot print gold bullion. Gold, currently consolidating around all time highs of $3300 – $3500/oz, reflects the higher risk of a systemic debt collapse. Wars are expensive. The world desperately needs an outbreak of peace.
May 29, 2025
SG :
Yes, wars are expensive. But even more expensive to humanity is the false CAGW and its totally insane net zero CO2 emissions goal. Wind and solar “energy” cannot supply the necessary reliable energy needed by modern civilisations. Not only does CO2 not control the planet’s temperature but we are at a historically low level of CO2 after a continuous decline over the last 140m years and we need to increase it. History shows that another ice age is inevitable and we need to avoid CO2 dropping below the minimum level of 150 ppm for plants and hence all life on the planet to survive. At the last series of ice ages CO2 dropped to just 180 ppm.We need in the democratic West an outbreak of sanity.
May 29, 2025
So how long before the IMF squeeze us until the pips squeak?
May 29, 2025
There are no pips left to squeak, Johnson-the Destroyer and Rachel-from-Accounts have done the job.
May 29, 2025
I see Starmer has said that Reform’s economic plans will be like the Liz Truss budget and push up mortgage costs. As noted the 10 & 30 year gilt rates are now higher than they were under Liz Truss so by his own logic Starmer has pushed up mortgage rates even higher. For all the obvious OBR and IMF bias in favour of Starmer the bond markets will deliver their verdict in due course.
May 29, 2025
Yesterday, when the U.S. stock market was higher than it was when President Trump took office and the U.S. reported good consumer confidence numbers, the BBC was silent about both matters. Yet it is quick to report negative news.
The IMF is only in business because the so-called mainstream media keep taking notice of them and some governments follow. These people are lying to each other. They are pretending.
This pretending means that they are no longer “mainstream” but represent a large minority, as proved by the Brexit result, the Trump triumph and Reform’s high poll rating.
This is why trust in the BBC has seen a sharp decline in recent times: it’s politics does not reflect the majority. The IMF talks to a minority as well. The rest of us ignore it.
May 29, 2025
I don’t think the Finance people in the BBC will be very popular highlighting the truth.
May 29, 2025
Conservative MPs helped to destroy Liz Truss and, in doing so, caused the demise of their party, from which I doubt they will ever recover. Boris had such a large majority that he could have stopped the boats, reduced immigration, cancelled Net Zero, delivered a proper Brexit, and put this country back on the road to greatness. He squandered this opportunity, and voters will never trust the party again.
May 29, 2025
+1
You can’t be ‘The Conservative Party’ with globalist socialist politics just as you can’t be Britain without the native British.
May 29, 2025
Also, it’s ridiculous how little Prime Ministers earn. They should be earning at least double of what earning now. So as to attract higher quality MPs into Parliament.
And Cabinet Ministers should be earning a lot more too.
(In the old days, politics was often more of privilege with lots of money behind the MPs before even going into Parliament. Not always but often).
Why shouldn’t PMs and Cabinet Ministers receive a decent salary for doing a big, responsible job? Especially now as they’re so often ridiculed. They should at least be compensated by much higher salary!
Anyway, beggars can’t be choosers. Our Tory Party is in relative chaos. And Labour (and Lib Dems) far worse. We’ve got to do something.
May 29, 2025
They should earn NOTHING. Unless they can conduct their own affairs successfully why should we entrust them with ours?
Johnson is always close to being bust (Ukraine might have changed that for Johnson in recent years), Farage the same, he dominated the front pages by claiming to be ‘skint’. Just saying.
May 29, 2025
But you got to start off somewhere?!
We’re screwed now as it is (Tories a mess etc).
What’s an extra £200K (for PM) if it means we get someone of a much better calibre. Ditto for cabinet ministers. The rest in Parl can stay on the same salary.
If we’d upped PM and Cabinet’s Salary when Tories first came into power, we might now have a much better crop of Tories. And it’s not just the money but also the respect. That we respect our PM and Cabinet Ministers (like we should respect the judges, police, doctors, nurses – and just people in general, perhaps! Respect in modern world has gone out the window. So paying decent salary to PM and Cabinet is also about respect and part of this is about attracting higher quality politicians!)
Reply Most MPs want to be Ministers despite the low additional pay for taking on the extra responsibilities. If you think the current class of MPs lacks talent you need to propose a higher rate for MPs. I do not think the pay is a problem.
May 30, 2025
Money is also about respect. UK politicians are amongst the most disrespected / badly-treated by media in the world. So money also about making up for this disrespect from media.
Here are salaries of some foreign PMs in pounds (and so I think we should up PM’s salary by 100K).
Australia 290
Austria 320
Germany 310
Hong Kong 500
New Zealand 260
Switzerland 420
Singapore 1 million plus
May 30, 2025
I think pay is part of the problem. And higher pay would at least be compensation for all the awful disrespect politicians have to put up with from the media (sometimes warranted to a degree but way over the top and too often).
May 30, 2025
Our MPs are much better than American politicians. Let’s put it like that.
But the Democrats and the Republicans are poor. Compared say to the Swiss, who do a much better job even though it’s a small country.
May 29, 2025
If the Head of South Western Railway, earns £585,000 a year then the Prime Minister of our great country should earn more! (Forget the past, I’m talking about attracting the Tory leaders of the future – and it’s not just about the money but respect as well that a decent salary demonstrates).
Hold on. Just getting going … If the head of Thames Water can earn £2.3 million per year …
Reply There are able people elected as MPs. The issue is not MP pay but why it is so difficult for MPs/Ministers to get good changes through.Plenty of talented people want to be PM, but parties do not always make good choices of Leader, as we see currently.
May 30, 2025
The head of SW Railway may get £585,000 pa, but he definitely doesn’t earn it.
May 30, 2025
I was travelling in a lovely Great Western from Newbury to London. Changed at Reading for Clapham. Got onto a SW train and it was like being back on a train in India again (but without the fun – and with a really aggressive / rude special ticket inspector).
And not the first time. 80% of time their trains are late or cancelled – and often jammed packed like sardines when there are lots of empty carriages sitting around in the stations.
And then Thames Water …
May 30, 2025
On that topic, ‘Failed State’ 2024 by Sam Freedman is really interesting. He reiterates the point already made some years ago by Isabel Hardman (‘Why we get the wrong politicians’, 2018) but in a more detailed way that MPs, thanks to the whips, the ‘executive’ Government, the skeleton bills, the statutory instruments, … actually debate often very little of the bills/laws of this country, and that at least some Lords/Ladies are essential to scrutinise the at times very poor ‘drafts’ that originate from the HoC.
Then, as presented even before those books in ‘The blunders of our governments’, A. King & I. Crewe, 2014, there is the question of why some people want to become politicians … Some are great and brilliant, some not so much.
May 30, 2025
they ‘earn’ very little, in fact most staff of companies doing such a hopeless job would be shown the door.
May 29, 2025
This clear comparison with 10yr and 30 yr government bond interest rates now and in Oct 2022 when it led to the collapse of the Liz Truss govt is so important and relevant. Its repetition and explanation is essential to debunk Labour’s endless discrediting of the last Conservative government.
May 29, 2025
Indeed
May 29, 2025
The IMF wants to put a good spin on the state the UK economy is in and where it is going – an almost impossible task considering how badly our economy is being managed and the sour policies being implemented, not to mention the waste of public money.
The IMF is similar to the OBR in that it deceives when it can to confuse and make the government look viable – it’s another quango that works against the best interests of the truth.
1.2% growth for this year sounds impressive when you look at our borrowing, debt and compression of our own internal market.
It strikes me that it is only hot air from politicians and the likes of the IMF keeping the markets afloat, but that bubble will burst when reality eventually comes into play and hits hard, showing just what a bad economic state we are actually in — then no amount of misinformation will keep our stock exchange from hitting rock bottom.
May 29, 2025
But Sir John, why was the BoE, the pension funds, selling Bonds, did they both wake up one morning and think ‘Lets sell some Bonds’, or was it a thoughtful decision in reaction to some other event, such as Truss and her budget? It was within the powers of the Truss govt to strip the BoE of its independence, thus return such decision making authority to HMT, if the govt believed the BoE was acting against the interests of the UK economy.
As for comparing the economies of the USA and the EU, chalk and cheese, unless you also want to compare the success of China with that of the faltering USA, China runs a national surplus, the USA runs a $tn national debt…
May 29, 2025
@ jerry – bond selling started before Kwarteng’s budget for recall there was not an exchange of information between HMT and the Bank about the budget measures that were planned. Recall further that the government was preoccupied with HLMQE2’s funeral, hence the budget was delayed. And yes, the Bank woke up one morning and decided to do more of raising interest rates through selling bonds (it is a scurrilous lie that it was in reaction to Scholar’s sacking, surely) with the consequence the pension funds it was inadequately supervising were caught in a bind with uncovered short positions, necessitating them selling too, wholly as a result of the Bank’s actions. Had Kwarteng and Truss survived for longer, perhaps the Bank would have seen curbs to its freedoms.
As for your observation “the economies of the USA and the EU, chalk and cheese,” why should that be? And as for performance comparisons, is that not rather Sir John’s point?
May 30, 2025
Excellent post formula57.
Totally agree.
May 30, 2025
@f57; Only problem there, Truss hung her expected budget from her (Party leadership) campaigns flag pole, that’s how she got elected, it is also how Trump got elected, and how Farage hopes to get elected…
Given what Truss intended, given she had more time to prepare due to the death of HMQE2, surely her move should have been to neuter the already known petulance of the BoE for textbook economics, just as Trump 2.0 has tried to do.
Not sure what you are suggesting regarding my “calk and cheese” comment, are you suggesting the UK (and EU) runs an even nigher deficit, thus be more like the USA?! The US can do so because it is a federal entity, and pretty much a self sufficient one at that should push come to shove, immune from economic Flu, unlike the the UK and EU27+.
May 30, 2025
Are you really claiming Jerry that the UK with its own currecy supported by the Bank of England and the EU with its Euro currency supported by the European Central Bank are not federal entities like the USA.
They are as self sufficient as the USA.
May 29, 2025
Both the US and Argentina will get out of the clutches of the WHO, and they intend to create a new joint global health cooperation model.
Just the sort of thing we should be joining with – unfortunately our PM has already signed us up to supporting the aims of the UN/WHO to have ultimate control over our health, and most certainly imposition of heretical vaccinations.
May 29, 2025
The IMF estimates for “growth” are simply based upon continuing mass immigration. In addition to becoming a nation of strangers the Civil Service’s Net Zero NDC announced by the PM at COP29 last November to reduce all greenhouse gas emissions by at least 81% by 2035 (and 100% by 2050) is known by all, including the Civil Service and the MSM, to be impossible and is clearly a socialist plan to sabotage the economy and destroy our democracy, freedom and national security. If the country keeps voting for these two policies they will only have themselves to blame if we become the Venezuela of Europe.
May 29, 2025
Tom Stevenson sounds a similar note of caution in his Telegraph article this morning. My suspicion is that what we are seeing is events building up in slow motion to a ‘Truss’ moment in Gilt and currency markets, and the result will be even more dramatic for markets because of the length of time it has taken to come to pass.
May 29, 2025
An economy without cheap energy is doomed to fail. Look what happened to Germany after NATO blew up its source of cheap gas. Ditch the Global Warming Hoax and ditch NATO.
May 29, 2025
The IMF report is nonsense; there is no way the UK economy will grow this year or next year. The ignorance and arrogance of Starmer, Reeves, Rayner and the rest of the government will sink the UK. The Government is an utter shambles. We have been running deficit budgets for over 20 years, yet Starmer gives billions to Mauritius, and our MPs sit there like nodding donkeys. If they increase taxes yet again, they will paralyse the economy.
Do our MPs manage their own financial affairs as they manage the UK’s? Are they personally borrowing money to give away? Not a chance, so why do they think they can do it with the nation’s finances?
The day of reckoning is coming.
May 29, 2025
So why isn’t Kemi banging on about this failure? If she is, it’s not cutting through.
Where are the daily BoE warnings that it could cause a financial meltdown like we had over Truss hourly? A chain of chaos was repeated that caused more chaos. What had she done to cause the chaos – promised to cancel the rise in NI (which did go ahead), cancel the higher corporation tax, and a popular energy price freeze in a stripped back tax and spending event.
The Pound has fallen to its lowest level for more than a year amid a sell-off in the gilt market warned the Standard. Treasury minister Darren Jones told the Commons on Thursday in response to an emergency question there is “no need for an emergency intervention” yet when Truss talked about her mini-budget it was “market chaos”.
Where is the IMF warning combined with a public rebuke. She was criticised for a potential increase in borrowing, we’ve had a bigger increase in borrowing.
May 29, 2025
Recently the 30 year has been 5.5% and the 10 year 4.7%. Both rates have been well above the October 2022 spike all this year so far.
Indeed so, and today (and last Friday) the ten-year pushed through 4.7% to 4.77%. Economic commentators seem to be inherently leftwing – ignoring all the danger signs. It seems that the bond vigilantes who are scrutinizing ths government’s blustering blunders will soon render the IMF’s commentaries irrelevant.
JR is absolutely right about the IMF’s curious Keynesian blind spot. Debt is debt is debt is debt. How they think it will magically convert into wealth is a mystery.
May 29, 2025
“Recently the 30 year has been 5.5% and the 10 year 4.7%. Both rates have been well above the October 2022 [Truss] spike all this year so far.”
Why does the Conservative Party keep this so quiet?
May 29, 2025
From the MsM
“China backs Starmer’s Chagos deal
Prime Minister offered ‘massive congratulations’ by Beijing”
Comrade 2TK will soon be promoted by hiss boss to govern the new Chinese Territory
May 29, 2025
The NATO planned drone attack on Moscow failed. Trump’s ‘leverage’ evaporated. Now Germany has transferred Torus Missiles to Kiev, which can reach Moscow. They are claiming that they will be manufactured in Ukraine 🤯 in an attempt to distance themselves. Russia has warned Germany that they are becoming an overt ally of Ukraine. They will be targeted and bombed.
May 29, 2025
Starmer always grandstands in the protected confines of a factory and today displayed sheer hypocrisy smearing Reform and Garage as Liz Truss who was brought down by the Bank of England and Treasury who quietly made public their previously hidden liabilities problem and very conveniently deliberately chose to scapegoat poor Liz Truss and KK as she was seen as a threat to their perceived false integrity. Hindsight is Starmer’s desperate straw that he spins hoping no one asks him for his vision forward.?
Yesterday Starmer went to Liverpool Police HQ, another secure and safe place.
He would never stoop to appear on the street unlike Nigel Farage as he would be heckled for his appalling policies no one ever voted for.
Can’t wait to see him debate with Farage or rather vice versa.
May 29, 2025
Its argued that china controls & funds a great many departments of the UN ….including the IMF
May 30, 2025
I hope you realise that ‘it’s argued’ is not particularly conducive to your comment being taken seriously. Who is arguing that? The Beano? Chirp magazine?
What is becoming clear is that the USA having slashed their UN funding, the principal beneficiary is likely to be China.