Bye Bye Sunak..

[GG.]

Personally speaking, she cost me an extra £420 per month on my mortgage...

I have been meaning to bring this up - she didn't. Central Bank rates have been elevated around the world to deal with inflation fueled by a number of factors such as excess liquidity from money printing during Covid and the war in Ukraine.

The Fed rate is the same as the BoE Bank Rate and the ECB is 75bps inside that on account of differences between the Euro are and UK/US economies/monetary policy. Essentially all have gone from hovering around zero to c.5%.

Truss did cause a short term crisis in the reduction in yields on central bank bonds (guilts) which in turn triggered liquidity issues with pension funds but within 12 months their liquidity exceeded the level at the point prior to the 'mini-budget'.

Truss had the correct idea of what to do with tax directionally, but in conjunction with Kwarteng committed the cardinal sin of releasing plans that were not fiscally neutral and would therefore mean more issuance of government debt (bonds therefore worth less as diluted by new issuances, yields fall - see para above).

I was pretty suprised that the tories have not challenged that the interest rate changes are a global macro driven thing, not related (save for Sunak's largesse during covid) to their policies. I think the truth is it would just go over most people's heads and the strategy seems to be that people can only process very simple messages.

I don’t have the evidence to hand but I was tracking mortgage offers in the lead up to September 22 and I was expecting an increase of between £100 to £150. By October 22 it was £450 which hadn’t changed by Sept 23 when we re-signed. And still hasn’t changed significantly since.

It was frustrating as we planned to reduce our term by 2 years so we were budgeting a big increase anyway but now we’re paying that for the same term. So set our plans back 2 years.

Now it may just be a coincidence but I’m still blaming Truss

If you look at this timeline of the Fed Rates - you'll see it is a (n unfortunate) coincidence

https://en.wikipedia.org/wiki/History_o ... ee_actions

[Beany]

Funny how the interest rates going up isn't the governments fault, but when they come down it's because of them...

This is why they're not interested in clarifying that point. Makes for easy wins when it's good news, and easy deflection when it's bad.

[GG.]

Funny how the interest rates going up isn't the governments fault, but when they come down it's because of them...

Keeping tax rates high rather than tax cuts has a small effect but as most of the inflation is driven by external factors so the government is hardly responsible for the bulk of the effect. Most of Hunt keeping them high was to restore confidence post Truss, so you could argue that is the real effect of the mini-budget.

[Mito Man]

There's a lot of macroeconomics which are out of the hands of politicians such as the wider economic cycle. When it's bad it's global macroeconomics, when it's good it's due to the government - convenient. Most of them have economic degrees so it shows you how much they think of the public by spinning it that way.

Kwasi's mini budget was pretty academic - he just completely failed to take into account that the UK isn't a closed market and is part of a global market. The kind of thing you'd expect an economic student to come up with in an ideal world type scenario

As for Rishi taking credit for inflation dropping, lets not forget his 5 goals:

Actually, I think it's better to forget them

[GG.]

There's a lot of macroeconomics which are out of the hands of politicians such as the wider economic cycle. When it's bad it's global macroeconomics, when it's good it's due to the government - convenient. Most of them have economic degrees so it shows you how much they think of the public by spinning it that way.

Kwasi's mini budget was pretty academic - he just completely failed to take into account that the UK isn't a closed market and is part of a global market. The kind of thing you'd expect an economic student to come up with in an ideal world type scenario

As for Rishi taking credit for inflation dropping, lets not forget his 5 goals:

Actually, I think it's better to forget them

0/5 - Graded an F.

ETA - I also like how the hand gesture reflects the floor giving way beneath him

[Mito Man]

Anyone else feel like political parties should put down actual figures for their goals with actual consequences for not meeting them? Otherwise you end up with GDP growing at 0.1% with them acting like it's a victory. Or Reform style bollocks with Nige saying he'll fix everything within 2 years...

Give the goals for 12 months down the line. Actual figures. Anything that doesn't hit the mark gets reviewed. Heads roll. Accountability. Because currently we're treading the line between vague and bollocks.

[dinny_g]

If you look at this timeline of the Fed Rates - you'll see it is a (n unfortunate) coincidence

https://en.wikipedia.org/wiki/History_o ... ee_actions

Don’t care still blaming Truss.

[Jobbo]

If you look at this timeline of the Fed Rates - you'll see it is a (n unfortunate) coincidence

https://en.wikipedia.org/wiki/History_o ... ee_actions

Don’t care still blaming Truss.

I don’t know why we bother setting our own rates if they’re driven by global factors. Might as well be in the Euro or pegged to the dollar.

Or… actually we do have our own economy and Kwarteng/Truss destroyed all confidence in the government’s fiscal management, which is what led to the dramatic step increase in interest rates. It’s all very well saying rates have been too low for too long and should have risen, but the trigger event was Kwarteng’s budget which Truss didn’t even stand behind. Meanwhile as she demonstrated zero control of the economy, the Bank of England stepped in to prevent a total crisis.

[GG.]

The trigger wasn't the mini-budget. They were just contemporaneous enough to generate the misconception in people's mind that they were as the already existing increases in bank rate starts to take effect gradually.

The huge spike in inflation which the increase in central bank rates was designed to quell pre-dated it by 9-12 months - the below chart is handy (the mini budget was September 2022). You can see that the BofE's trend was sharply up already by the time and there was no inflexion point pre/post that budget. The BofE did step in to provide a liquidity backstop but that had nothing to do with the Bank Rate.



On the question of why we set our own rates - sometimes there are global macro events which necessitate a change of rate (and indeed in a globalised world economic peaks and troughs do align to a degree - particularly since 2008) but that need not be the case at all. At the very least we do not track recessions exactly with the US for example, but do so with a time lag - so we should certainly have the ability to indpendently set rates.

[Jobbo]

I’m sorry, you can look back at charts and have a revisionist view of the situation but the trigger was very apparent at the time. The pound started to slide against the dollar and Euro immediately.

[GG.]

It did - to its lowest point ever against the dollar (1.03) but the bank did not jack rates to 10% to shore the pound against the dollar a la Black Wednesday and the ERM - the Bank Rate kept on increasing in measured steps to counter inflation (not with a view on FX rates). The BofE did start to buy gilts to keep the price up and ensure the pension funds did not have to liquidate positions causing a cascade effect which I'm sure causes paper losses, but that doesn't feed into Bank Rate and mortgage rates.

As you can see from the Fed Rate, ECB, etc. all this time later, there is no but for causation between the mini-budget and high rates. They'd be sat there at 5% even if that had never happened. I'm of course not saying that the mini-budget was a success (it caused markets to do exactly what they would have done had Corbyn got in!), just that it did not affect the Bank Rate in the long term (certainly not now, 18 months out).

[ZedLeg]

It’s starting to be a trend that Labour candidates are ducking hustings.

The guy they’ve put up against Corbyn isn’t going. Understandable that a private healthcare lobbyist might be nervous about a public debate though.

[dinny_g]

As I've mentioned, I'm going Labour as I think the counrty needs change.

But the Labour candidate turns out to be from Newport Pagnell, went to the same school as Mini-dinny and his first job was collecting glasses in one of the pubs I go to on the high street. So a genuine local.

Happy to vote for him now.

[MikeHunt]

The Bromsgrove Labour candidate also skipped hustings.

The local Labour candidate was replaced at the last minute by a former west mids MEP which dosnt look good, but there was also a scandal over the replacement of Sajid Javid. The local mandate was voted in and Rishi attempted to override the vote and bring in an ex journalist, so neither party looking great on that score.

[ZedLeg]

Rosie Duffield after claiming that she was facing threats due to her “gender critical” beliefs has walked that back a bit and said she was worried that a protest against her would spoil the hustings for people who were there for the first time.

Bizarre.

Wouldn’t normally quote the speccy but they’ve quoted her interview with Andrew Neill.

https://www.spectator.co.uk/article/lab ... -terribly/

[V8Granite]

So she is worried about her safety, for saying facts, what a disgusting situation.

She seems braver than most so it’s a shame she feels like that.

Dave!

[ZedLeg]

She isn’t worried about her safety, she just didn’t want to go.

At least she got someone fired though.

[dinny_g]

https://vm.tiktok.com/ZGegjkAmt/

[Nefarious]

She isn’t worried about her safety, she just didn’t want to go.

At least she got someone fired though.

Or at least it has been decided that *that* is a conversation they *really* don't want to be having at the moment, so probably best not give the opportunity for a newsworthy scene

[GG.]

Recently released poll suggesting the Tories will fall to 53 seats... Labour with 550 and Reform with zero.

Clearly no-one wants the Tories to win but with FPTP meaning this results in effectively a one party system is a pretty worrying outcome with only 8% of the respresentation being right of centre (when the public vote would be c.40% for right leaning parties).

Arguably this is a much stronger argument for PR than ensuring the Lib Dems get a few more seats in a parliament with two evenly weighted main parties... My concern with PR was always that it would result in fragmentation and paralysis but clearly it would likely be better than FPTP in this scenario.