Sunak should be modelling his fiscal rules on Clem Attlee’s, not Margaret Thatcher’s
Normally, reading economic statistics is, for almost everybody, a sure-fire way of curing insomnia. Not anymore. The Office for National Statistics came out with yet another attention-grabber last week. Government debt in the UK, the august body pronounced, is now bigger than GDP for the first time in over 60 years. The statisticians did qualify […]
The Bank of England risked our economy by believing a Peter Pan myth on inflation
The Bank of England has finally accepted that it needs to react to the growing criticism of its failure to either predict or control the persistently high rate of inflation. In response to demands from the Treasury Committee of the House of Commons, the Bank has decided to commission a broad external review of its […]
If we concede to the unions, Britain will find itself in a dizzying wage-price spiral
A wage price spiral. We have not experienced one for so long that for most people the phrase might just as well be written in the Old English of a thousand years ago. It is, well, sort of comprehensible but only just. But such spirals can take hold with terrifying swiftness. Towards the end of […]
Sunak’s flexibility has been curtailed by our undue reverence for the Bank of England
Rishi Sunak will deliver an updated Autumn Statement next week, after Liz Truss’ so-called “mini-budget” triggered her demise. His freedom for manoeuvre has been sharply contained by the new found reverence being accorded to the Bank of England and the Office for Budget Responsibility. The Bank of England has forecast a long recession, which could […]
Central banks have fooled themselves into thinking they have power over inflation
The failures of central banks around the world to anticipate and control the current upsurge in inflation are now apparent to all. What has been going on with the highly technical models which economists in these institutions build to try and explain inflation? If we look under the bonnet, we find a debate which is […]
We need to stop comforting ourselves with the myth of the all-powerful central bank
Inflation continues to be a major problem for policy makers. The annual rate of price increases hit 7 per cent last month and could be in double figures later this year. This projection is far from being a fantasy. On some measures, annual inflation in America is already over 10 per cent. Rather bizarrely, the […]
Despite what we wish, there are no miracle economics Rishi can pull out of his hat
The economic pressures now known as “the cost of living crisis” were at the core of the criticism of the spring statement last week. Those who once eulogised the Chancellor have now been selling their stocks of Sunak. While much of the commentary is unfair, politics is a trade in which the concept of fairness […]
As government debt jumps to fund defence spending, our economy will pay the price
Sanctions will clearly hit the Russian economy very hard. But economic prospects for the West are not exactly rosy. Twice in the 1970s and again in the early 90s, there were rapid spikes in oil prices; each instance was followed by economic recessions. The deep recession following 2008 was, of course, due to financial causes […]
The Bank of England has developed a mythical stature – it’s time to burst it
The UK, along with the rest of the Western world, has just lived through a period of low inflation. In the 25 years since the mid-1990s, inflation has averaged just 2 per cent a year. It is enough to double the price level every 35 years, but a far cry from the double-digit rates seen […]
Businesses face a fresh tipping point of staff shortages and wage hikes
For years, inflation has not been an issue. Since the late 1990s, annual inflation in the UK has averaged 2 per cent, with a peak of just over 4 per cent. In the US, there was a similar story, with even less variability. This is in stark contrast to the 1970s and 1980s, when the […]
