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’re not reliving the 1970s yet, but today’s decisions will keep us out or drag us back
At the end of June 1975, the weather was hotting up. Indeed, August of that year proved to be the warmest ever recorded. Then, as now, there had been a massive rise in world energy prices. There was trouble on the railways, where the unions were in an aggressive mood. The TSSA union and ASLEF […]
Andrew Bailey fell asleep on inflation and now it is workers who will face the flames
Is there a comfortable chaise longue in the office of Andrew Bailey, Governor of the Bank of England? I think we should be told. Because it has become apparent that the Bank has been asleep on the job. In the year to December 2021, consumer prices rose by 5.4 per cent. We have to go […]
Bail outs for businesses in strife only gloss over the truth, it’s time to face reality
The price of both oil and gas has doubled across the world in the last year. The price of crude oil is at $84 a barrel for the first time in three years. As a result, fuel of every kind, for every purpose has become more expensive. The public has reacted in the most extraordinary […]
If you’re panicking about a spike in oil prices, look to history for a silver lining
The tanker attacks in the Gulf of Oman have raised fears of a sharp increase in the price of oil. These are currently being offset by worries about a slowdown in the world economy and a drop in the demand for oil. But what if the conflict escalated and oil prices really did go through […]
Does the productivity gap actually exist?
Whoever wins the election tomorrow will have to grapple with what appears to be a fundamental economic problem. Estimated productivity growth in the UK is virtually at a standstill. The standard definition of productivity is the average output per employee across the economy as a whole, after adjusting output for inflation – or “real” output, […]
The so-called ‘output gap’: another piece of economic mumbo-jumbo
The concept of the’ output gap’ is central to mainstream macroeconomics. It is not merely of academic interest. The Office for Budget Responsibility (OBR) has a specific requirement to estimate the output gap, which it defines formally as “the difference between the current level of activity in the economy and the potential level it could […]
No interest rate changes for three years? Zero hours contracts for the Monetary Policy Committee!
The new Governor of the Bank of England, Mark Carney, said last week that interest rates will not be raised until unemployment falls below 7 per cent, a process he thinks will take three years. The battle of Austerlitz in 1805 was one of Napoleon’s greatest victories, leading to his complete domination of Continental Europe. […]
Why Can’t Debt Just be Inflated Away?
The debt problems which the UK and Europe currently face are essentially ones of political economy. Basically, there is a lot of debt around and the simple question is: who is going to pay for it? All the economic theory in the world does not get around this fundamental issue. Traditionally, bondholders paid. The real […]
