I posted this Tweet last night:
There isn't much to add to that.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Except to say that on R4 this morning, a slew of commentators all pointed to the un-confidence of consumers in the UK and layoffs beginning to happen.
To me this is an obvious sign that credit is over-relied on for consumption and that real wage growth has been stymied which also locks us into a boom and bust cycle created by credit.
And adds credence to your observation perhaps that the BoE wants to cause a recession.
The ONLY way interest rates work to control inflation is to cause a recession. Of course, the BoE will say otherwise but experience suggests that rates cannot be perfectly finessed to deliver a “soft landing”…. the soft landing is about a 1 in 10 chance.
So, Richard is right, rates should be cut….. but let’s not load everything on interest rates policy. The government could pay public sector workers more to help consumption; rebalance tax policy in favour of lower earners that spend rather than save.
So, by all means slag off the BoE but the Government bears a heavy responsibility.
Agreed
Clive
Look – we know this government is crap – OK?
We know the 1997 Act ensured that the final word on these decisions should be made by the government that created the faux ‘independent BoE’ in the first place.
But the Tories will not do it. So we can discount them from doing anything properly at all, such is their record in office.
So into the vacuum goes an institution led by a man on just over half a million pounds a year telling us that wage rises are contributing to inflation and knowingly inflicting pain on people with debt and mortgages as if he were Queen Mary burning people at the stake to save their souls.
On top of that, the recession and cuts in household spending also tell us of an over reliance on credit because of poor wage growth.
So we a have a confluence of sheer stupidity and dogma leading to economic self destruction.
Yes – the government is hurting us because it washed its hands of any responsibility – agreed.
But Andrew Bailey and his monetary committee are effectively in charge and have condemned themselves by their own words and actions and are worthy of being called out – government or no government.
Or to put it another way – they’re not exactly being helpful are they?
Thanks.
There doesn’t seem an end in sight to the misery being caused. Unless interest rates are cut, unless wages rise, unless prices not only stop rising but instead fall, unless landlords cut rents, unless energy companies cut bills. Unless petrol prices fall. There are no levers of power that most people can pull to improve their situation, most of us are beholden to the decisions of powerful and seemingly cruel individuals – even voting won’t change things. Some may say “get a better job” but that is disingenuous. For most the route out of a desperate situation is blocked: by a lack of time, the cost of education, the immediacy of the problem, absence of opportunity, the mental cost of facing destitution imposed by the government and corporate greed. And pay is decided by employers not employees, and not everyone can get a better job, obviously, since the work available won’t change just because more people are more educated. It seems that many now will be permanently worse off, all to further enrich those already far beyond being wealthy enough.
like 20 years ago there is no commentary in the media about personal debt levels and the ability to pay. In the 3rd quarter of 2023 there was an 18% increase in Debt Relief Orders – https://www.thegazette.co.uk/insolvency/content/104204
I have no idea what this might mean for the future if the trend continues.
I do know that all 18 year olds are “encouraged” to build a credit score/history because without one you can’t do things like renting a room or a property. Therefore all of them own credit cards – the high interest ones of course. Contributions to one of the UKs largest industries (“financial services”) begin much earlier than they ought to.
There are individuals making absolute fortunes from this debt and misery, I guess the BoE would rather keep them happy.
is this a bout of profiteering? Hoping they can get homeowners to sign up to higher fixed rate mortgages before lowering them and providing cheaper credit to their cronies enabling them to buy up properties cheap when the market crashes?
Maybe