As the FT has reported in the last few minutes before writing this post:
British retail sales unexpectedly fell in October, fuelling concerns that high prices and interest rates are hitting households' finances more than anticipated.
The quantity of goods bought in Great Britain declined 0.3 per cent in October compared with the previous month, the Office for National Statistics said on Friday.
I am not sure why anyone is surprised. As the FT also reported this morning:
More than half of low-income UK households with mortgages have fallen behind on one or more of their bills, highlighting the combined pressure of rising interest rates and rapid inflation on their finances, new research has shown.
A survey from the Joseph Rowntree Foundation charity showed a sharp increase in the share of less well-off mortgage holders who are in arrears on one or more of their household bills in October, with 58 per cent reporting difficulties, up from 49 per cent a year earlier.
They added:
More than half of those who were struggling found themselves in arrears with four or more household bills.
The stress of living in that situation is horrible to imagine. I admit, I count my good fortune.
It is also true to say that if these are the raw statistics, then many more people will be struggling very hard to avoid being in this situation. Many will not succeed: mortgage rate rises will hit millions more households in the next year as their low-rate fixed-term mortgages end.
The reality is that we have as yet hardly begun to see the stress that the Bank of England has deliberately engineered for the UK economy. The human misery that they have so callously prescribed for those living in situations it would seem that they cannot imagine is going to get very much worse if they stick to anything like their stated interest rate plans.
The knock-on effect of this on the economy is the smallest of the worries that we should have.
The much bigger cost in terms of stress, anxiety, mental and physical ill health, family breakdown, resulting abuse, and loss for millions who no longer have the stability that all families crave, is what really matters here.
And the Bank just does not care.
They don't even think that they have massively overshot with their interest rate rises, and rapid falls are now required.
Instead, they are doing quantitative tightening to keep them as high as possible.
Inhumanity to others is happening here in the UK right now, disguised as monetary policy.
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You have been saying this for more than a year – and it is happening. The Bank just woudnt understand your language – they don’t see what they are doing as a matter of choice – its justt something they have to do according to their understanding of how the economy works.
They also dont think about the effect on ‘people’ its just ‘the economy’
Yes it is. The casual and more considered cruelties will worsen as Mandelson is controlling Labour and he is a loyal Murdoch man.
The UK is now a democracy and two party state in name only.
Inflicting destitution and early death on those on low wages and making the majority suffer unremitting economic uncertainty has been the US Heritage Foundation’s and other supremacist disaster capitalists stock in trade for achieving their half a century battle to hijack democratic governments for control by oligarch corporate interests. They have been aided and abetted in this, now visible to all, endeavour since 1971 by fellow travellers in the international criminal mafia and hostile state players.
A brutal social storm is upon us.
“….. that high prices and interest rates are hitting households’ finances more than anticipated.”
So, can anyone tell me what exactly policy makers WERE anticipating?
Also, an interesting article about “greedflation” in the FT that also references several BoE papers.
My key takeaway is that, even excluding oils and gas, large companies have maintained margins. Remember “maintaining margins” really means that profits have risen about 10-15%.
There is also a paper suggesting “unit cost of capital” is responsible for over halt the inflation seen in 2022. Now, it is unclear exactly what this means but it is surely hinting that higher rates (a key “cost of capital”) is pushing up inflation.
Perhaps the author reads this blog! (I would add that some of the stuff the BoE puts out is interesting…. just a shame that the boss doesn’t read or understand it!)
Thanks Clive
I had not got to that, as yet
Meanwhile the Chancellor is talking about using “carrots and sticks”. It is not just the poorest who are feeling the bruising effects of the cumulative beatings of a stick called ‘austerity’; another stick called ‘the cost of living crisis’, and a third stick, or is it tawse, called BoE interest rate rise beatings. Well, there are the sticks, all plain to see. Where are the ‘carrots’; oh yes, that will be tax cuts for the comfortably well-heeled.
How much more do we need to know? The need is no longer to simply defeat the Conservative Party in a General Election; but enable its extinction. Unfortunately, under an FPTP system that is not going to happen.
There is an illusion among many people that there is a generously spirited majority in the British electorate, considered as a whole. I will not debate the point, because we are never going to find out. Such a majority is not politically available; it may as well not exist. We have an FPTP system, so we know how it works; we know where the FPTP majority lies; and in that electorate the vote of the majority requires the abandonment of decent standards for the demands of the worst of self-serving, hypocritical British exceptionalism. The result is the political Parties we have; a Dante-esque, grotesque corruption of the human spirit.
I see that Hunt is also considering a cut to inheritance tax. That will clearly help many people who are struggling in these difficult times…
Richard, linking from Mariner’s point above, this is from the BBC, under the headline:
“What the chancellor really means when he says tax cuts are ‘impossible'”
This is what they say:
“The financial markets – or the bond markets to be more precise – help fund the government’s plans. But if they aren’t convinced of a government’s creditworthiness, or if they are concerned its plans are risky, the interest rate they charge for that funding will go up. So governments want to convince them to lend at affordable rates.”
Is this correct? I thought Government set the bond rates. How does an investor in a bond change the interest rate being charged?
It’s total nonsense
Governments do never need to borrow, as QE proved
And interest rates are fundamentally set by central banks who can always control the price they pay through what are called open market operations, of which QE is an example
The statement you quote is undiluted drivel
Meanwhile in the Tory fantasy world.
Autumn Statement: Jeremy Hunt considering cuts to inheritance tax
https://www.bbc.co.uk/news/business-67448602
While for those at the very bottom things are about to get a lot worse.
Welfare cuts worth billions planned by ministers
The changes, affecting hundreds of thousands of people from 2025, would save £4bn from the welfare budget.
https://www.bbc.co.uk/news/uk-67385385
I expect to have more to say on this over the weekend
I will be on Radio 2 next Wednesday discussing the budget
This is one of the lowest actions of this government so far and that is saying a lot.
Losing access to free prescriptions for not finding or taking a job.
https://www.independent.co.uk/news/uk/politics/jeremy-hunt-benefits-coasters-job-b2448612.html
Agreed
https://www.theguardian.com/politics/2023/nov/18/shocking-scale-of-uk-governments-secret-files-on-critics-revealed
This is pretty low, too. We can’t be told how the government behaves because lots of people are banned from talking to government departments for criticising ministers. Hadn’t realised it had got this bad. That’s what the labour party does, but it suspends people who criticise them on social media.
I used to get invited
Not any more
Keeping a society under pressure, denied decent basic services and unhappy so that they can be politically exploited is what this is all about, quite simply.
There are some politicians prepared to do the right thing by people who they employ.
https://northeastbylines.co.uk/newcastle-city-council-pays-real-living-wage-to-800-staff/
There’s only so much bad news you can take, so every bit of good news is welcome.
Indeed