The Guardian has reported that:
UK inflation has returned above 3% as soaring fuel and transport prices triggered by the Iran war heap renewed pressure on British households.
Figures from the Office for National Statistics show inflation as measured by the consumer prices index rose from 2.9% in July to 3.1% in August, driven by motor fuel prices rising by almost a quarter.
In a critical week for the economy, the Bank of England is preparing for a crunch decision on interest rates on Thursday against a backdrop of rising inflationary pressures from soaring oil and gas prices.
A number of obvious questions arise from this.
Firstly, why is the Guardian treating this as if it is a surprise? They had to just go outside and live in the real world to realise that inflation is rising at present.
Second, why aren't they questioning the relationship between rising energy and fuel prices and interest rates? Why do they assume that a problem resulting from war, giving rise to shortages, resulting in price increases over which we have precisely no control, can be solved by increasing the price of money, which will reduce its availability to those who need to buy both energy and fuel?
Third, from elsewhere in the article, where they talk about the fact that the increase in interest rates is a “kick in the teeth for the chancellor”, why are they not asking what it is that the government can do to control these rates, rather than accepting that they might be set by bond markets, whose commentators they grant the opportunity to comment, with the implication that it is only their opinion that matters on this subject?
The Guardian would like to pretend that it is a serious commentator on economic issues. When it asks none of the obvious questions, and directs them at the wrong people, it is very difficult to agree with that claim.
There is a hegemony of stupidity among the mainstream economic commentators in this country at present, none of whom appears to have the imagination to ask, “Why does it have to be like this?”
If you want an explanation for precisely why we are in a mess, that would be amongst my best offerings.
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I agree with your comment “There is a hegemony of stupidity among the mainstream economic commentators in this country at present, none of whom appears to have the imagination to ask, “Why does it have to be like this?”
Its very worrying that commentators appear not to have any idea about government finances or how the economy works. All we get on the BBC is all about the importance of the bond market, how can the govt balance its books etc. We don’t get a debate we get ill informed rubbish!
Even channel 4 news have been parroting these lines. It’s so frustrating.
Similarly, with other issues, and especially with the AI debate, the mainstream reporting is dire. All we get is verbatim reporting of the doomsday script the tech bros are feeding us, thereby amplifying the profit enhancing scare tactics that are obvious to anyone who investigates what is really going on.
I propose that all journalists be mandated to use the term Trumpflation instead of inflation, for the foreseeable future.
After all, attribution is one of the bedrocks of good journalism, isn’t it?
Which group or groups in our society does “The Guardian” choose to please and/or serve?
A comfortable group of boomers who think they are socially concerned and cannot see who they helped create the problems the world now faces.
I have met many of them.
Thank you, both.
With some honourable exceptions there, the staff are often privately educated and rather well to do. It’s the same at its former stablemate, the Observer.
Older readers may recall the SDP fans and even candidates there in the 1980s, Polly Toynbee and Malcolm Dean. Ruth Kelly was there between the Bank of England and Parliament.
A friend, now based in the Far East, worked in IT there and reports how the leadership is even more elitist than its readers.
Richard knows some of the staff and may elaborate.
There are exceptions to the rule you note – and they are easy to spot. But comfortable living is commonplace for many.
You should not use the term ‘boomers’ its offensive. The problems exist because of bad policy choices made by politicians of left and right not baby boomers!
I disagree. We are responsible for our actions.
Agree. The MSM has to keep the BoE narrative going, else invites to journos to nice dinner parties might dry up (& the journos have to follow the party-line set by the rag that they work for).
BTW: gas prices for the mo’ seem to have “stabilised” @ Euro80ish/MWh which means Euro180 to Euro240/MWh for elec (perhaps a bit more in the UK).
Could things be diff? Yup, nationalise the totality of energy & sell in the UK at the cost of extraction (for nat gas this would be £3 to £5/MWh). Of course this will not happen.
There was a commentator on the radio this morning suggesting that the UK pays more in debt interest than it spends on health or on social security. (For the record, spending on each is about double debt interest, and we all know the reported amount of interest paid is too high as it includes increased redemption amounts on index linked gilts, and unnecessary interest on central bank reserve accounts). Not challenged by the interviewer of course.
Staggering
I had to listen back to make sure I was not misrepresenting or misunderstanding. It was Lord Sedwill, former Cabinet Secretary and National Security Adviser, who well understands the meaning of words, and their uses and misuses.
About 1 hour 38 mins on BBC Sounds. https://www.bbc.co.uk/sounds/play/m0031kpx
He said that the government’s biggest expenditures – other than interest on debt, which is now huge – are “welfare”, pensions, and health. Clearly implying the debt interest is more than the other items. Plainly untrue. Non-pensioner social security is around £160 billion. Pensioners are another £160 billion, and health is around £200 billion. Interest is around £100 billion, perhaps nudging up towards £130 billion due to inflation and interest rate increases.
He went on to discuss the language of choice – what politicians choose to do and not do – and the duty of the citizen – to ask what you can do for your country, not what your country can do for you. And a citizen’s responsibilty for resilience and the defence of our country.
And here are OBR forecast figures for 2026-27 from March 2026 – https://obr.uk/forecasts-in-depth/brief-guides-and-explainers/public-finances/
UK government spending £1,368 billion
Health and social care £204 billion
Pensioner spending £161 billion (not including tax subsidies to private pensions)
Universal credit £91 billion plus other welfare £79 billion
Education £95 billion
Interest £109 billion
He was not a good Cabinet Secretary
His grasp of both economics and the symbiotic relationship between the government and the governed is a clear indication of why.
“Ask not what your country can do for you, but what you can do for your country”.
In fact these two are exactly the same thing. What your country can do for you (eg provide health care when you need it) is limited by what you can do for your country (eg get a job emptying bedpans for strangers in hospital). One job of government is to maximise the ability and willingness of people to do the work that constitutes “what your country can do for you” at the point of delivery.
It’s incredible that some of us dream of an afterlife in some form of paradise, and yet deny that paradise whilst we live in the hear and now by subjecting ourselves to nonsense like this. All it does is make death more attractive.
What a queer species the human animal is……………….
Fear not PSR, there is a growing clamour from dreamers of an afterlife like me, objecting to the nonsense spouted by, and apparently believed in, by government, that has been making this life so miserable, for so many, for so long.
Some of us take the “thy will be done on earth as it is in heaven” bit very seriously, and our sensitive digestions are increasingly intolerant of regular helpings of poisonous “pie in the sky when we die” from the Treasury OR the pulpit.
You may see and hear us throwing up in public more often- sorry it took so long! 😉
The vast majority of UK economists and economic ” commentators are utterly incapable/unwilling to think beyond the the standard of a minimally competent student.
Bearing in mind whatever research is done these days is by A1, the old adage ” garbage in garbage out” is still extremely true.
The stupidity is only apparent. They know exactly what they are doing. They have been rolled out incessantly over the last few weeks to reinforce Thatcher’s old (and patently incorrect) idea that “there is no alternative”.
Meanwhile, all actually existing alternatives such as the successful 15+year experiment in bottom-to-top self-determination commonly called Rojava and the 67 year-old lesson in equity and (enforced) sustainability called Cuba are crushed. Haiti continues to be punished for daring to rebel, and I have no doubt Burkina Faso will be next.
Thank you
No one bothers to ask the so-called economic journalists about their own backgrounds. Too many of these commentators have little or no training in economics (and certainly not in accounting). Even those that have some grounding in economics (and, generously I might include those with the Bluffer’s degree [PPE]) display no appetite for questioning the orthodoxy. I am old enough to remember when today’s economics orthodoxy was viewed as highly questionable (to say the least). I suspect that is why the Treasury, politicians and their chums in the mainstream media seem incapable of doing anything other than flogging a dead horse. The real problem is that eventually this refusal to re-examine their own knowledge and views and try something different (like MMT) will catch up with them and the public may turn on them. I suspect that is behind some voters turning to Reform and Restore – they know the current system is not working for them so they support people who claim to understand their concerns and share their view. Sadly these voters are being misled and subject to a different type of exploitation by Farage, Lowe and their ilk. When these chancers and grifters show their true colours the public backlash might be the political equivalent of a wildfire. Desperate people may resort to desperate measures. The writing is on the wall.
Much to agree with
And the prime example is Amol Rajan, who have neither a degree or masters in Economics, which makes him eminently qualified to be the BBC’s economics correspondent
He is not the BBC’s economics correspondent. Faisal Islam is.
Apologies, Richard. I had a senior moment – not sure why I said Amol Rajan. I should remember Faisal’s name as he causes me to shout at the television every time he comes out with his claptrap – but I do find it remarkable that the BBC should have someone with no Economics qualifications to comment on the subject (very badly I might add).
And if the Bank of England increases interest rates then because price rises are due to external supply prices not domestic demand then prices will not be decreased, and in fact by raising business costs (including the cost of holding stock that has already been paid for) then it will push inflation up further.
By contrast, reducing VAT on domestic energy, capping public transport costs and other cost-of-living measures reduces inflation.
The majority of the price paid for petrol and diesel is taxes or one form or another. If the government reduced fuel duty or other tax on the fuel, then the part that’s raising more for the government at present could be returned to lower prices, immediately reducing the inflationary impact of higher underlying prices. Since the recent increases are already factored in, that would be a direct reduction of inflation as well as a further cost-of-living improvement.
It would also be hard for markets to argue too much against such a change as it would just represent not claiming extra tax revenue from war, not losing something it had prior to it.
Perhaps the best option for this would be a cap on the amount of tax charged per litre of fuel for at least some element – this would automatically drop off as oil prices drop but provide some mitigation while they are high.
Its really chilling – only one economic narrative allowed – BBC MSM. Not even mildly curious questioning. ‘Do we really have to pay all this interest on money government created?’. Not a mention of massive tax reliefs on high income pension.<p>
They sort of make the ‘triple lock’ issue sound just an economic choice where as the ‘high income pension subsidy’ seems unmentionable because it would sound too ‘political’ <p>
And even more chilling that the quasi official think tanks IFS, NIESR, Resolution Foundation – none seme prepared to look outside the narrow tramlines of the official narrative that there is no money, and the books have to be balanced<p>
Richard and commentators here – are so out of line with all this. That there is not even a hint that there might be an alternative is never uttered – is that a silent signal that we all risk being arrested?<p>
Or at the very least be blacklisted – whoever keeps the black list<p>
Is that paranoid?
No
Just read the Guardian editorial ( don’t do it very often). It discusses the role of QT suggesting it is ended. ” It is unsustainable for the Bank to make decisions and have ministers face voters for the political consequences.”
https://www.theguardian.com/commentisfree/2026/sep/15/the-guardian-view-on-the-bank-of-englands-120bn-bill-power-without-accountability
So maybe some light has penetrated.
We can live in hope.
More glimmers of hope. Things are a rumbling in the corridors at the BoE.
https://www.theguardian.com/business/2026/sep/15/bank-of-england-bond-selling-cut-uk-borrowing-costs-john-healey
Broadbent’s response has generally been that slowing QT would only serve to spread the losses over a longer period. If it reduces amounts lost through sales by not moving prices more than necessary, then it would reduce the total losses.
Additionally, that is exactly the point of having Quantitative Easing and then some kind of gradual Tightening – you inject money at a point it’s urgently needed and very slowly remove it to spread the pain over many years. You don’t take a point when war and after-effects of austerity and Covid mean many are still struggling and decide now’s a good time to incur all of the pain as quickly as possible.
It’s fortunate that the Guardian and the Government seem to be realising that there is another path, because left to its own devices the Bank of England leadership would pursue arbitrarily elevated financial cruelty on the public.
That response reveals a staggering level of stupidity.
Maybe he has not realised that rates can go down.
The c.£490bn of gilts held by the BoE could be converted to a zero-coupon ‘perpetual’ bond if the will was there. As Bill Blain was musing today.
The global bond selloff hit a worrying tidemark yesterday as the US 10-year Treasury hit 5%. Shock, horror… mass panic? Nope – Normalisation.
The Bank of England spotted the kerfuffle in bonds – and are doing the right thing by slowing QT.
The key issue for bond markets is how QT impacts demand/supply pricing. At current rates QT was about 22% of the size of new UK debt issuance. That’s had a significant negative impact in terms of the higher yields on Gilts.
The UK’s debt position isn’t as bad as other nations – its’ longer debt profile means less to refinance each year. Cutting competing supply will ease prices further.
Slowing QT will not create a sudden bull market, but will ease the pressure from energy costs, slowing trade, rising inflation, conflict risks and unsustainable government deficits. (It might even shut the Torygraph up for a while…)
The UK’s Treasury and The Bank should cooperate to abandon QT completely and embrace liability management of the UK’s debt pile.
Zonk Theory – replacing the Bank’s Portfolio with a Zero-Coupon Perpetual “Zonk” could reduce the UK’s outstanding debt, avoid crystalised losses from QT and further lower debt costs…
Whether one agrees with Bill or not, I like the “Zonk Theory”!
Me too
An excellent essay.
AI is not a flyer
That is good.
And spot on about aviation.
Thanks for the link. Worth a read. One of the last observations chimes in with what I have been saying:
“Most likely, when the dust settles, less ambitious LLMs of the Deep Seek kind, running on private servers will offer an affordable way of continuing the handful of genuinely useful things that LLMs can do.”………
Yup.
Agreed
I could use that just to access my own work and do all the other tasks I undertake.
A wonderful characterisation, The Hegemony of the Stupid. And excellent response comments above too.
It echoes Dietrich Bonhoeffer’s idea that stupidity is far more dangerous a threat to society than malice.
(Another reason not to have closed 800 libraries in the last 15 years? A massive chunk of population having had removed within reasonable walking distance such facilities. Reason: Back to neoliberalism again. )
Of course, with US Obscenity government we have a lethal combination of Stupidity + Malice.
Anyway, I really do commend this article that serendipity put my way recently. : )
[DELETED AT COMMENTATOR’S REQUEST]
Thank you
I wish to apologise for my recent post just WRT the linked article.
Have re-read it and while it starts well further in some of it is offensive, even racist.
That mistake will not happen again! So apologies for the link.
I have deleted the link. Such things happen.
It occurs to me that the taxes on fuel, clothing, drink, etc., are just as arbitrary as income tax and other more direct taxes. There is therefore no real reason why government sticks to them and tries to make a virtue out of not increasing them “in line with inflation”.
And we still have El Niño and associated climate catastrophes to look forward to.
https://gwynnedyer.com/2026/climate-no-good-outcomes/
We are being led into the future by the worst among us. No good outcomes indeed.
I heard on the news that teachers pay could be increased because the teacher’s pension fund has a larger than expected surplus which the gov are allowing them to pass on to teachers. The surplus is normally taken back by the gov, who in turn, cover any shortfall.
Nobody questioning why they have accumulated a surplus. They could have said the national debt is matched by assets such as this fund and also higher interest rates boost the fund thereby funding teachers’ pay rises. But they only emphasise the debt, not the owners of the debt. Maybe they don’t know how this works despite a concrete example presenting itself.
The question about using higher interest rates to tackle inflation driven by fuel shortages really stood out. If the underlying problem is supply, making borrowing more expensive seems worth questioning.
There will be a video on this, probably in the morning. The only question is what the Bank of England does today, whoch will shape the final edit.
So, the Bank of England held rates and re-thought (seemingly under pressure from the government) its active QT.
However, the notes indicate they while they expected inflation to lead into wage inflation, they see it hasn’t happened yet and wage inflation is still trending down.
Rather than acknowledge a mistake, they declare this is because it is just delayed and will be coming soon. Same for food price inflation not going up as much as expected from higher energy prices.
At some point it starts to sound rather like those people you find declaring the end of the world is nigh, who revise the date of that doom whenever the previous date passes without an apocalypse.
When, exactly, will Rapture-flation arrive?
They said this re QT:
“The Bank of England should reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, to zero. This should be conducted through a multi-year plan, such that the remaining stock of £368 billion of bonds held for monetary policy purposes is unwound at an annual average pace of £46 billion by the end of 2034, through annual sales of £20 billion alongside maturing gilts.”
They have committed to sell all their bonds and central bank reserves, and will eliminate most central bank reserve account balances as a result. They really are mad.