Amazing. Domestically, the regressive nature of the tax cuts may be attracting the most criticism, but in market terms no one cares. The crisis was caused by the fact that the plan was to pay for these cuts by issuing an unsustainable level of debt at a time when monetary authorities need to be raising interest rates to address the highest levels of inflation in fifty years.
So, they want to announce more uncosted changes…
Does anybody know whether the BofE Monetary Policy Committee gets access to these OBR interim forecasts that are provided to the government/treasury? Obviously the BofE has its own experts but the OBR is, in theory, meant to have somewhat of an influence on the government’s implementation of its intended fiscal policies. You’d think that they would need to coordinate with the BofE on these matters. Otherwise the BofE is purely reactionary, which would seem ridiculous and counterproductive.
As far as I know, they get early access, but not different access (i.e. they see the finished product, but are given time to have a prepared response).
The reactionary nature goes along with the independence, for better or worse.
Yes, I can see that but it would surely be helpful for the BofE to have as much time in advance to consider the most appropriate measures to take that are available to it. I can see that there might be a danger in the BofE to then say, “ok, if this is what you’re going to do, then this is what we’re going to do” as that conversation obviously opens the way for the BofE to try and influence government fiscal policy…but at the same time, it would seem helpful for the government to know that if they did A, the BofE would do B. Otherwise, if that sort of dialogue doesn’t take place, surely sub-prime outcomes are inevitable?
He’s an arrogant moron.
Quite possibly. I’d love to have been a fly on the wall during his Brexit negotiations, which I’d find it difficult to argue that he didn’t come away with what he wanted or at least what he was instructed to deliver.
And therein lies the problem. He seems very keen to defend the indefensible
That reverses the relevant flow of why central banks need independence. The danger is always that the government influences the bank, not the other way around. if the central bank is subordinated to the government (i.e. the fiscal authority), then the government can use inflation/monetary policy as an indirect tax to pay for spending. In the short term, this is politically palatable, but is generally understood to lead to a higher than optimal inflation rate - and is the underlying cause of virtually all hyperinflation incidents.
To your point about the importance of the fiscal authority being able to predict what the monetary authority will do, that is why most central banks have worked with defined rules and targets. In this instance, there should have been absolutely no surprise at the situation that the Chancellor put the Bank in.
There are many who would object to the fundamental idea that democratically elected governments need to subordinate their fiscal authority to an independent technocratic monetary authority. But if they don’t, they cannot reasonably expect investors from outside or inside that polity to leave their capital at the whim of inflationary fiscal policy.
The world of finance is absolutely not my forte, but what has been the thinking by Kami here?
The OBR exists to provide feedback on whether the treasury is being fiscally responsible or not. At every turn, the treasury have been very deliberately evading the OBR and any scrutiny on their mini-budget. For a layman like myself, that suggests the treasury knew the figures didn’t add up, or the mini-budget was released in such a disorderly fashion that they didn’t even fully cost it, or they thought OBR’s forecasts would be of no benefit as they had done their own internal forecasts (snobs) and they saw that the only outcome of this was that everything would be rosy. I’m hoping its not the latter though the other two choices aren’t brilliant either.
The Treasury is not at fault here. Dont forget ahead of the budget, their most senior civil sevant was sacked for no good reason. They will have sent advice to chancellor but ultimately their job is to carry out his requests.
This is purely an issue caused by Pm and the chancellor not wishing public scrutiny of their proposals and trying to provide a message that they were serious about being a taxcutting government and thinking everything else is of secondary importance.
How the hell anyone thought this kind of thing could lead to growth is beyond me. Demand for housing is relatively inelastic, the knock-on effects of this sort of leap in fixed expenses on sectors that depend on disposable income is almost incalculable. She can probably do better than that rate, but when lenders tighten, the rates seen by marginal borrowers often climb by more than the market average.
It’s not far off economic vandalism.
Our mortgage was approved yesterday.
Marginally more expensive than we thought, so I guess we are very lucky indeed, but fuck it has been a tense few days around here.
1600 mortgage products were pulled on this weeks by various lenders who had no idea where to set the market anymore. I think that young lady will get a better offer if she waits for the market to reset again but it’s still going to be drastically higher than 4.5% (which is already pretty high).
That’s just imbecilic.
Why is there no ironing board emoji?
My terminology is fucked. I meant the chancellor even though I said treasury.
How the current Conservatives have veered to the right…
