Andrew Sentance
@asentance
Independent business economist. Former CBI Director of Economic Affairs and BA Chief Economist. Member of #BoE MPC 2006-11. Guitarist & organist.
Another establishment figure from the House of Lords becomes Chancellor of University of Cambridge. But it is a pointless post with no powers, so not surprising we have anyone of significance in this role. share.google/I6jQgb6Ls7AwXp…
Reeves’s “fiscal rules” are meaningless. They are based on 5-year forecasts to 30/31, not current reality. No firm spending plans exist beyond 28/29 & no firm tax plans after this year. Unrealistic figures given by Treasury to #OBR can easily give a false view of public finances.
Just to expand on this comment in response to @julianHjessop, the #OBR has a poor forecasting record and it has acknowledged in its recent Risk Review that it has persistently under-forecast borrowing and debt levels by significant amounts.
Borrowing in Apr-Jun in this FY is 15pc above 24/5. 1f borrowing continues to run at same level relative to last year, it will exceed £170bn by year-end. OBR forecast avoids this result by projecting big improvement in 2nd half of FY but difficult to see where this comes from.
Book now for another great concert in Swansea from my good friend @malpope. Tickets now on sale!
Tickets are now on sale for my concert at @ArenaSwansea for 8th Oct. Last year's guest list was pretty phenomenal and this year promises to be just as special. @HyppoHydrogen @SwanseabayNHS Book now swansea-arena.co.uk/shows/mal-pope
More shocking borrowing figures for Rachel Reeves to digest. Deficit in June £6bn+ up on June last year, and up £7.5bn in fin year so far. Deficit for 25/6 heading for £170bn, 5.5-6pc of GDP, even higher than last year - totally unsustainable & over £50bn above #OBR forecast!
UK 10-year bond yields are the highest in the G7: 4.6-4.7pc vs 2.7-3.6pc in Ger/Fra/Ita/Can and 4.4pc in US. Asian economies even lower - 1.5-2.9pc in Jap,China & Korea. UK is paying the price for poor control of inflation and excessive spending & borrowing by the current gov’t.
Regulators like OFWAT, OFGEM, OFCOM, ORR should protect consumers from being ripped off by monopoly suppliers. They have totally failed. Price rises since 2020: Gas & elec 63pc; Post 58pc; Water 51pc; Rail fares 30pc; Telecoms 26pc. A colossal policy failure by all regulators.
Inflation Alert: Warning from Supermarkets and Grocers that UK food inflation is heading above 5 percent in the next few months. share.google/66cnvCpMDMS5Kt…
OFWAT scrapped after imposing 26pc rise in water prices. Of course, the rise in water prices will not be reversed. Just something else to be blamed on the previous gov’t!
As predicted, Ofwat scrapped, new “super OfWat” created. And shock horror our bills go up. 🙄😡👇 Water bills to rise by another 30% in next 5 years as Labour confirms regulator Ofwat will be SCRAPPED thesun.co.uk/news/35938484/…
OFWAT is being “abolished” + replaced by a new “super-regulator”. But who will be in charge of water regulation? 2 most recent chairs of OFWAT - Jonson Cox (2012-22) & Ian Coucher (since 2022) - have done a very poor job of regulating UK water companies. We need someone better.
UK public/policy establishment addicted to low interest rates. Hence calls from politicians + media for more interest rate cuts, despite inflation being too high and heading higher. #MPC should resist these populist views which will only fuel inflation & hamper economic growth.
Leading City economist argues against a rate cut in August. See comments from @Robwoodecon of @PantheonMacro. uk.finance.yahoo.com/news/bank-engl…
The UK’s economic and financial crisis is deepening. It is only a matter of time before a major meltdown - quite possibly this autumn.
ICYMI: Britain is drifting into what economists call fiscal dominance – the point at which the debt burden is so great, and the cost of servicing it so punishing, that neither monetary nor fiscal policy remains truly independent ✍️ @DamianPudner capx.co/britains-fisca…
The #BoE cannot take much comfort from today’s labour mkt data. Pay growth is still too high at 5pc and labour market “slack” has not increased enough to bring inflation back to target. No case for a fifth rate cut in August, or later this year.
UK inflation set to exceed 4pc in Sept and continue at 4-4.5pc until next Spring - see my latest forecast. Even by Jan 2027 price rises will be stuck around 3.5pc. #MPC should not be contemplating interest rate cuts in August or later this year & rate rises could soon be needed.
Despite today’s rise in unemployment, the full picture on jobs is much more positive. Emp rate for 16-64s has risen to 75.2pc, 0.1pc up on previous 3 months & 0.8pc up on year ago - highest for 2 years. Higher unemployment more than offset by fewer “inactive” people aged 16-64.
Has any other US President publicly undermined the Fed Chair in the way that Trump abuses Powell? It is quite shocking and totally unprofessional - but what we have come to expect from Trump,sadly.
Lots of concern about CPI inflation hitting 3.6pc today, highest since Jan 2024. Other inflation measures are even higher! RPI & GDP deflator = 4.4pc; RPIX=4.3pc; CPIH=4.1pc. Ave of of 10 key inflation measures just below 4pc. CPI inflation heading for 4pc plus later this year.
Also, the #BRC has warned that food inflation will reach 5pc by the end of the year. So there is more inflation to come from this direction in the months ahead.
📈 If you think today's rise in inflation is "unexpected", you weren't paying attention when @the_brc reported a 0.9% rise in grocery prices two weeks ago...
Good economists will tell you that if there is a combined monetary and fiscal stimulus in an economy at or close to “full employment”, higher inflation is the inevitable result. That is what we are now seeing here in the UK.