Governor Issues Warning ...
The Bank of England increased base rates by 25 basis points on Thursday. It could have been worse. Four members of the MPC voted for a 50 point increase.
Inflation is expected to peak at around 7.25% in April. The squeeze on incomes will be the most severe since Ed Conway was a lad. Post tax incomes are expected to drop by 2%.
Growth in the year is expected to slow to 3.75%. It gets worse next year, the growth rate drops to just over 1%.
The Governor is worried about the impact of energy costs. Households are in for a difficult period, he warned. Ofgem announced a huge 50% plus hike in the energy cap. The cap will rise by £693 to £1,971 in April.
He needn't have worried over much. Over in the House of Commons, Chancellor Rishi Sunak was explaining how the Treasury will help with household energy bills. National Insurance charges will go up. Council taxes will go down. Every household will be given £200 subsidy in September, to be paid back over four years.
It was difficult to know just what to watch on Thursday. The Chancellor in the House. The Governor in The Bank. Or the Sky News live count of special advisers leaving Downing Street.
To bolster up support on the back benches, more detail of the leveling up agenda was revealed. Michael Gove is to relocate to Wolverhampton. Andy Haldane, co-author of the report, explained the UK should be like Renaissance Florence. An emphasis on the discovery of new worlds perhaps, the government is accelerating the Medici income inequality gap to match the period, OK.
Leveling up will be great. If every area in the country moves above average, the income growth will just about enough to pay for the NHS. Our new report "Truly global Britain, leveling up, in a country that works for everyone, with a balanced economy and a march of the makers, not along the M20 because it's full of lorries stuck in traffic" will be out soon.
The Governor announced new tools to fight inflation ... The Governor announced new tools to fight inflation. Rising rates, the end of QE and a request to workers not to ask for a big pay increase. Andrew Bailey wants to see, "Clear Restraint" in the annual wage bargaining process. Ouch! Sharon Graham, the Gen Sec of Unite said "Why is it, every time there is a crisis, rich men ask ordinary people to pay for it".
It was a bit of an own goal. Number Ten played the offside rule. The Prime Minister's official spokesman said pay restraint was not something the Prime Minister was asking for. "We want a high wage, high growth economy and we want people's wages to increase". The Governor should butt out and stick to hiking rates.
Good to know policy makers are on the same page. The lack of documentation for industrial strategy and energy policy doesn't help. Sound bites and photo ops hardly the solution. Misleading statements on key stats compound the problem. The Prime Minister and Home Secretary were rebuked by the UK stats authority. It may be correct, "We are cutting crime by 14%" as long as fraud and computer crime are not included, small detail.
Priti Patel is still fuming, a demand to send our aircraft carrier to the Channel to bomb the migrant dinghies, refused by the Royal Navy. The ship with planes is currently on manoeuvres in the Baltic Sea, the Black Sea and the Taiwan Straits, bit stretched.
Over in Beijing China is hosting the Winter Olympics. An expression of peace, co-operation and friendship the theme. Western leaders are absent. Putin holds a starter pistol. A new gas contract in his pocket. Add no foreign policy to the missing documentation for government ...
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