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How can the UK ever reduce its electricity prices? | Notayesmanseconomics's Blog
This morning has brought news that in many ways I consider to be welcome. Scottish wind farms were paid not to produce 37 per cent of their planned output during the first half of this year, as the electricity could not be used locally or moved to where it was needed. ( Financial Times) Not…
Bank of England Governor Andrew Bailey struggles to get his interest-rate cut | Notayesmanseconomics's Blog
Yesterday turned into quite an interesting day at the Bank of England with several implications for the future. On the surface we got what had been signaled by Governor Andrew Bailey on July 14th. The Bank of England is ready to make larger cuts to interest rates if the jobs market shows signs of a…
As the Bank of England gets ready to cut interest-rates this week will it also hint at a reduction in the rate of QT? | Notayesmanseconomics's Blog
Later this week the Bank of England will announce its latest decision on interest-rates as it meets and votes on Wednesday and announces that decision at midday on Thursday. Some food for thought was giving to it by the US employment report on Friday which went as follows. Total nonfarm payroll employment changed little in…
Has UK Chancellor Rachel Reeves created two “Black Holes” in the UK Public Finances? | Notayesmanseconomics's Blog
Today the economic agenda in the UK has been set by the National Institute for Economic and Social Research which has released this. The Government is not on track to meet its ‘stability rule’, with our forecast suggesting a current deficit of £41.2 billion in the fiscal year 2029-30. Substantial adjustments in the Autumn Budget…
Has China devalued its way to higher exports? | Notayesmanseconomics's Blog
It is time again for us to look East and we can start the main driver of these times which is trade. Here is the Financial Times on this morning's figures. China’s exports rose faster than expected last month, official data showed, ahead of the expiry next week of a tariff truce with the US…
What have the Swiss done to upset President Trump? | Notayesmanseconomics's Blog
It is in fact past time for taking a look at the Swiss economy and a particular trigger for looking at it comes from this. Late on Thursday, Keller-Sutter held a “disastrous” phone call with Donald Trump, according to multiple people familiar with the situation. The 30-minute conversation capped more than three months and hundreds…
What are the economic effects of the Trump Tariffs so far? | Notayesmanseconomics's Blog
Today we advance on the next stage of the Trump Tariff era. So we have a take two if you prefer after the excitement of April. One thing we can start with is human psychology because whilst equity markets are lower with the UK FTSE 100 some 0.7% lower that is a minor move compared…
Euro area GDP has been flattered by a French inventory surge | Notayesmanseconomics's Blog
This morning has brought rather a barrage of economic data from the biggest economies in the Euro area. Let us step back a day both for a full series and also because we can start with some good news. GDP registered a 0.7% change in volume terms in the second quarter compared to the previous…
In an odd twist the Bank of Japan should be supporting the Trump push for lower US interest-rates | Notayesmanseconomics's Blog
Last night and this morning have brought a lot of news on the future path of interest-rates as we have heard from the United States and Japan in that order. The evening before the US announcement ( but after the meeting had started) I pointed out this on social media.. Interesting move by the US…
UK food price inflation is creating quite a headache for the plans of the Bank of England | Notayesmanseconomics's Blog
This morning opened with some disappointing news for the research student whose turn it was to present the Bank of England morning meeting. Shop price inflation increased to 0.7% year on year in July, against growth of 0.4% in June. This is above the 3-month average of 0.3%. ( British Retail Consortium or BRC) With…
Will the Bank of England choose output or inflation next month? | Notayesmanseconomics's Blog
This morning has brought us up to date with the latest news on the UK economy and we have a welcome piece of positive news. Retail sales volumes (quantity bought) are estimated to have risen by 0.9% in June 2025, following a fall of 2.8% in May 2025 (revised down from a fall of 2.7%…
Will the ECB cut interest-rates now the European Union has a trade deal with the US? | Notayesmanseconomics's Blog
The last few days have seen quite a few pieces of economic news out of the Euro area. We can start with the latest last night from the meeting between President Trump and European Commission President Ursula Von der Leyen. We have stabilised on a single 15% tariff rate for the vast majority of EU…
Why are stock markets hitting new all-time highs? | Notayesmanseconomics's Blog
Today I thought I would look at an issue which frankly has been almost relentless over recent days. We can start with the United States as it is by far the largest stock market and in that sense is Gangster Number One. Earlier on Wednesday, the S&P 500 added 0.78% to hit its 12th record close of…
The UK borrows another “Black Hole” in June | Notayesmanseconomics's Blog
This morning has brought the release of the latest numbers for the UK Public Finances. Borrowing - the difference between total public sector spending and income - was £20.7 billion in June 2025; this was £6.6 billion more than in June 2024 and the second-highest June borrowing since monthly records began in 1993, after that of…
Japan is facing an economic crisis caused by high inflation and bond yields | Notayesmanseconomics's Blog
Japan is about to have an election and to my mind much of the apparent dissent comes from this reality. The headline inflation rate in the country dropped to 3.3%, coming down from 3.5% in May, but marking the 39th straight month that inflation has run above the Bank of Japan’s 2% target. ( CNBC)…
UK Unemployment rises again as the labour market weakens | Notayesmanseconomics's Blog
This morning has brought more disappointing news from the UK economy and this time from the labour market. The UK unemployment rate for people aged 16 years and over was estimated at 4.7% in March to May 2025. This is above estimates of a year ago, and up in the latest quarter. The Office for…
Can anybody think why the Governor of the Bank of England misled Parliament over the UK Bond market yesterday? | Notayesmanseconomics's Blog
Yesterday the Governor of the Bank of England was interviewed by the Treasury Select Committee of HM Parliament. The session was set up like this. MPs may seek to understand the FPC’s view of plans for fast-paced deregulation in financial services, as the Treasury continues to push forward proposals to cut red tape. MPs on…
The UK electricity supply is in trouble as opposed to the claims of being a green energy superpower | Notayesmanseconomics's Blog
We are increasingly being reminded that past economic growth was reliant on cheaper energy. In the UK that is a particular issue as electricity prices soared but have not fallen back much. The official claim is that this is due to the high price of gas which has two main problems. Why are electricity prices…
The UK continues to be in a cost of living crisis | Notayesmanseconomics's Blog
This morning has brought more disappointing news for the UK on the inflation front. The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to June 2025, up from 3.4% in the 12 months to May. As this is the measure targeted by the Bank of England it means that Governor Andrew Bailey…
How long will countries accept the deflation being exported by China? | Notayesmanseconomics's Blog
Today it is time to look East again as we have received the official data on economic growth in the first half of the year. At the moment in addition to our long-running theme on the bursting of the property market bubble we have the first period under the new Trump Tariffs. As ever the…
What can we expect from the UK Mansion House speeches tomorrow? | Notayesmanseconomics's Blog
This week brings one of the set piece events in British economic life when both Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey speak at Mansion House in the City of London. As the Chancellor has obviously been talking to the Financial Times about it let us take a look. Chancellor Rachel Reeves…
The second quarter of 2025 has started badly for the UK economy | Notayesmanseconomics's Blog
This morning has brought some more disappointing news for the UK economy via the latest monthly economic growth release. Monthly real gross domestic product (GDP) is estimated to have fallen by 0.1% in May 2025, following an unrevised fall of 0.3% in April 2025. On its own a 0.1% decline may not be that significant…
The UK turns towards yet more house price pumping | Notayesmanseconomics's Blog
There are some certainties in life beyond death and taxes and one of them is the British state's enthusiasm for house price pumping. Let me hand you over to the Financial Stability Report from the Bank of England. The FPC discussed the current operation of its LTI flow limit, building on its deliberations in Q1.…
Chinese investors are taking quite a risk with their investments in bank shares | Notayesmanseconomics's Blog
I thought that today I would start my analysis by looking at a consequence rather than a cause, partly because it is awfully familiar to those of us in the Western world. Yesterday I spotted this in the Financial Times. Chinese investors are driving a sharp rally in mainland bank stocks listed in Hong Kong,…
The UK Public Finances are “relatively vulnerable” and “daunting” according to the OBR | Notayesmanseconomics's Blog
This week is another one where the UK Public Finances are again in focus. Today in particular with the publication of the latest forecasts from the Office for Budget Responsibility or OBR. But already we find ourselves singing along with Glenn Frey. The heat is onOn the streetInside your headOn every beat. The reason for…
Why is UK government so incompetent and spendthrift? | Notayesmanseconomics's Blog
These days we find ourselves in a situation where governments spend ever more - my updates on the public finances show expansionary fiscal policies - but there is a large amount of dissatisfaction with the services provided. As an initial point I will start with potholes in the roads partly because the roads near me…
More Eurobonds and joint borrowing look to be on the cards | Notayesmanseconomics's Blog
Recently there have been developments in a topic that has become something of a hardy perennial over the years. That is the issue of joint bonds for the Euro area which traditionally has been opposed by the fiscally conservative ( German bloc) and supported by those with weaker fiscal positions. If we look back to…
The UK bond market posts a warning to the Chancellor and Bank of England | Notayesmanseconomics's Blog
Yesterday was quite a day in my old stomping ground. For many years I worked in the UK bond ( Gilt) futures market, usually in the options pit. Things started quietly but those who follow my work will know that there has been a succession of signs of trouble for it. What I mean by…
The Tokyo Whale has captured the Bank of Japan | Notayesmanseconomics's Blog
Sometimes when a central bank holds an event other news can slip by mostly unnoticed. But after all the years of looking at the activities of The Tokyo Whale this attracted my attention. BoJ’s Masu: My Stance Is Neither Hawkish Nor Dovish - BoJ Must Unload Its Huge ETF Holdings At Some Point - Given…
The UK economy has had a disappointing start to the week | Notayesmanseconomics's Blog
Sometimes the economic evidence and changes come thick and fast. One we will see today is something that follows on from my article on the 27th of May when I pointed out that the UK government has lost control of spending and thus fiscal policy. As it ends up making ever more concessions on one…
The ECB finally agrees that owner-occupied housing costs need to be in its inflation measure | Notayesmanseconomics's Blog
Today the ECB starts its annual works holiday to Sintra in Portugal. After all someone has to drink that wine and eat the fine food. Perhaps they will also find the time to tell others not to travel as it contributes to climate change. Switching back to economics one context that will please them is…
Has the Governor of the Bank of England already forgotten the letter he wrote to the Chancellor last week? | Notayesmanseconomics's Blog
Yesterday the Governor of the Bank of England spoke at the British Chamber of Commerce. We got a hint of what was coming as he opened with this. Elevated global uncertainty affects UK businesses too. We have heard that clearly through the Bank’s Agents – and I have heard it when I talk to business…
Should the Reserve Bank of Australia cut interest-rates further? | Notayesmanseconomics's Blog
It is time again for us to take a trip down under as whilst so much attention has been on the Middle-East there is rather a debate going on in Australia. Let us get straight to it. Investing.com-- Westpac economists on Thursday said they now expect the Reserve Bank of Australia (RBA) to cut interest…
Why did an extra Dove Cry at the Bank of England last week? | Notayesmanseconomics's Blog
Last week saw a change in the pattern of voting for interest-rate cuts at the Bank of England and today we can look at why this was? The change was an additional member voting for a cut in addition to Professor Alan Taylor and Swati Dhingra. The latter two are the equivalent of the nominees…
Pressure is building on the US Federal Reserve for interest-rate cuts | Notayesmanseconomics's Blog
These are indeed volatile times as it appears even ceasefires are nor what they used to be. As we stand there is now a ceasefire between Iran and Israel although there also seem to be missiles on their way to Israel! But the link between that and the economic issue today is President Trump who…
Where can the Euro area find some economic growth? | Notayesmanseconomics's Blog
The latest economic news from the Euro area reminds me of a long-running theme for it. “The eurozone economy is struggling to gain momentum. For six months now, growth has been minimal, with activity in the service sector stagnating and manufacturing output rising only moderately." Those first eight words could have been repeated time and…
The UK economy is showing more signs of struggling as borrowing rises | Notayesmanseconomics's Blog
This morning has brought some disappointing economic news for the UK. Retail sales volumes (quantity bought) are estimated to have fallen by 2.7% in May 2025, following a rise of 1.3% in April 2025 (revised up from a rise of 1.2% in our last bulletin). That is quite a lurch lower and comes on the…
Lower UK house prices will alarm the Bank of England | Notayesmanseconomics's Blog
Today is Bank of England day or rather announcement day as they voted on interest-rates last night. I am expected an unchanged at 4.25% announcement so let is look ahead because we have seen news over the past 24 hours which will focus their minds. The first part came at 9:30 am yesterday. Average UK…
UK food prices surge in May | Notayesmanseconomics's Blog
Today has seen the release of the official UK inflation data and one of my themes simply leapt off the page. The downward contributions from other divisions were partially offset by an upward effect from food and non-alcoholic beverages, where prices rose by 4.4% in the 12 months to May 2025, up from 3.4% in…
The Tokyo Whale is hoping that you will not spot it is losing a fortune | Notayesmanseconomics's Blog
It is time again to look East to Nihon to examine the news from the Bank of Japan.Plus an update on its hedge fund The Tokyo Whale. Let us start with what for us at least is the easy bit. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5 percent.…