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The trajectory for the UK Public Finances is a cause for concern | Notayesmanseconomics's Blog
This morning has brought us up to date on an area that is an increasing concern for the UK which is the level of public-sector borrowing. This is on several levels. Firstly we had all the Covid era borrowing which at the time was juiced by the Bank of England as it drove UK bond…
The path for interest-rates in 2025 was raised quite a bit by the Federal Reserve last night | Notayesmanseconomics's Blog
Last night or evening if you prefer saw rather a change in expected policy from the US Federal Reserve and it immediately echoed around financial markets. Indian rupee falls to a record low of 85 per US dollar ( @business) Brazilian Real plunges to its weakest level against the U.S. Dollar in history. ( @barchart)…
The prospects for UK inflation will give the Bank of England food for thought when it votes on interest-rates later today | Notayesmanseconomics's Blog
This morning has brought some disappointing news for the UK on the inflation front. The Consumer Prices Index (CPI) rose by 2.6% in the 12 months to November 2024, up from 2.3% in the 12 months to October. We can start with the Bank of England which targets this measure and will be voting on…
UK Real Wages are regaining some of the losses from the cost of living crisis | Notayesmanseconomics's Blog
This morning has brought us up to date on the latest official UK labour market figures and there is one component at least sending a seasonal message. Annual growth in employees’ average earnings for both regular (excluding bonuses) and total earnings (including bonuses) in Great Britain was 5.2% in August to October 2024. That is…
ECB President Lagarde tells Lithuania that 22.5% inflation was an example of “unity in the face of a more volatile world,” | Notayesmanseconomics's Blog
This morning has opened with economic news from the Euro area. That is in addition to the indirect news of disappointing retail sales from China which is not hopeful for Euro area exports. We can start with the words of ECB President Christine Lagarde who has been speaking in Vilnius Lithuania. ECB’s Lagarde says ‘darkest…
UK GDP contracts for two months in a row as a wind drought highlights the energy policy crisis | Notayesmanseconomics's Blog
The UK economy had a good first half to 2024, bit since then the economic clouds have begun to gather. First we saw GDP growth fall to a relative crawl in the third quarter of the year and this morning we have received this update. Monthly real gross domestic product (GDP) is estimated to have…
It is the season for 0.5% interest-rate cuts | Notayesmanseconomics's Blog
The last 24 hours have brought quite a dash on the interest-rate front. That is before we get to the European Central Bank at lunchtime which is presumably have second thoughts. Let me explain why via this morning's action. The Swiss National Bank is lowering the SNB policy rate by 0.5 percentage points to 0.5%.…
The economy of Argentina has hopes for better times in 2025 | Notayesmanseconomics's Blog
It is time to take a look again at what is happening in Argentina and its economic and monetary experiment. We can start with this from its central bank last week. The Board of Directors of the Central Bank of the Argentine Republic (BCRA) decided to reduce the monetary policy rate from 35% to 32%…
Even the UK’s statisticians are being forced to admit I was right about house prices,affordability and inflation | Notayesmanseconomics's Blog
Yesterday there was rather a shift from the UK's official statisticians as they found themselves confessing to a central tenet and perhaps the central tenet of my work. That is after around 12 years of not only denial of it but also formally pushing inflation measures that include fantasy numbers, because that is what imputed…
The economy of China with so little inflation and emphasis on exports during a property slump looks rather like Japan | Notayesmanseconomics's Blog
This morning has brought us a new phase in the economic slow down affecting China. So let us start with the latest data which is on inflation. From the National Bureau of Statistics. In November 2024 , the national consumer price index rose by 0.2% year-on - year . Among them, the urban price rose by 0.1% and the rural price rose…
Why did higher interest and mortgage rates not cause UK and US house prices to fall? | Notayesmanseconomics's Blog
This morning has brought news which has reminded me of a question that some of you have asked so let me start with the news. It will have meant that the research student presenting the morning meeting at the Bank of England will be in good humour and have a skip in their step. “UK…
ECB President Lagarde wants control over your savings | Notayesmanseconomics's Blog
This is a rough period for the Euro area and some of that is symbolised by this from ECB President Christine Lagarde at the Monetary Dialogue at the European Parliament yesterday. "We saw moderate growth in the first half of 24 following,I remind you,5 quarters of stagnation.Real GDP growth was largely driven by export &…
The Bank of England joins the central banks promising interest-rate cuts | Notayesmanseconomics's Blog
Today has seen quite a few of my themes in action and along the way we see that the recent theme of central banks promising interest-rate cuts has an extra member. The Bank of England expects four interest rate cuts next year if its outlook for the UK economy bears out, Andrew Bailey said on…
Why is the US Federal Reserve hinting at cuts to interest-rates later this month? | Notayesmanseconomics's Blog
This has been a rather extraordinary year for interest-rate expectations. We came into the year with expectations having been fed by the US central bank. The quotes below come from the 14th of December last year. So we moved onto expectations of them cutting interest-rate next year and in fact there was even more. Officials…
The problems underlying the crisis in France are lack of economic growth and higher debt costs | Notayesmanseconomics's Blog
Over the weekend the pace rather picked up on the issue of the French Budget. The situation yesterday was this. PARIS, Dec 1 (Reuters) - France's far right National Rally (RN) leaders said on Sunday that the government had rebuffed its calls for more budget concessions, raising the chances of a no confidence vote in…
UK money supply growth suggests the window for interest-rate cuts may soon close | Notayesmanseconomics's Blog
This morning has brought some better news for the Bank of England and indeed the UK government. The likely appointment of Scott Bessent as US Treasury Secretary has been followed by a fall in US bond yields. Thus what we might call a fair following wind has brought the UK ten-year yield back to 4.3%…
ECB President Lagarde has a tenure littered with policy errors and U-Turns | Notayesmanseconomics's Blog
This morning the economic news is coming from the European Union and we can start with an interview with the Financial Times by ECB President Christine Lagarde. As ever she seems to be in rather a muddle. President-elect Donald Trump has clearly announced last week the magnitude of tariffs that he has in mind: 60%…
What can we expect next from Bitcoin? | Notayesmanseconomics's Blog
The issue of Bitcoin is something that is not going away even if the central banks wish it would. They would far prefer a world of central bank digital coins where they would have control and in particular the ability to impose even more negative interest-rates in the next recession. But before we get to…
Trump 2.0 starts with a bang with proposed Tariffs on Canada, China and Mexico | Notayesmanseconomics's Blog
This morning the economic news is dominated by an overnight announcement from President elect Trump as he announces some initial plans for 2.0. As you can see below it is Trump Tariff time. Donald Trump has said he intends to levy tariffs of 25 per cent on all US imports from Canada and Mexico, and…
Three of the four Deputy Governors at the Bank of England come from HM Treasury | Notayesmanseconomics's Blog
Today gives us an opportunity to look at Bank of England policy and which path it will take between the two choices ahead? These are to follow the US Federal Reserve with limited rate cuts or to follow the European Central Bank with more of them. Next month we could see no cut from the…
Germany is in an economic depression due to its reliance on renewable energy | Notayesmanseconomics's Blog
This morning has seen a selection of poor economic news in Europe and the UK. If not quite toxic rather unpalatable and let me start with something that I marked you cards about back when the original Germany GDP report was released. Gross domestic product (GDP) rose by 0.1% in the third quarter of 2024…
UK public-sector borrowing continues to reflect the fiscal profligacy of our political class | Notayesmanseconomics's Blog
This morning has brought us up to date on a UK number that has acquired increased importance after the recent Budget by Chancellor Rachel Reeves. She intends to increase borrowing and we know that such a move is on top of what was an already fiscally profligate position. In spite of the fact that we…
The rise in UK inflation is uncomfortable for a government which plans to raise it further | Notayesmanseconomics's Blog
This morning has brought some predictable but none the less disappointing news for the UK on the inflation front. Let us start our analysis with the measure that the Bank of England targets. The Consumer Prices Index (CPI) rose by 2.3% in the 12 months to October 2024, up from 1.7% in September. On a…
Japan is seeing labour shortages as its population shrinks but still real wages have fallen | Notayesmanseconomics's Blog
This morning has brought an intriguing development in Japan as we have seen the Japanese Yen rally very sharply from 154.60 to 153.60. The move was like there had been some intervention if we look at the speed and size of it. I doubt that there was explicit intervention but perhaps bodies close to the…
The ECB plans to double down on the policies which have stagnated the Euro area economy | Notayesmanseconomics's Blog
Today sees quite a raft of speakers from the ECB and we have seen two already this morning as they rush to pit their point of view forwards. They can in one sense be positive after this was released last week. In the third quarter of 2024, seasonally adjusted GDP increased by 0.4% in the euro…
UK GDP Growth Disappoints as September Shrinks | Notayesmanseconomics's Blog
This morning has brought some disappointing economic news for the UK. The relatively strong economic growth seen in the first half of 2024 has faded to this. UK gross domestic product (GDP) is estimated to have increased by 0.1% in Quarter 3 (July to Sept) 2024, following growth of 0.5% in Quarter 2 (Apr to…
Chancellor Rachel Reeves will give her Mansion House speech to a back drop of financial market pressures | Notayesmanseconomics's Blog
Today is Mansion House day when the Chancellor in this instance Rachel Reeves gives a keynote financial speech setting out plans for the future.Sometimes the Governor of the Bank of England does so to as I recall former Governor Mark Carney solidifying his reputation as the "unreliable boyfriend" by what he said. These days he…
Yet again we see the prospect of interest-rate cuts in the US disappearing | Notayesmanseconomics's Blog
2024 so far has been a story of interest-rate cuts being some combination of being hinted at and promised and then disappearing as if they had been a mirage, at least in the United States. Yesterday focused investors minds on the danger of that happening again next month. A factor in this came at a…
Is the rise in UK Unemployment a blip or a new trend? | Notayesmanseconomics's Blog
This morning has brought us up to date on the official view on the UK labour market. Whilst there are some good parts there are also some which are more of a mixed bag. Plus we should recall that the data itself is more uncertain these days or as it if officially put. Increased volatility…
China has unveiled a disappointing economic stimulus giving an echo of The Lost Decade | Notayesmanseconomics's Blog
The economic week has started with us again looking East to China as we received on Friday news about the stimulus programme that was announced at the end of September. China has announced a Rmb10tn ($1.4tn) fiscal package to bail out local governments and help shore up its faltering economy, as it braces for increased…
Bank of England Governor Andrew Bailey probably cannot believe his luck | Notayesmanseconomics's Blog
We are in a phase where economic news has picked up and in particular there is much going on in my home country the UK. We can start with an example of that from the Bank of England yesterday. At its meeting ending on 6 November 2024, the MPC voted by a majority of 8–1…
Sweden slashes interest-rates by 0.5% | Notayesmanseconomics's Blog
This morning we have witnessed what is a rare event. That is we have seen an example of Forward Guidance from a central bank being proven to be correct. Admittedly it is for a cut which they are always more enthusiastic about but none the less the world's oldest central bank has backed up talk…
What are the economic consequences of a victory for President Trump? | Notayesmanseconomics's Blog
This morning we in the UK have woken up to the expectation of a second Presidential term for The Donald as he has 267 of the required 270 electoral college votes as I type this. Along the way it has been a bad election for the MSM as they have pushed the idea of it…
What does the Bank of England do now on interest-rates? | Notayesmanseconomics's Blog
Later on tomorrow the Bank of England will vote on what to do with interest-rates. It finds itself in a slightly awkward position in terms of timing in that it will be voting 24 hours before we find out what the US Federal Reserve has done. In terms of the Bank of England's announcement on…
What is the state of the US economy ahead of the election and Federal Reserve meeting? | Notayesmanseconomics's Blog
This week will bring two big pieces of news from the worlds largest economy. First we will have the Presidential election and then we will have the latest decision on interest-rates from the Federal Reserve. The latter is something that we have been debating throughout 2024 as we opened it with Federal Reserve Chair Jerome…
How much can we trust official statistics? | Notayesmanseconomics's Blog
I thought that I would finish the week by looking at a subject I would prefer did not exist. Regular readers will be aware that I have a rule that I accept official numbers until there are really good reasons to challenge them. Sadly that is happening more and more often which should not be…
What are the economic consequences of the UK Budget? | Notayesmanseconomics's Blog
Yesterday was always going to be both a set piece event and a significant one as we had the first Labour Budget for many years. If I may start with my old stomping ground of the UK government bond market there was something that was familiar. Back in the days of Gordon Brown as Chancellor…
Germany returns to economic growth (if you believe the GDP figures) | Notayesmanseconomics's Blog
This morning I think we have seen something of a swerve from the German statistics office. It starts with an announcement that looks rather positive in the circumstances. WIESBADEN – Gross domestic product (GDP) grew by 0.2% in the third quarter of 2024 compared to the second quarter of 2024 – adjusted for price, seasonal…
What are the economic prospects for the UK ahead of the Budget? | Notayesmanseconomics's Blog
We can start today's look at the UK economic situation with some good news. We have seen a further fall in shop prices according to the British Retail Consortium. October saw shop prices fall marginally further into deflation for the third consecutive month. Food inflation eased, particularly for meat, fish and tea as well as…
The Japanese Yen is under a lot of pressure again | Notayesmanseconomics's Blog
There is only one place for us to start the week and it is one where the Rishi Sunak award for calling an early election has been handed out. The LDP and Komeito fell well short of the 233 seats required for a majority, meaning Prime Minister Shigeru Ishiba must find more supporters if he is…