Sack Andrew Bailey? Let’s look at the case against him

The Governor of the Bank of England, Andrew Bailey, is a loyal and well-intentioned public servant in a role that, by its nature, attracts constant blame and hindsight judgment. Liz Truss is a spectacularly failed 44-day prime minister with a book to sell. So when Truss says Bailey should have been sacked for his part in her downfall –when the Bank intervened to prevent a pension fund crisis after her chancellor Kwasi Kwarteng’s radical mini-Budget of September 2022 – and that he should be sacked anyway for being part of a Keynesian economic Establishment, with the Treasury and the Office for Budget Responsibility, that has delivered nothing but stagnation, my

Did Jeremy Hunt reduce inflation?

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Inflation has fallen to 3.4 per cent, it was announced this morning. Jeremy Hunt said it was a sign that the government’s economic plan is working. Is he right? Max Jeffery speaks to Katy Balls and Kate Andrews.

Javier Milei’s radical reforms could start to heal Argentina’s economy

Argentina has spent most of its 200-year history in deficit; no other country currently owes the International Monetary Fund a greater sum of money. The new finance minister, who entered government with President Javier Milei earlier this month, has been stark in making the point: ‘Out of the last 123 years, Argentina ran a fiscal deficit in 113… we have come to solve the addiction to fiscal deficits.’  Milei’s government is wasting little time carrying out what it calls ‘shock therapy’. The official value of the peso, Argentina’s currency, has been halved against the US dollar. Why might a government want to weaken its own currency, pushing up the price

Portrait of the Week: The Crooked House fire, Liz Truss’s honours and a Commonwealth Games flop

Home The first of about 500 asylum seekers were taken to live on the Bibby Stockholm barge on the Isle of Portland, north of the prison and linked to the mainland by one road. The arrival of 339 migrants by small boat across the Channel at the weekend brought the year’s total to 15,071. The government declared it would increase enforcement action against lawyers who ‘coach illegal migrants to lie’ in making claims. Fines were to be tripled for employers and landlords who allow illegal migrants to work for them (up to £45,000 per illegal worker for a first breach) or rent their properties, the Home Secretary announced. The 18th-century

Will Brits feel richer if inflation halves?

The government’s objective to ‘halve inflation’ by the end of the year seems to be back on track – for now. Last week’s interest rate hike was delivered with an updated inflation forecast from the Bank of England, showing the rate slowing to 4.7 per cent by the end of the year, just below Rishi Sunak’s target. The better-than-expected fall in the headline rate last month has forecasters thinking things are finally moving in the right direction. As Ross Clark reports on Coffee House, Capital Economics is expecting another major fall in the rate next week – down to 6.9 per cent on the year – when July’s figures are released.

Home truths: the crushing reality of the mortgage crisis

In December Jeremy Hunt hosted a mortgage summit, attended by lenders and the Financial Conduct Authority, to discuss rate woes. At the time, the numbers were at least moving in the right direction. During Liz Truss’s 49-day premiership, the FCA expected interest rates to rise to 5.5 per cent, an increase which was forecast to put 570,000 people into mortgage payment difficulty. Once Rishi Sunak and Hunt undid Truss’s mini-Budget, things looked calmer: a 4.5 per cent peak was expected, and 356,000 people were due to be in difficulty. Hunt was still struck by the figure. Horribly high, he thought. The Chancellor used the meeting to lay the foundation for

Portrait of the week: Boris locked out, mortgage misery and Titanic submarine search

Home Boris Johnson, the former prime minister, was ritually buried by the House of Commons voting by 354 to seven to approve the Privileges Committee report that found he had lied to parliament about observing coronavirus regulations. He would have been suspended for 90 days had he not left parliament; as it was, his pass to enter the Houses of Parliament was withdrawn. Rishi Sunak, the Prime Minister, having remembered an important long-standing engagement, was among 225 MPs who were absent or abstained. David Warburton, an MP who sat as a Conservative until last year, said he was leaving the House. In the King’s birthday honours, Sir John Bell, Ian

Brexit could fix inflation

Has food price inflation finally peaked? Figures released by the British Retail Consortium (BRC) this morning reveal that food prices were up 15.4 per cent in the past 12 months, down from 15.7 per cent in the year to April. Last week’s figures from the Office of National Statistics also showed a small fall, from 19.2 per cent in March to 19.1 per cent to April. The BRC’s methodology is different from the ONS’s, not only in that it tends to produce slightly lower figures but that it also runs slightly ahead. The inflation story has subtly changed, from being one led by energy prices to being dominated by food

Is it time for the £100 note?

Thanks to the recent spike in inflation, never have indisputable luxuries such as Sharwood’s mango chutney or Anchor butter quite so tested the domestic purse strings. The sad truth is, however, that it’s much worse than you think. Because unlike the watched kettle, the frog of devaluation hasn’t just arrived at a nice simmer, it’s begun to boil over. And mango chutney at £4.10 a jar is but the tip of the iceberg. For the long view consider the BBC’s new drama, Ten Pound Poms, about Brits who emigrated to Australia in the 1950s for the princely sum of a £10 processing fee. These days the closest you’ll get to

Portrait of the week: Rioting in Cardiff, rising migration and falling inflation

Home A crash in which a 15- and a 16-year-old boy riding on an electric bike were killed led to rioting, the burning of cars and attacks on police in the Ely estate in Cardiff; social media had said the deaths followed a police chase, which the police denied. But video evidence seemed to show a chase. During the riot, one of the boys’ mothers posted a Facebook message: ‘Please I beg you all to stop and let my son be moved to hospital so I can see him.’ A woman hit on 10 May by a police motorcycle escorting the Duchess of Edinburgh died. Rishi Sunak, the Prime Minister,

What crisis? A tough week for Trussonomics

What’s the sign of a successful Budget? Chris Philp, the new chief secretary to the Treasury, gave his answer moments after Chancellor Kwasi Kwarteng’s statement last Friday: a strong pound. ‘Great to see sterling strengthening on the back of the new UK growth plan,’ he tweeted out. A (temporary) rising pound made sense to Truss supporters, who argued that markets would support their transition to a lower-tax, higher-growth economy. This was, they thought, their vindicating moment. The moment didn’t last. Within minutes, the pound had entered a steep descent and UK borrowing costs surged. But Kwarteng is not a politician who panics. Instead of staying in the office and trying

Can the Bank of England inspire confidence?

It has dawned on the government that last week’s mini-Budget might have been a bit too one-sided: £70 billion worth of extra borrowing and not a single mention of spending cuts or efficiency gains has seen borrowing costs spike (up by 0.3 per cent just today). As James Forsyth reports on Coffee House, this afternoon’s announcement that a ‘medium term fiscal plan’ will be announced next month is an attempt by the Treasury to reassure markets – and convince them that fiscal responsibility has not totally disappeared from this government’s agenda. Emphasis is being placed on previous promises to make sure debt falls as a percentage of GDP in the

Why the interest rate rise might frustrate Liz Truss

Rising interest rates is a key pillar of Trussonomics. Liz Truss herself has always stopped short of saying this explicitly, pointing fingers instead at the Bank of England for its failure to curb spiralling inflation. But the economists advising her have made clear, in no uncertain terms, that they think interest rates have been too low for too long.  Right from the start of her leadership campaign, Truss was far more vocal about her criticisms of the Bank; a point made even clearer once she entered No. 10 and her Chancellor Kwasi Kwarteng set up bi-weekly meetings with the Bank’s governor Andrew Bailey. With this new pressure being applied on the

The painful road to lower inflation

In the end, it could have been worse. The Federal Reserve might have followed Sweden’s lead, with a whole one point rise in interest rates, or it could have even decided to short-circuit the whole process and go straight for a 1.5 per cent increase. Instead, it opted for the safer course, imposing a 0.75 per cent increase in rates much as the market expected. Even so, it made one thing absolutely clear. It is not going to let up in its battle to bring inflation back under control – and the rest of the world will have no option but to follow its lead. The markets were primed for

Has inflation peaked?

This morning’s surprise update from the Office for National Statistics shows headline inflation at 9.9 per cent on the year to August, down slightly from 10.1 per cent in July. While consumer inflation remains at a 40-year high, the drop from double digits back into single digits has the optimists whispering: might inflation have peaked? This update is no doubt good news, but this is likely to be a brief moment of calm in an ongoing storm. The slight fall in headline inflation has primarily been driven by easing fuel prices, as the cost of oil has been on a downwards trajectory. That at least is an early sign that global markets

Can anything halt the pound’s fall?

My predecessor Christopher Fildes looked at exchange rates through a cocktail glass: three negronis for the Italian lira equivalent of a tenner, good; a $2 martini for £1, even better. That latter ratio applied briefly 30 years ago when, he wrote, the favoured tipple ‘brushed against my lips like an angel’s kiss’. It recurred during the financial crisis of 2007-08, when no one was really able to enjoy it, and has never been seen since. On Monday, as Liz Truss was crowned, the pound dipped below $1.15, in sight of its 1985 all-time low of $1.05. ‘The prospect of …parity versus the dollar,’ said Bloomberg, ‘is becoming ever less outlandish.’

Trussonomics: a beginner’s guide

When polls started to show Liz Truss miles ahead of Rishi Sunak in the Tory leadership contest, her team adopted a cautious campaign strategy. Why gamble on another interview with Nick Robinson when last time she had struggled to name a single economist who backed her economic plans? Eventually she landed on Professor Patrick Minford, an academic at Cardiff Business School and a bullish Brexiteer. Minford went on the record calling for interest rates to rise to 7 per cent, which Truss then had to defend and deflect. But that moment in the Robinson interview, widely reported as a humiliation, turned out to be one of the most helpful points

Portrait of the week: Drought in Europe, property crisis in China and barristers and binmen strike

Home Inflation would reach 18.6 per cent by January and the energy price cap £5,816 in April, according to a forecast by Citi, the investment bank. An annual National Grid exercise simulating a gas supply emergency has been extended from two days to four in September. Workers at Felixstowe, Suffolk, Britain’s biggest container port, handling 48 per cent of traffic, went on strike for eight days. Strikes by Scottish dustmen spread from Edinburgh. Barristers belonging to the Criminal Bar Association voted to go on an indefinite strike in England and Wales after their demand for a 25 per cent increase in pay for legal aid work was denied. A man

Inflation hits double digits. Is it out of control?

Long gone are the days when politicians and experts dared to claim inflation was simply ‘transitory’. Now it’s hang-on-to-your-hats as prices spiral faster than anyone predicted. This morning the Office for National Statistics reveals that headline CPI inflation hit 10.1 per cent on the year in July. This double-digit figure takes inflation to a 40-year high, outpacing consensus yet again, which was 9.8 per cent. That figure means all those horrors that have been discussed for months have become more immediate: the instability that comes with spiralling prices, the risk of stagflation, increasing fears of recession as consumers grow more cautious, not to mention the very real fear that people

The death of saving

I was intrigued to learn from Tom Daley – that young man who became famous for jumping off a platform into some water – that homophobia is a ‘legacy of colonialism’. The Ugandan President, Yoweri Museveni, begs to differ. He believes that it is homosexuality which is a legacy of colonialism and had been brought to his benighted country by effete whitey – and so he may well think Tom is indulging in the disagreeable act of ‘whitesplaining’. However, it is possible, if not likely, that both Tom and Yoweri are correct – after all, it is difficult to be homophobic if you have around you a complete absence of