Mark Bathgate

Some context for the ongoing growth debate

Listening to Ed Miliband’s speech today, you’d be left with the impression that the UK is suffering a huge decline in government spending this year, and that this is to blame for most of our economic ills. The facts are a little different, as the below chart shows. The European Commission estimates that the UK

The gathering storm

The UK inflation rate again “surprised” to the upside today, registering at 1.5%. As the above chart shows, the UK now has by some margin the highest inflation rate in G7. Were it not for the temporary VAT cut – which takes about 1% off the current CPI rate – the rate would be moving

Bring on the serious economic debate

Why does Britain fall for financial spin so often? The question goes well beyond the great confidence trick of Gordon Brown’s ten years in the Treasury. I’m just back from three weeks in Australia. What’s always struck me in the years I’ve gone there is how different the newspapers/news shows/political debates are. They are well

Turbo-charged fiscal crises

The crisis in Greece shows just how quickly a fiscal crisis can blow up. Just two-and-a-half weeks ago, Greece was able to raise several billions in financing, with demand for almost 25 billion of their debt in an auction. The very next day, their bond market collapsed and the rout began. Just ten days later,

Why Osborne is getting it right on banking

Oh dear. After Massachussetts, it seems like the usual sneering about “populist” politicians, and about voters who aren’t happy with the bankers, is back.  So here are a few facts of life for those knocking people who think the banking sector could still do with a lot of fixing: 1) The financial performance of the

Three steps to cleaning up our toxic banks

Fraser outlined the problem with the British banks in his earlier post, but I’d like to suggest a three-step solution.   1. To deal with the problem, you have to admit to the problem. This is the First Step for Alcoholics Anonymous 12 step plan but holds true for politics. Say it out loud: the

Brown’s next worry: the Gilt markets

With inflation continuing to “surprise” on the upside, how long can the Bank of England keep justifying printing money? Now we learn that the Bank of England had printed £193.5 billion to finance government spending by the end of last week. So we are only four weeks to the next MPC meeting – but there

What happens when quantitative easing stops?

Where the Gilt market goes in coming months is going to be very important for the UK economy and politics. There is little history of countries being able to sustain deficits of the UK’s magnitude, for very long, without serious market problems. At the moment, we’re getting by thanks the sticking plaster approach of quantitative

Inflation nation<br />

The inflation surge is now upon us. The CPI rate again “surprised” to the upside – Britain is the only major economy in the world to have inflation doing this. But given that the Bank of England’s printing presses have been working overtime to fund a fiscally irresponsible government then little wonder things are different

The markets’ verdict on the PBR

The press didn’t like Darling’s budget – and neither do the markets. What Darling didn’t say yesterday is that the Treasury is looking to borrow £243 billion from the City by the end of the financial year – this info was slipped out by the debt management office (link here). Brother, can you spare a

How much more will Darling have to borrow?

The figure of £178 billion in the Budget – for 2009/10 – is by no means the full story. For that we have to turn to the Debt Management Office, which is in charge of flogging the IOU notes. It just now confirmed that it will need £223.3 billion by the end of this financial

Saving the world | 5 December 2009

The further revelations about the astonishing costs of the bank bailouts so far indicate just how much taxpayers’ money is now being used to plug the holes in the banking system.  A key cause of the bank crisis is explained by the above IMF graph, charting the decline of some of the trillions of AAA structured credit

Risky business | 3 December 2009

With the largest transfer of liabilities in British history – the insurance of the risk of loss on £240 billion of toxic RBS assets by taxpayers – proceeding, there is worryingly little information being given about either what these assets may be or what risks there are to the taxpayer. Rather than the parliamentary enquiry

Labour’s free for all

The potentially huge exposure of UK banks in Dubai, depreciating some UK bank share prices again this morning, is a reminder of just how much UK bank lending grew in recent years. The above chart shows the growth in external claims of the UK owned banks around the world over the past decade. The sums

Saving the world | 25 November 2009

Today’s revised GDP data confirms that the UK remained alone of the world’s major economies in recession in the third quarter of this year*. The fact that the UK remains mired in recession long after most economies have recovered makes clear how uniquely badly positioned the UK economy was to handle a downturn.  While some

Fatal inexperience

The Government debt mountain grew by a further £11.4billion in October. The UK now has one of the most expensive governments in the European Union – now materially above the Eurozone average and within touching distance of France and Sweden in spending above 50% of GDP.  Blaming large Government per se for economic problems is

The perfect storm

The UK debt crisis has three constituent parts – household, government and banking. The fact that households, government and banks all went on a debt binge at the same time makes the risks for the UK economy so unusual.  The European Commission is now estimating that total UK Government debt will rise above £1.3trillion by

Two elementary mistakes

The warnings from around the world about the scale of the UK’s government debt crisis keep flowing in. Following last week’s warnings from the IMF and European Commission about the scale of the UK debt crisis, credit rating agency Fitch has described the UK as the AAA country most vulnerable to a downgrade. The table