Macroeconomics, the economy, inflation etc. *likely to be very dull*

briantrumpet

kingstongraham said:

https://www.telegraph.co.uk/business/2023/01/20/strikers-home-workers-blame-britains-sky-high-inflation/

Strikers and home workers are to blame for Britain’s sky-high inflation

British workers now seem to regard loafing around in their pyjamas (or working from home, as it is officially known) as a divine right

Astonishing revelations.

If I didn't know better, it's almost as if they started with the target of those workshy woke snowflake WFH Labour-voting workers, and found a way to blame them for inflation.

Obviously the WFH Cakestoppers aren't workshy or to blame for inflation.

I wonder how many Telegraph writers work from home...

rjsterry

kingstongraham said:

https://www.telegraph.co.uk/business/2023/01/20/strikers-home-workers-blame-britains-sky-high-inflation/

Strikers and home workers are to blame for Britain’s sky-high inflation

British workers now seem to regard loafing around in their pyjamas (or working from home, as it is officially known) as a divine right

Astonishing revelations.

Bet he wrote that at home.

kingstongraham

The USA doesn't have WFH, and France doesn't have strikes.

rjsterry

The Telegraph's continuing quest to out-stupid the Guardian's Comment is Free section.

kingstongraham

rjsterry said:

The Telegraph's continuing quest to out-stupid the Guardian's Comment is Free section.

Whoever writes the headlines really hates Britain.

https://www.telegraph.co.uk/news/2023/01/21/sir-andy-murray-puts-work-shy-britain-shame/

pblakeney

kingstongraham said:

rjsterry said:

The Telegraph's continuing quest to out-stupid the Guardian's Comment is Free section.

Whoever writes the headlines really hates Britain.

https://www.telegraph.co.uk/news/2023/01/21/sir-andy-murray-puts-work-shy-britain-shame/

Quite the analogy.
Slog your guts out and ultimately lose to the non-Brit. 😉

kingstongraham

pblakeney said:

kingstongraham said:

rjsterry said:

The Telegraph's continuing quest to out-stupid the Guardian's Comment is Free section.

Whoever writes the headlines really hates Britain.

https://www.telegraph.co.uk/news/2023/01/21/sir-andy-murray-puts-work-shy-britain-shame/

Quite the analogy.
Slog your guts out and ultimately lose to the non-Brit. 😉

It's a purely positive article, with a hateful headline. If I was the journo, I'd be very annoyed.

surrey_commuter

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

wallace_and_gromit

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

No free lunches...

I was digging into the debt service costs of Index-Linked Gilts earlier, as it is IL Gilts that are driving the really large movements in debt service costs, despite being only 25% of the outstanding gilts by value.

I have to admit I was not man enough for the task and am no wiser as to whether the ILG debt service costs will fall when inflation falls or whether these higher debt service costs are now locked in. The were a few hints from the ONS and DMO that a lot of the recent debt service cost increases on ILGs would reverse when inflation falls, but nothing on which to hang my hat.

surrey_commuter

wallace_and_gromit said:

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

No free lunches...

I was digging into the debt service costs of Index-Linked Gilts earlier, as it is IL Gilts that are driving the really large movements in debt service costs, despite being only 25% of the outstanding gilts by value.

I have to admit I was not man enough for the task and am no wiser as to whether the ILG debt service costs will fall when inflation falls or whether these higher debt service costs are now locked in. The were a few hints from the ONS and DMO that a lot of the recent debt service cost increases on ILGs would reverse when inflation falls, but nothing on which to hang my hat.

ILG will come down with RPI

However the existing debt has an average of age of circa ten years so when it is rolled over it will be at significantly higher levels, plus the total is going up.

kingstongraham

So it would have been better to borrow more of it on long term fixed rates. Be paying for itself by now.

TheBigBean

wallace_and_gromit said:

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

No free lunches...

I was digging into the debt service costs of Index-Linked Gilts earlier, as it is IL Gilts that are driving the really large movements in debt service costs, despite being only 25% of the outstanding gilts by value.

I have to admit I was not man enough for the task and am no wiser as to whether the ILG debt service costs will fall when inflation falls or whether these higher debt service costs are now locked in. The were a few hints from the ONS and DMO that a lot of the recent debt service cost increases on ILGs would reverse when inflation falls, but nothing on which to hang my hat.

The interest element of the index linked gilts is small in comparison to the indexation of the principal. Some of them have only a 0.125% coupon on them, so for example, if the principal is £100, then the interest payment is only £0.125 per year. If you apply 10% inflation, then the principal becomes £110, but the interest payment only increases to £0.1375.

wallace_and_gromit

kingstongraham said:

So it would have been better to borrow more of it on long term fixed rates. Be paying for itself by now.

One thing I did find out is that ILGs weren't originally designed to reduce debt service costs. They were designed as an investment for pension funds suitable for matching long-term RPI-linked liabilities.

I think ILG coupons are lower than on the equivalent term conventional gilts so during the long recent period the cost may have been lower per £ of amount borrowed.

Either way, if ILGs were issued as a cunning wheeze to keep a lid on debt service costs then it's a wheeze that hasn't turned out to be quite so cunning.

rick_chasey

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

Where would growth be if that borrowing had occurred. If there had been bigger investment, there's a chance the economy would be bigger, so the debt would proportionally be smaller.

You keep on looking at half the equation.

Part of the reason borrowing is so high is because the gov't naturally does counter-cyclical spending via social security.

TheBigBean

wallace_and_gromit said:

kingstongraham said:

So it would have been better to borrow more of it on long term fixed rates. Be paying for itself by now.

One thing I did find out is that ILGs weren't originally designed to reduce debt service costs. They were designed as an investment for pension funds suitable for matching long-term RPI-linked liabilities.

I think ILG coupons are lower than on the equivalent term conventional gilts so during the long recent period the cost may have been lower per £ of amount borrowed.

Either way, if ILGs were issued as a cunning wheeze to keep a lid on debt service costs then it's a wheeze that hasn't turned out to be quite so cunning.

As above, lower coupon, higher repayment. In the last decade the real return was negative, so it is more confusing, because someone might by pay £120 for £100 of principal.

pblakeney

rick_chasey said:

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

Where would growth be if that borrowing had occurred. If there had been bigger investment, there's a chance the economy would be bigger, so the debt would proportionally be smaller.

You keep on looking at half the equation.

Part of the reason borrowing is so high is because the gov't naturally does counter-cyclical spending via social security.

The bold bit is where it all went wrong.
We were borrowing to stand still.

rick_chasey

pblakeney said:

rick_chasey said:

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

Where would growth be if that borrowing had occurred. If there had been bigger investment, there's a chance the economy would be bigger, so the debt would proportionally be smaller.

You keep on looking at half the equation.

Part of the reason borrowing is so high is because the gov't naturally does counter-cyclical spending via social security.

The bold bit is where it all went wrong.
We were borrowing to stand still.

Sure. I suspect part of the underperformance of the UK now is related to the sharp drop off in investment (in general) since 2016. That begins to bite eventually.

Had the UK gov't been switched on enough to use it's position as the lowest cost borrower in all-the-land to prop up investment, (along with a stable political and regulatory scene so business don't get scared to invest), we'd all be richer and so that borrowing would cost less.

To focus just on the big number and not put it in the context of how it impacts growth and overall income & productivity is just myopic.

Just because the clock happens to tell the right time now doesn't mean it is not broken.

TheBigBean

rick_chasey said:

pblakeney said:

rick_chasey said:

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

Where would growth be if that borrowing had occurred. If there had been bigger investment, there's a chance the economy would be bigger, so the debt would proportionally be smaller.

You keep on looking at half the equation.

Part of the reason borrowing is so high is because the gov't naturally does counter-cyclical spending via social security.

The bold bit is where it all went wrong.
We were borrowing to stand still.

Sure. I suspect part of the underperformance of the UK now is related to the sharp drop off in investment (in general) since 2016. That begins to bite eventually.

Had the UK gov't been switched on enough to use it's position as the lowest cost borrower in all-the-land to prop up investment, (along with a stable political and regulatory scene so business don't get scared to invest), we'd all be richer and so that borrowing would cost less.

To focus just on the big number and not put it in the context of how it impacts growth and overall income & productivity is just myopic.

Just because the clock happens to tell the right time now doesn't mean it is not broken.

Noting that you are benefiting from a crystal ball, what should the government have invested in in 2016?

rick_chasey

TheBigBean said:

rick_chasey said:

pblakeney said:

rick_chasey said:

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

Where would growth be if that borrowing had occurred. If there had been bigger investment, there's a chance the economy would be bigger, so the debt would proportionally be smaller.

You keep on looking at half the equation.

Part of the reason borrowing is so high is because the gov't naturally does counter-cyclical spending via social security.

The bold bit is where it all went wrong.
We were borrowing to stand still.

Sure. I suspect part of the underperformance of the UK now is related to the sharp drop off in investment (in general) since 2016. That begins to bite eventually.

Had the UK gov't been switched on enough to use it's position as the lowest cost borrower in all-the-land to prop up investment, (along with a stable political and regulatory scene so business don't get scared to invest), we'd all be richer and so that borrowing would cost less.

To focus just on the big number and not put it in the context of how it impacts growth and overall income & productivity is just myopic.

Just because the clock happens to tell the right time now doesn't mean it is not broken.

Noting that you are benefiting from a crystal ball, what should the government have invested in in 2016?

Good question.

I share SC's downbeat view on a gov't ability to successfully chose where to spend, so, off the top of my head, incentives to invest in the UK generally. Whether that's tax breaks or gov't agreeing to match investments up to x amount, etc.

pblakeney

rick_chasey said:

pblakeney said:

rick_chasey said:

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

Where would growth be if that borrowing had occurred. If there had been bigger investment, there's a chance the economy would be bigger, so the debt would proportionally be smaller.

You keep on looking at half the equation.

Part of the reason borrowing is so high is because the gov't naturally does counter-cyclical spending via social security.

The bold bit is where it all went wrong.
We were borrowing to stand still.

Sure. I suspect part of the underperformance of the UK now is related to the sharp drop off in investment (in general) since 2016. That begins to bite eventually.

Had the UK gov't been switched on enough to use it's position as the lowest cost borrower in all-the-land to prop up investment, (along with a stable political and regulatory scene so business don't get scared to invest), we'd all be richer and so that borrowing would cost less.

To focus just on the big number and not put it in the context of how it impacts growth and overall income & productivity is just myopic.

Just because the clock happens to tell the right time now doesn't mean it is not broken.

The government has the same status as the clock.

wallace_and_gromit

TheBigBean said:

rick_chasey said:

pblakeney said:

rick_chasey said:

surrey_commuter said:

In my ongoing quest to prove that debt matters I wanted to point out that the UK borrowed £27bn in December. For the dwindling band who argue that you need counter cyclical borrowing that is the largest December figure since records began.

Also for the dwindling band of people who believe it would have been negligent not to ramp up the borrowing when rates were close to zero the debt servicing costs in December were £17bn taking the annual total to £100bn

Where would growth be if that borrowing had occurred. If there had been bigger investment, there's a chance the economy would be bigger, so the debt would proportionally be smaller.

You keep on looking at half the equation.

Part of the reason borrowing is so high is because the gov't naturally does counter-cyclical spending via social security.

The bold bit is where it all went wrong.
We were borrowing to stand still.

Sure. I suspect part of the underperformance of the UK now is related to the sharp drop off in investment (in general) since 2016. That begins to bite eventually.

Had the UK gov't been switched on enough to use it's position as the lowest cost borrower in all-the-land to prop up investment, (along with a stable political and regulatory scene so business don't get scared to invest), we'd all be richer and so that borrowing would cost less.

To focus just on the big number and not put it in the context of how it impacts growth and overall income & productivity is just myopic.

Just because the clock happens to tell the right time now doesn't mean it is not broken.

Noting that you are benefiting from a crystal ball, what should the government have invested in in 2016?

Windpower.

Training home-grown medics. We're short of doctors and yet kids with 3 A* A-levels often can't get into medical school.

focuszing723

This fractal linked with chaos n stuff shows the consequence of spiralling inflation due to assumed double figure pay increases.

focuszing723

Too many hands wanting/expecting increases.

Why didn't the governor of the BoE and MP's take a pay cut to show good grace when they knew the $h1t was going to hit the fan?

focuszing723

Andrew Bailey has warned that interest rate rises may have to continue for longer if pay keeps rising sharply in the face of surging inflation.

The Governor of the Bank of England said policymakers "will have to respond" if wage data and inflation continue to "overshoot" to avoid the risk of such a situation becoming permanent.

pblakeney

Vicious spiral. Inflation leads to wage demands leads to increased interest rates leads to wage demands leads to inflation leads to...

mully79

..

pblakeney said:

Vicious spiral. Inflation leads to wage demands leads to increased interest rates leads to wage demands leads to inflation leads to...

Describing inflation as a percentage then using that as a justification for a percentage pay rise is the root cause of the spiral.

pblakeney

mully79 said:

..

pblakeney said:

Vicious spiral. Inflation leads to wage demands leads to increased interest rates leads to wage demands leads to inflation leads to...

Describing inflation as a percentage then using that as a justification for a percentage pay rise is the root cause of the spiral.

I'd suggest that those struggling to pay their bills are not concerned one whit about the root cause.

rick_chasey

I’d like to see some evidence that wage rises are actually having input into inflation first.

Thus far not showing up

pblakeney

rick_chasey said:

I’d like to see some evidence that wage rises are actually having input into inflation first.

Thus far not showing up

You'll have to take that up with Andrew Bailey.

rjsterry

One for @surrey_commuter : if you want a challenging viewpoint, follow Julian Jessop on Twitter. 🤨