Yes:
Rachel Reeves has been warned that interest rates will stay higher for longer after the Chancellor said she will change Britain’s debt rules to unleash a borrowing spree of up to £50bn.
The Chancellor confirmed she will change how debt is calculated to take into account the benefits of investment spending at her maiden Budget next week, even as her plans triggered jitters in financial markets.
This has already happened:
Now, it isn’t true that borrowing more is the only reason gilts yields have changed – it’s never true that there’s an omnicause in something so complicated as an entire economy. But let us just pretend for a moment – we might want to assign at least some of that price change to this cause after all. So, that’s a quarter of a percent. On a national debt of what, £2 trillion? £3 trillion? Yes, we can all argue about exactly what should be included in that but let’s plump for the lower, £2 trillion, as that’s closer to what the gilts market is.
It’s also true that the coupon on extant gilts doesn’t change as a result of this yield change. It’s only the borrowing of new money that changes the cost to the Treasury. But, in time, all of that is going to get rolled over – actual repayment of the national debt, even in part, is one of those aha, aha, aha, jokes – so just as a modelling exercise we can say 0.25% of £2 trillion. Which is, you know, quite a lot. £5 billion extra in interest a year to borrow £80 billion. To “invest”. There’re going to have to be some pretty startling returns on government spending – well known in its efficiency as it is – to cover a 6.25% funding cost. But it gets worse – because it’s necessary to pay both the extra interest on the new issuance as well as the increase in total interest costs. So, 10.3% then.
That calculation is very much at the high end. But the base idea there is correct. Interest rates have already risen because she’s saidshe’sgoing to borrow more.
Markets are forward looking, see?
Aren’t chess champions meant to be forward-looking?
Pity she wasn’t actually a chess champion, eh?
Recession coming
Money moving offshore
Money moving out of investments, FTSE250 will tank
Pensions raided, anyone in their 20s or 30s must be questioning the wisdom of committing to a 40 year product when government just changes the rules in a whin
Recession, starfish?
Full on economic collapse more likely.
I’m beginning to understand why the red mob thought Gordon Brown was an economic genius.
https://order-order.com/2024/10/24/rachel-reeves-bank-economist-myth-busted/
According to Guido:
Rachel Reeves makes a lot of her time working as an economist. After serving in a trio of junior positions at the Bank of England, Rachel says that in 2006 she moved to the Bank of Scotland to work as an “economist,” before leaving in 2009 to serve as MP. Guido spoke to colleagues of Reeves’ from her Bank of England days – one described her as having a reputation for being “f***ing useless”…
Reeves’ boilerplate biography, given to event organisers for her speaking events, says: “Previously, she worked as an economist at the Bank of England, the British Embassy in Washington DC and latterly at Halifax Bank of Scotland.” She is constantly praised for having an “economist brain.” She speaks of her time at HBOS in the midst of the financial crisis: “When economies tumble, it is those on the lowest incomes who suffer most. Some people lost their jobs but also their sense of pride.“ Guido probed these claims after numerous former colleagues of Reeves got in touch to raise questions over her CV…
The Chancellor states on her LinkedIn that she was working as an “economist” at HBOS. This is not true. Guido can reveal that Reeves worked in a mundane support department at the bank, according to multiple former colleagues. Within the Halifax/HBOS Complaints team there was a small support unit which managed administration processes, IT matters, and small projects and planning. It was a team of three people far from the Economics Department. Reeves held a mid-level position. HBOS was acquired by Lloyds in 2009 and the Chancellor left in December of that year to pursue a career in politics…
Reeves has a tendency to be selective about the truth when it comes to her CV – Guido exposed her “chess champion” myth as a falsehood according to records last week. Guido reached out to Reeves’ team – they did not deny she did not work as an “economist” for the bank, but instead said she “covered various areas using her economist background.” As she prepares to drop a huge tax bombshell on Britain, her self-styled claim to be an economic technocrat is unravelling…
… because her lips are moving.
Good god, she’s Jen from IT Crowd.
“Within the Halifax/HBOS Complaints team there was a small support unit which managed administration processes, IT matters, and small projects and planning. It was a team of three people far from the Economics Department. Reeves held a mid-level position.”
🙂