A guest post by Peter Doyle, economist and former IMF staffer
I very much hope—and expect—that Brexit will be rejected.
Selected quotes/charts from the ‘Review of HM Treasury’s management response to the financial crisis‘, which reveals that there was a significant lack of personnel in the finance ministry who knew about banking crises, on the eve of the UK’s biggest ever banking crisis…
After serious concerns were first raised about Northern Rock in mid-August, it took the Treasury about four weeks to appreciate that there might be systemic dimensions which would mean wider handling and greater Treasury input
The Government agrees that a limited statutory power of direction for the Chancellor over the Bank in a time of financial crisis would be helpful in clarifying lines of responsibility and accountability…
Blame whoever or whatever you want, but net British debt, “excluding the temporary effects of financial interventions,” topped a trillion pounds sterling in December.
That’s equivalent to 64.2 per cent of GDP. And it’s less than expected. Read more
If you liked the Bank of England inflation fan charts, then you’ll love the OBR’s fan charts.
GDP: Read more
Some good news for the battered UK banking sector?
HM Treasury is going to announce special liquidity measures to help Lloyds, Barclays and RBS get through a funding hump in the first quarter of next year. Read more
This should make Davos a bit less tense; a win-win for the British and Swiss governments on Wednesday:
Aug 24 (Reuters) – Switzerland and Britain struck a deal on Wednesday to tax money kept by British residents in secret Swiss bank accounts, which will gift a windfall to the cash-strapped British government and helps the Alpine country’s banks come clean on untaxed accounts.
I am informed that the Treasury was on tenterhooks last night, waiting for confirmation that the Queen had given the royal assent to the bill which establishes the Office of Responsibility in its final official form. I believe that the Chancellor traditionally briefs the Queen about the contents of the Budget on the day before he makes his speech, but I do not know if he went to the Palace yesterday with the bill (and a biro) in his briefcase.
No matter. The OBR is expected to act as if the bill were already passed until the royal assent is attained. Read more
Ah, the Budget.
Taxes, benefits, sweeteners, dubious forecasts, the Gladstone box, drinking in the House (just the Chancellor, mind, if he so chooses), and Treasury civil servants staggering out of 1 Horse Guards Road to the nearest pub like students after a final exam. Read more
The biggest banks operating in Britain have met a Treasury deadline to sign up to a code of conduct designed to curb tax avoidance, reports the FT. The code, which will encourage banks to follow the spirit as well as the letter of the law, was first announced by Alistair Darling last year in an effort to defuse anger over banks’ tax planning schemes. George Osborne, chancellor, said on Tuesday: “Alongside the bank levy, this shows that the coalition government is taking action to ensure banks pay their fair share – unlike the previous government, which talked tough, but failed to deliver.” The announcement that the top 15 banks had signed was made in the Commons by Nick Clegg, deputy prime minister, whose party has been pushing hard for tougher regulation. The code had been criticised last year by Vince Cable, then Liberal Democrat Treasury spokesman, as a “terribly limp-wristed response to a serious abuse”.
In public policy terms, this will probably be the most important day of this parliament, possibly of this decade…
George Osborne is polishing his scythe… The Chancellor must now try to kill the rapacious £155bn deficit by a thousand cuts…
Some highlights from Thursday’s first ever annual report from the UK’s Asset Protection Agency (APS) show interestingly that the whole thing seems to be accounted for as a derivative (as opposed to say, an insurance contract — something that was discussed by the APA), reports FT Alphaville. And as a derivative, the APS is valued at fair value. The Agency is even using a Gaussian Copula to determine that value — albeit one that has been slightly tweaked to take into account recent (crisis) events. Read more
Got a spare 10 minutes? Some technical expertise? Experience in handling large volumes of data?
Then you might be able to get some use from the just-released UK Coins data. That’s the Combined On-line Information System, used by the Treasury to collect financial data from the public sector. Read more
After six quarters the UK’s longest, and possibly deepest recession since the second world war has ended – but only JUST.
Q4 GDP rose 0.1 per cent quarter-on-quarter, well below forecasts. (A 0.4 per cent rise was expected). Read more
Alistair Darling’s attempt to stop banks making lavish bonus payments through the one-off 50 per cent “supertax” has failed, government officials admit, as many institutions plan to absorb the charge rather than reduce pay-outs. The chancellor’s allies admit the tax has not changed the behaviour of big financial institutions, but take comfort in the fact that the Treasury is set for a windfall of hundreds of millions of pounds just months before the election as a result.
Investment banks like these things — and when the latest deal league tables show Goldman Sachs being knocked off the top spot by Morgan Stanley we can treat it as bona fide news.
From MergerMarket, an FT sister company… Read more
A copy of the letter sent by Joanthan Keeling, chief executive of Arden Partners, to the FT:
Dear Sir, Read more