Britain faces spending cuts “almost without historical or international precedent” over the next few years and, painful as the squeeze has been so far, it amounts to less than a 10th of what is planned by the 2016/17 fiscal year, according to the Institute for Fiscal Studies. The FT says in its annual “Green Budget”, the independent think-tank noted that the case for a short term fiscal stimulus to boost the economy is stronger than it was a year ago because growth over the past year has been so much weaker than had been expected. Moreover, the IFS calculates, it is likely that the combination of cuts and comparatively buoyant tax receipts mean that by the end of the 2016/17 year, government borrowing will be about £9bn lower than the current official forecast. The Telegraph says a separate report yesterday from the National Audit Office found 2.3 per cent of departmental spending cuts have been completed so far, against a target of 19pc by April 2015, and too many of those were achieved by non-permanent measures such as delaying IT programmes. Read more
Sir John Vickers is laughing all the way to the bank(ing commission). As a movie plot, the publication of his report, immediately followed by a spectacular demonstration of why we needed it, is much too far-fetched. It would have seemed preposterous for a bank to suddenly find itself short of $2bn, thanks to some bad bets at the casino.
“Delta One” sounds whizzy, but its underlying operation is as old as it is simple: promise some muppet investor a return linked to some fashionable index, and then bet his money on something else. The banks’ traders always think they can beat the market, and much of the time, they can’t. Even beating such pedestrian indices as the FTSE100, with its mechanical rules for quarterly constituent changes, is much harder than it looks. Just try it. Read more
Here’s something to throw the Bank of England’s will to withstand high UK inflation (and low interest rates) in surprising, sharp relief.
It’s a new finding by the Institute for Fiscal Studies, connected to a study of inflationary effects on low-income households over the long term: Read more
Ahead of this week’s ‘pro-growth’ but pro-austerity UK budget, comes a no-growth finding from the Institute for Fiscal Studies. Not only did the UK experience the biggest three-year drop in real living standards since 1980-83 between 2008 and 2011, says the Institute, incomes in 2013-14 are likely to be below those in 2008 -09. That will be the biggest drop over a five-year period since the five years from 1972 to 1977. FT Alphaville wonders if it’s stagflation time in the UK? Read more
If policy wonks had their way, the publication date of the IFS Green Budget would be a national holiday.
We exaggerate — slightly — but for an arid testament to the prose potential of Excel spreadsheets, it’s a good read. Not least because across its twelve chapters it meticulously meanders through the high stakes game the UK economy is currently in. Read more