Best Of

I'm shocked:

https://obr.uk/docs/dlm_uploads/August-PSF-commentary.pdf

Local authority revisions and lower-than-expected receipts push borrowing above forecast

This morning’s ONS release estimates that borrowing in the first five months of 2025-26 totalled £83.8 billion. This is £16.2 billion above the same period last year and £11.4 billion above the monthly profile consistent with our March forecast. The overshoot in this month’s estimates compared to our March forecast profile is primarily due to revisions which have increased estimated borrowing by local authorities so far this year. In addition, VAT and other receipts were lower-than-expected in the month of August.

Tax rises are eating into economic activity at a higher than expected rate. No fucking shit. Sometimes I wonder whether the people writing the models ever actually go outside and talk to people, experience real life a bit. I assume not.

The OBR is not fit for purpose. As if they would ever forecast in good faith the reality of Labour's shit show.

The OBR's projections for debt are absolutely catastrophic, and have been for some time (since about 2017 when they reflected how slow growth had been in the 2010s). Ultimately Labour's taxes and spending plans are immaterial compared with the overall picture - we're still miles off French/Scandi levels of tax for example.

What's curious is that, given just how bad this is and for how long we have known it, why our borrowing costs are so low (relatively). If Max and the OBR are right, it should be nigh on impossible for the government to borrow over the long term.

Defined benefit pension schemes needed a place to park their money for a long time which helped keep 30 year yields down. That upwards pressure on gilt prices has unwound substantially which is what has caused yields to rise here much faster than elsewhere. The holders of the UK's long term debt now has a much higher risk profile because it's bond investment funds and hedge funds rather than pension funds. The money is much more flighty than it used to be which is why I keep saying the same thing - this country is one adverse fiscal event away from a sovereign debt crisis.

I don't relish the thought, we just have to hope there is enough competency in the government to keep the plates spinning for long enough that we get a new one that will come in and cut spending like the Tories did in 2010.

The markets just don't believe it's that bad, for whatever reason. I think there is an assumption that fiscal drag will continue, that health spending growth will slow, that the State Pension will be unlocked. All this stuff takes decades to have an impact though, so I think there is a boiling frog thing going - "don't worry, I'm sure the Treasury will deal with it next year".

It's also relative, no? Most other Western countries have a similar fiscal outlook to the UK, so as long as we're part of that pack well continue to attract investors as a relatively safe haven.

Yes, the only thing keeping the markets away from a serious run on bond rates, is that most large developed economics are in similar positions.

Everyone is now Japan circa 1999.

At some point though the markets will realise it's a Ponzi scheme everywhere. The UK could try to get ahead of things by fixing things now, especially as our demographic pressures, compared to some peers, are not actually that bad.

Yes, but do Labour have the cojones to cut public sector pensions and the state pension?

I am not sure anyone does. Health and social care costs are the bigger problem, too.

"James Tidmarsh

The tyranny of tipping
Why should I be expected to pay extra?"

https://www.spectator.co.uk/article/the-tyranny-of-tipping/

The only thing worse than tipping is people complaining about tipping.

I am going to complain about the people who complain about tipping. I tip if I have enough money (I don't always). Be good to the staff because one day that will be you.

FPT: Francis Urquart said about Utah: "The stat I remember (I don't know if it is still true) SLC, some of the highest academic achievement levels in the whole of the US, one of the highest suicide rates."

Here's the data: https://www.cdc.gov/suicide/facts/rates-by-state.html

At a quick glance, what I see is that states with harsh winters tend to have higher suicide rates -- but I would need to see more data before I was certain of that correlation.

Looking at that map, I think (with the exception of Utah) the strongest correlation is probablty with alcoholism rates.

I just ran an analysis, and it staggering how strong the correlation between alcoholism and suicide is in the US (outside Utah).

Craig Murray jumping the shark

'@CraigMurrayOrg
A day I shall never forget.
Speaking at the UN in Geneva in favour of Scottish Independence, I stated that the UK is a force for evil in the world.
And people from all over the globe interrupted with spontaneous applause'
https://x.com/CraigMurrayOrg/status/1968720543416287530

O wad some Power the giftie gie us
To see oursels as ithers see us!
It wad frae mony a blunder free us,
An' foolish notion.