Billy made a call this morning (Friday 14 October) to the Government's 'Policy Making (and Sticking To) Department'. After 20 or so rings he hung up and called the Bank of England. No answer there either, but he did get a tinny version of the Bedford School Childrens' Pipers rendition of 'Winter' from Vivaldi's Four Seasons.
There is not a lot of solid leadership at the top of the pile of Britain's financial decision-makers, although there is news that Chancellor Kwarteng is making an early way back from an International Monetary Fund meeting in Washington (where he was made to sit in the corner and 'think about his behaviour') to clear his desk.
The numbers supporting Liz Truss and her 'onomics' are so terrifyingly small that most need a microscope to know they exist at all and no commentators give her or her hapless team of advisors as long as the end of the coming weekend in continued power. What has gone so wrong?
Mark Carney, NTI newsroom's favourite of the two most recent Bank of England Governors, said yesterday there were a number of “lessons” to be learnt from the sell-off in the pound and Government bonds. He added that the Government’s policies sparked panic in a “different risk environment”. Was that Andrew Bailey at the back of the room, furiously taking notes? Mr Carney further explained his position by saying: "We are going through a series of shocks that hit the least well-off the hardest. A credible growth strategy is an inclusive growth strategy. It is an issue not just of fairness but of credibility.”
Rumours abound this morning that Truss and Kwarteng will be deposed and replaced with Sunak and Mordaunt who must feel either foolish or fireproof enough to race headlong into a burning building. All of this whilst the current Governor of the Bank of England is reported to be taking 'the risk of his career' by ruling out an extension of the central bank’s emergency programme to buy UK Government bonds, which was launched when a sharp spike in gilt yields after Kwarteng’s fiscal statement threatened insolvency for multiple pension schemes. He is telling pension funds to 'sort themselves out'.
Andrew Bailey said: “We’ve got two things going in opposite directions", citing the dual pressures on the BoE to both tighten monetary policy to curb high inflation as well take steps to restore order in the Government bond market. Today marks the end of the central bank's emergency gilt-buying operation, introduced two weeks ago to try to help pension funds, which were facing a liquidity crunch following turbulence exacerbated by the not-so-mini Budget. And here is the main problem - the Bank of England's remedies were always going to be sticking plasters at best. Restoring confidence in the sustainability of UK finances will require a more substantive rowing back by the Government from its promised tax cuts, particularly as temporary prime minister Truss also rules out spending cuts.
The fog of today makes it almost impossible to see where the UK is going. There was news this week that we will suffer the hardest and longest of all G7 nations as we deal with fuel and energy and supply chain and inflation crises. What price a change of leadership?
