The OBR have now confirmed that they've used the 10 working days before 21 October for their debt interest forecast. Here's my precise graphical depiction of what was happening to yields in that period. Suspect this is why the fiscal forecasts are reported to improved.
November 14, 2025 at 3:07 PM
The OBR have now confirmed that they've used the 10 working days before 21 October for their debt interest forecast. Here's my precise graphical depiction of what was happening to yields in that period. Suspect this is why the fiscal forecasts are reported to improved.
Your regular reminder that, while it doesn't have every policy option under the sun, @theifs.bsky.social Be the Chancellor tool will tell you how much could be raised from a whole raft of policy changes (e.g. cutting higher-rate threshold by £10k raises ~£17bn).
ifs.org.uk/be-chancellor
ifs.org.uk/be-chancellor
November 14, 2025 at 11:56 AM
Your regular reminder that, while it doesn't have every policy option under the sun, @theifs.bsky.social Be the Chancellor tool will tell you how much could be raised from a whole raft of policy changes (e.g. cutting higher-rate threshold by £10k raises ~£17bn).
ifs.org.uk/be-chancellor
ifs.org.uk/be-chancellor
The key point the Bank want to make is that everyone focuses on the purple diamonds (the cashflow losses, i.e. payments from the Treasury to cover losses made by the Bank via the APF). But if you factor in the turquoise bars, the net fiscal impact doesn't look so bad (and might even be positive).
November 11, 2025 at 2:40 PM
The key point the Bank want to make is that everyone focuses on the purple diamonds (the cashflow losses, i.e. payments from the Treasury to cover losses made by the Bank via the APF). But if you factor in the turquoise bars, the net fiscal impact doesn't look so bad (and might even be positive).
Bit more info on how the authors of the QJE paper construct their policy uncertainty index: by counting mentions of key words/phrases in newspapers. The approach for the UK is similar.
November 11, 2025 at 9:25 AM
Bit more info on how the authors of the QJE paper construct their policy uncertainty index: by counting mentions of key words/phrases in newspapers. The approach for the UK is similar.
A final point: this is a nice chart but I'm not entirely convinced by the measure of policy uncertainty. Baker et al construct this by counting the number of times a couple of UK newspapers use phrase certain phrases (like “economic uncertainty”).
Where's the pandemic spike?!
Where's the pandemic spike?!
November 11, 2025 at 9:25 AM
A final point: this is a nice chart but I'm not entirely convinced by the measure of policy uncertainty. Baker et al construct this by counting the number of times a couple of UK newspapers use phrase certain phrases (like “economic uncertainty”).
Where's the pandemic spike?!
Where's the pandemic spike?!
An interesting piece which (rightly in my view) puts policy uncertainty front and centre. But I'm less convinced by the proposed policy prescription: if we kept a 2nd forecast, but don't formally assess rule compliance, what stops everyone else just reading off the OBR spreadsheet?
November 11, 2025 at 9:25 AM
An interesting piece which (rightly in my view) puts policy uncertainty front and centre. But I'm less convinced by the proposed policy prescription: if we kept a 2nd forecast, but don't formally assess rule compliance, what stops everyone else just reading off the OBR spreadsheet?
These assessments are *extremely* sensitive to the forecast for GDP growth. But under the Barclays economic forecast, we'd be missing the debt rule by £17bn (more than the amount by which we'd be missing the borrowing rule). Cutting/reprofiling capital spending plans could help to meet this.
November 10, 2025 at 4:24 PM
These assessments are *extremely* sensitive to the forecast for GDP growth. But under the Barclays economic forecast, we'd be missing the debt rule by £17bn (more than the amount by which we'd be missing the borrowing rule). Cutting/reprofiling capital spending plans could help to meet this.
Great to see @tomcalver.bsky.social using this IFS chart in his (excellent) piece about the UK's economic and fiscal travails. The combination of low growth and high debt interest really does make for some unpleasant fiscal arithmetic. It's a tough time to be Chancellor.
November 9, 2025 at 4:33 PM
Great to see @tomcalver.bsky.social using this IFS chart in his (excellent) piece about the UK's economic and fiscal travails. The combination of low growth and high debt interest really does make for some unpleasant fiscal arithmetic. It's a tough time to be Chancellor.
For this week's @theobserveruk.bsky.social I've written about one of my favourite topics: the productivity of the public sector, how it's measured, why it tends to grow less quickly than productivity in the private sector, and what it means for policy.
observer.co.uk/news/busines...
observer.co.uk/news/busines...
November 9, 2025 at 10:11 AM
For this week's @theobserveruk.bsky.social I've written about one of my favourite topics: the productivity of the public sector, how it's measured, why it tends to grow less quickly than productivity in the private sector, and what it means for policy.
observer.co.uk/news/busines...
observer.co.uk/news/busines...
Best followed up with this FT podcast with
@timleunig.bsky.social who has a nice example of why zero-rating things like food and children's clothing isn't a particularly effective way of supporting poorer households
www.ft.com/content/33d7...
@timleunig.bsky.social who has a nice example of why zero-rating things like food and children's clothing isn't a particularly effective way of supporting poorer households
www.ft.com/content/33d7...
November 7, 2025 at 10:44 AM
Best followed up with this FT podcast with
@timleunig.bsky.social who has a nice example of why zero-rating things like food and children's clothing isn't a particularly effective way of supporting poorer households
www.ft.com/content/33d7...
@timleunig.bsky.social who has a nice example of why zero-rating things like food and children's clothing isn't a particularly effective way of supporting poorer households
www.ft.com/content/33d7...
Rachel Reeves is about to get bitten by the productivity hedgehog. A bigger-than-expected OBR downgrade means a bigger-than-expected consolidation will be needed to meet the fiscal rules. Makes it harder to honour manifesto tax promises, and harder to build in more ‘headroom’.
October 27, 2025 at 7:04 PM
Rachel Reeves is about to get bitten by the productivity hedgehog. A bigger-than-expected OBR downgrade means a bigger-than-expected consolidation will be needed to meet the fiscal rules. Makes it harder to honour manifesto tax promises, and harder to build in more ‘headroom’.
The Conservatives’ “golden economic rule” requires that for every pound of spending cuts, at least half goes towards reducing borrowing. That’s an overly rigid policy rule. I can also imagine scenarios where it makes tax rises more likely - which presumably wasn't the intention.
October 27, 2025 at 9:16 AM
The Conservatives’ “golden economic rule” requires that for every pound of spending cuts, at least half goes towards reducing borrowing. That’s an overly rigid policy rule. I can also imagine scenarios where it makes tax rises more likely - which presumably wasn't the intention.
I think this chart is useful to have in mind: the private sector is already being asked to absorb large volumes of gilts. Investors are sensitive to any hint will that there might be more to come: it would get priced in, pushing up borrowing costs and debt interest.
From: ifs.org.uk/publications...
From: ifs.org.uk/publications...
October 24, 2025 at 9:55 AM
I think this chart is useful to have in mind: the private sector is already being asked to absorb large volumes of gilts. Investors are sensitive to any hint will that there might be more to come: it would get priced in, pushing up borrowing costs and debt interest.
From: ifs.org.uk/publications...
From: ifs.org.uk/publications...
2) On bond markets. Missing the fiscal rules by a small amount matters because it would send another signal to the one listed here: that much higher levels of future borrowing (and bond issuance) are more likely, which could lead to a much larger increase in financing costs as that's priced in.
October 24, 2025 at 9:55 AM
2) On bond markets. Missing the fiscal rules by a small amount matters because it would send another signal to the one listed here: that much higher levels of future borrowing (and bond issuance) are more likely, which could lead to a much larger increase in financing costs as that's priced in.
I always enjoy reading Simon's thoughts, but I think this misses two big things.
1) What this thermostat analogy misses is that the act of constantly fiddling with the dial (volatility in tax and spend policy) is itself damaging - in particular because it ramps up uncertainty. That's one ...
1) What this thermostat analogy misses is that the act of constantly fiddling with the dial (volatility in tax and spend policy) is itself damaging - in particular because it ramps up uncertainty. That's one ...
October 24, 2025 at 9:55 AM
I always enjoy reading Simon's thoughts, but I think this misses two big things.
1) What this thermostat analogy misses is that the act of constantly fiddling with the dial (volatility in tax and spend policy) is itself damaging - in particular because it ramps up uncertainty. That's one ...
1) What this thermostat analogy misses is that the act of constantly fiddling with the dial (volatility in tax and spend policy) is itself damaging - in particular because it ramps up uncertainty. That's one ...
Some big reductions in gilt yields in recent days. It's unclear whether the OBR have already closed their forecast window or not, and so unclear whether it will feed directly into Budget calculations, but it's good news for the Chancellor regardless.
October 22, 2025 at 11:22 AM
Some big reductions in gilt yields in recent days. It's unclear whether the OBR have already closed their forecast window or not, and so unclear whether it will feed directly into Budget calculations, but it's good news for the Chancellor regardless.
If you put income tax and NICs together, cash receipts look a bit healthier. I still think it's odd that VAT receipts aren't running higher
From the OBR
obr.uk/docs/dlm_upl...
From the OBR
obr.uk/docs/dlm_upl...
October 21, 2025 at 8:31 AM
If you put income tax and NICs together, cash receipts look a bit healthier. I still think it's odd that VAT receipts aren't running higher
From the OBR
obr.uk/docs/dlm_upl...
From the OBR
obr.uk/docs/dlm_upl...
The point my colleague @nickridpath.bsky.social makes here is an important and puzzling one. Given decent growth and (especially) higher-than-expected inflation so far this year, we'd expect receipts from e.g. VAT and income tax to be higher also. But no sign of that yet... Which is odd.
October 21, 2025 at 8:26 AM
The point my colleague @nickridpath.bsky.social makes here is an important and puzzling one. Given decent growth and (especially) higher-than-expected inflation so far this year, we'd expect receipts from e.g. VAT and income tax to be higher also. But no sign of that yet... Which is odd.
Yes, exactly. And while I understand the arguments for lengthening the forecast horizon (nothing special about 5 years, etc), it would be a recipe for short-term loosening with promises of tax rises/spending cuts in the next parliament that don't happen -- this OBR chart but on steroids
October 18, 2025 at 9:02 AM
Yes, exactly. And while I understand the arguments for lengthening the forecast horizon (nothing special about 5 years, etc), it would be a recipe for short-term loosening with promises of tax rises/spending cuts in the next parliament that don't happen -- this OBR chart but on steroids
This brief but brilliant discussion of the problems with stamp duty land tax.
October 13, 2025 at 8:59 AM
This brief but brilliant discussion of the problems with stamp duty land tax.
This discussion of the potential for a new annual wealth tax (my colleagues caution against and argue we’d be better off fixing the wealth-related taxes we already have).
October 13, 2025 at 8:59 AM
This discussion of the potential for a new annual wealth tax (my colleagues caution against and argue we’d be better off fixing the wealth-related taxes we already have).
This chart showing an alarming increase in the corporation tax gap. Among smaller companies there’s now a 40% gap ‘between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid’.
October 13, 2025 at 8:59 AM
This chart showing an alarming increase in the corporation tax gap. Among smaller companies there’s now a 40% gap ‘between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid’.
This discussion of the potential for a new ‘hypothecated tax’ on income to ‘pay for’ the NHS or defence. Short version: it may help gain voter consent, but adds complexity and creates various other issues.
October 13, 2025 at 8:59 AM
This discussion of the potential for a new ‘hypothecated tax’ on income to ‘pay for’ the NHS or defence. Short version: it may help gain voter consent, but adds complexity and creates various other issues.
This discussion of the case for broadening the UK’s unusually narrow VAT base. I particularly like the point about the waste of human ingenuity arguing about this nonsense in the courts.
October 13, 2025 at 8:59 AM
This discussion of the case for broadening the UK’s unusually narrow VAT base. I particularly like the point about the waste of human ingenuity arguing about this nonsense in the courts.
This section on the potential for a freeze to personal tax thresholds, which could raise ~£10 billion. Note, though, that freezing both income tax and National Insurance thresholds (they’re aligned at present) would represent a technical breach of Labour’s manifesto…
October 13, 2025 at 8:59 AM
This section on the potential for a freeze to personal tax thresholds, which could raise ~£10 billion. Note, though, that freezing both income tax and National Insurance thresholds (they’re aligned at present) would represent a technical breach of Labour’s manifesto…