David Woodruff
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dmwoodruff.bsky.social
David Woodruff
@dmwoodruff.bsky.social
2.7K followers 610 following 630 posts
Associate Professor of Comparative Politics, LSE. CPE, central banks, monetary history, intellectual history of social science, Karl Polanyi, Soviet economic history, complaining about neoliberalism, etc. He/him.
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dmwoodruff.bsky.social
Bloomberg taking a shot across the bow of @zackpolanski.bsky.social — but should we listen to an economist (and Times columnist btw) whose main concern regarding Reform is its fiscal policy? www.bloomberg.com/news/article...
Quite from Bloomberg article: “I’m engaging with Reform at the moment quite a lot because they look like they want to have a grown-up conversation about their economic policies, financial services,” French said. “If the Greens want to do the same, I have no dog in the fight.”
November 25, 2025 at 6:10 AM
dmwoodruff.bsky.social
Despite planning to continue paying the banks 3 x more in interest on reserves than they pay in corporate and related taxes, Reeves is reduced to begging the banks for PR help to sell her budget. on.ft.com/4iDbqqB
A chart with year-by-year data on interest paid to banks on reserves created by QE, banking sector profits as implied by tax receipts, and taxes on banking sector including corporate tax, bank levy, and bank surcharge. Total taxes banks paid over period: £100.1 bln. Total interest paid to banks: £109.3 bln Sources: https://www.gov.uk/government/statistics/paye-and-corporate-tax-receipts-from-the-banking-sector-2025 Interest calculated from BoE database series RPWZ4TM and Bank Rate
November 24, 2025 at 10:39 PM
dmwoodruff.bsky.social
This gives context to this proposal, which would significantly improve progressively.
Excerpt from https://www.theguardian.com/uk-news/2025/nov/08/rachel-reeves-increase-income-tax-budget-rises-salary-bands. ‘Two up two down’ A plan to increase income tax rates and lower national insurance rates by two percentage points is thought to be one of the frontrunners. It might sounds like robbing Peter to pay Paul but the switcheroo raises £6bn while protecting workers’ pay packets, according to the Resolution Foundation. Doing it this way cancels out the income tax hit for employees but would push up the tax bills of pensioners, landlords and savers. On Friday the Times reported that Reeves was considering limiting the national insurance cut to basic rate taxpayers (earning up to £50,270) to ensure that those with the “broadest shoulders” bore the biggest burden.
November 12, 2025 at 3:34 PM
dmwoodruff.bsky.social
TIL that employee contributions to UK national insurance are ludicrously regressive: rate goes down from 8% to 2% on income > £50,270. And it's getting even worse: threshold is infrequently updated & would be nearly £10000 higher if adjusted for post-Covid inflation.
46350 - 2019 threshold would be 59726 today if fully indexed.
November 12, 2025 at 3:09 PM
dmwoodruff.bsky.social
Over the last 11 financial years, the UK Treasury has spent more on paying interest to the banking sector on their reserves than it has taken in from them in corporate and sector-specific taxes. In 2024-25, it paid over 3 times as much for interest on reserves as it received from taxes on banks.
A chart with year-by-year data on interest paid to banks on reserves created by QE, banking sector profits as implied by tax receipts, and taxes on banking sector including corporate tax, bank levy, and bank surcharge. Total taxes banks paid over period: £100.1 bln. Total interest paid to banks: £109.3 bln Sources: https://www.gov.uk/government/statistics/paye-and-corporate-tax-receipts-from-the-banking-sector-2025 Interest calculated from BoE database series RPWZ4TM and Bank Rate
November 12, 2025 at 9:30 AM
dmwoodruff.bsky.social
An outstanding policy analysis, but should be made more general: *any* business that has a return on equity < 10% automatically gets a tax adjustment so it reaches that level. Also, the magic of the market requires businesses have absolute freedom on salaries and bonuses.
Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/b5708992-7c0e-46c2-a277-c99056d1df8f Second, banks — no matter what protesters might believe — are not exactly raking it in. On the basis of return on equity numbers that barely reach 10 per cent, the big banks are far less profitable than sectors such as technology or pharmaceuticals. An extract from an FT article https://on.ft.com/4oWpJse
November 4, 2025 at 1:07 PM
dmwoodruff.bsky.social
Some Threadneedle-ologists say BoE will hold rates this week and wait to see how budget looks. To act on this reasoning would contradict long-stated, albeit entirely arbitrary, policy, which implies implausibly assuming government makes no change.
Excerpt from May 2022 parliamentary meeting: this country, this country, the Government have announced a series of measures to tackle the cost of living, and some are calling for even more measures. To what extent have you factored in fiscal policy risk to your projections? Andrew Bailey: We always use announced Government policy as a conditioning assumption. We do not speculate on what Government policy might be in the future; we only use announced fiscal policy as the conditioning assumption. 439 Gareth Davies: So you have not factored in the fact that there may be additional measures coming down the track. Andrew Bailey: No. That is a long-held MPC policy, and I think it is the right one. It is not for us to speculate on what the Government might do.
November 3, 2025 at 10:13 AM
dmwoodruff.bsky.social
In case you don’t speak central banker, here’s BoE chief economist Huw Pill saying QT should be a club to force austerity on govt. Nary a reference to a BoE mandate in the speech! www.bankofengland.co.uk/speech/2025/...
At best, slowing QT is a temporary and indirect palliative, likely dominated in terms of effectiveness by other tools. And the danger exists that measures to treat the symptoms simply allow the underlying drivers to continue for longer and in greater force, making the eventual denouement more painful all around. For me, both structural challenges to public debt management and concerns about core market functioning are better dealt with via other means than QT.
September 23, 2025 at 12:51 PM
dmwoodruff.bsky.social
The official line from the BoE on this is that the pace at which their portfolio would shrink if all gilts were held to maturity would be too slow. What counts as fast enough has never been specified. So far about 2/3s of QT has been from maturing gilts.
Table £bln % of total QT to date Payments on matured gilts 193.9 61.2% Indemnities on matured gilts 15.3 4.8% Proceeds from gilt auctions 71.8 22.6% Indemnities on auctioned gilts 36.0 11.4% Total 316.9
September 19, 2025 at 11:11 PM
dmwoodruff.bsky.social
A more detailed breakdown by maturity.
Another chart showing that APF will be raising over half of the funds from gilt sales via sales of gilts with greater than 10 year maturity (assuming current prices), compared to only 19% raised from longer-dated gilts by the DMO.
September 18, 2025 at 3:04 PM
dmwoodruff.bsky.social
The BoE responded to market concerns on APF sales of long-dated gilts by shifting to shorter-dated ones. Still will not be following Treasury/DMO issue policy, which is much more geared to short-dated gilts. Note that APF doesn't sell any gilts with <3 years to maturity.
Two pie charts that show that funds raised by the DMO from its conventional gilt sales over the last six months broke down as follows: 28% near-term debt (<3 years), 32% short-term debt (3-7 years), 36% medium-term debt (7-20 years), and only 4% longer term debt. For the APF, the corresponding figures were 0%, 39%, 42%, and 19%, assuming that gilts would be sold at today's prices.
September 18, 2025 at 2:59 PM
dmwoodruff.bsky.social
Good piece from Alphaville on likely scale of next year's QT. Threadneedle-ologists starting to remind me of Kremlinologists. Here's some figures on the fiscal effects of possible QT size decisions, assuming current gilt prices.

www.ft.com/content/96e6...
Total QT target Of which from active sales Growth in PSNFL (based on current gilt prices) Change in annual interest costs (current values for Bank Rate and 10-year gilt) 100 50.9 8.6 -0.9 62.9 13.8 2.3 0.0 49.1 0.0 0.0 0.3
September 15, 2025 at 4:08 PM
dmwoodruff.bsky.social
How would changing the pace of QT affect the fiscal rules? The table compares 3 scenarios: an unchanged pace, a pace adjusted to reduce active sales to last year's level, or a shift to passive-only QT for the coming year. Maintaining the current pace would save £880 mln/year in interest costs.
Total QT target Of which from active sales Growth in PSNFL (based on current gilt prices) Change in annual interest costs (current values for Bank Rate and 10-year gilt) 100 50.9 8.6 -0.9 62.9 13.8 2.3 0.0 49.1 0.0 0.0 0.3
September 15, 2025 at 3:30 PM
dmwoodruff.bsky.social
This white van ad illuminates a UK fiscal rule accounting issue important for understanding significance of looming BoE QT decision. If buyers are offered a discount for paying deposit and interest, they can choose lower payments&higher indebtedness or a cheaper boiler. Savvy+liquid buyer… 1/3
Ad: Boilers from £1500. 0% Finance. 0% Deposit.
September 2, 2025 at 2:05 PM
dmwoodruff.bsky.social
This white van ad illuminates a UK fiscal rule accounting issue important for understanding significance of looming BoE QT decision. If buyers are offered a discount for paying deposit and interest, they can choose lower payments&higher indebtedness or a cheaper boiler. Savvy+liquid buyer… 1/3
Ad: Boilers from £1500. 0% Finance. 0% Deposit.
September 2, 2025 at 1:59 PM
dmwoodruff.bsky.social
Did you know that the Bank of England promised to give the Debt Management Office a voice in determining the terms of quantitative tightening? Here's Governor Mervyn King before the Treasury Committee in March 2009. Thread offers minimal and radical ways to implement this promise.
Excerpt from testimony: Q19 Mr Fallon: What is the exit plan for all this? If you put £75 billion worth of new broad money into the system, is there an exit plan for getting it out again? Mr King: It may be that we do not need to take it out, provided the further growth of money is in line with the growth of nominal national income, but we have an exit strategy. The obvious thing is that we would raise interest rates, tighten monetary policy. That we can do at any point the Monetary Policy Committee decides. The key anchor for us is the inflation target. That is what will guide the exit strategy. We have to take actions that we feel are consistent with keeping inflation close to the target in the medium-term. We will have to consult with the Debt Management OYce and obtain their agreement to sell the assets, and that is reasonable because we got the Debt Management Office to agree that they would not offset our purchases through their issuance strategy. So the one thing that has to be done is that any operation we carry out with these asset purchases, perhaps subsequently sales, has to be co-ordinated with the Debt Management Office.
August 25, 2025 at 4:20 PM
dmwoodruff.bsky.social
Redemption proceeds Sale proceeds Indemnities adding to PSNFL (Market discount to face value) Indemnities that do not affect PSNFL (Purchase cost minus face value) Total QT Annual interest cost reduction (w/ Bank Rate at 4% and DMO borrowing at 10-yr benchmark) QT in 2024-25 80043 9324 2245 9333 100946 352 QT in 2025-26 (£100 bln, no maturity skew, assuming 22/8/25 prices) 47242 32790 8702 11266 100000 1187
August 23, 2025 at 9:58 AM
dmwoodruff.bsky.social
In Norwich UK. Read it years ago in the US but it made me happy to see it.
A photo of Stay along with other books in a bookshop. A cobbled street is visible outside.
August 2, 2025 at 2:11 PM
dmwoodruff.bsky.social
Pigou wept. Must-read piece on AI infrastructure.
ig.ft.com/ai-data-cent...
From the FT: In 2023, Microsoft said that 42 per cent of its water came from "areas with water stress", while Meta said roughly 16 per cent of its water usage was derived from similar areas during the same time period. Google said last year almost 30 per cent of its water came from watersheds with a medium or high risk of "water depletion or scarcity". Amazon does not disclose its figure. Data centres in drought-prone states such as Arizona and Texas have led to concern among locals, while residents in Georgia have complained that Meta's development in the state has damaged water wells, pushed up the cost of municipal water and led to shortages that could see water rationed.
July 31, 2025 at 10:25 AM
dmwoodruff.bsky.social
Lending based on readily fungible collateral has serious negative externalities and should not be a presumptive right. Thank you for coming to my TED talk.
From the FT, headline says: JPMorgan explores lending against clients’ crypto holdings. From the article: More recently, Dimon has softened his tone. "I don't think you should smoke, but I defend your right to smoke. I defend your right to buy bitcoin. Go at it," he said in May.
July 27, 2025 at 11:22 AM
dmwoodruff.bsky.social
Lohmann’s ‘audience cost’ theory of central bank independence has held up for almost six months since the inauguration, which is pretty good for this crazed era.
A quote from Lohmann, Susanne. “Sollbruchstelle: Deep Uncertainty and the Design of Monetary Institutions.” International Finance 3, no. 3 (November 1, 2000): 391–411. https://doi.org/10.1111/1468-2362.00058. The dismissal of a central banker; a devaluation; the failure to achieve a monetary target – all of these are institutional defections that generate an audience cost.Voters may vote the policy maker out of office; wage setters may write high inflation mark-ups into nominal wage contracts; financial markets may engage in destabilizing speculation or shift investment capital to other countries; cooperative understandings with other policy makers on other dimensions of public policy may break down (the defecting policy maker experiences a ‘loss of political capital’). It is the audience cost, or the threat of a trigger-strategy punishment, that makes the policy maker’s commitment to the institution credible.
July 16, 2025 at 4:55 PM
dmwoodruff.bsky.social
A key passage from Lohmann. Source in next post. 2/3
Lohmann Part 1: there is more to this example. By dollarizing its economy (or tolerating its dollarization), the government creates an audience for a 'devaluation' or 'exit' from the 'fixed exchange rate regime. If the government takes action to reverse the dollarization, everybody who uses money to do business everybody - will notice and wonder what the government is doing. And this audience may impose political costs: some people might be more likely to vote the government out of office; others might shift their capital out of the country. So this is the core idea of my audience theory of institutional commitment. An institution enjoys some degree of credibility if the act of institutional creation attaches the institution to an audience that can and will monitor the integrity of the institution and impose audience costs on the policy maker who would dare to meddle with the institution. Creating an institution draws a line in the sand that focuses the expectations of an audience: voters, wage setters, financial markets, and other policy makers. The line in the sand is a public focal point that allows hundreds, thousands, or even millions of people to coordinate their beliefs about the trigger-punishment strategies that will be executed in the event of an institutional defection. Lohmann Part 2: The dismissal of a central banker; a devaluation; the failure to achieve a monetary target - all of these are institutional defections that generate an audience cost. Voters may vote the policy maker out of office; wage setters may write high inflation mark-ups into nominal wage contracts; financial markets may engage in destabilizing speculation or shift investment capital to other countries; cooperative understandings with other policy makers on other dimensions of public policy may break down (the defecting policy maker experiences a 'loss of political capital'). It is the audience cost, or the threat of a trigger-strategy punishment, that makes the policy maker's commitment to the institution credible.
April 22, 2025 at 12:30 PM
dmwoodruff.bsky.social
Calls for some Schumpeter. Nobody plays bridge anymore but substitute fantasy football, etc.
A quote from Schumpeter’s Capitalism Socialism and Democracy: What strikes me most of all and seems to me to be the core of the trouble is the fact that the sense of reality' is so completely lost. Normally, the great political questions take their place in the psychic economy of the typical citizen with those leisure-hour interests that have not attained the rank of hobbies, and with the subjects of irresponsible conversation. These things seem so far off; they are not at all like a business proposition; dangers may not materialize at all and if they should they may not prove so very serious; one feels oneself to be moving in a fictitious world. This reduced sense of reality accounts not only for a reduced sense of responsibility but also for the absence of effective volition. One has one's phrases, of course, and one's wishes and daydreams and grumbles: especially, one has one's likes and dislikes. But ordinarily they do not amount to what we call a will-the psychic counterpart of purposeful responsible action. In fact, for the private citizen musing over national affairs there is no scope for such a will and no task at which it could develop. He is a member of an unworkable committee, the committee of the whole nation, and this is why he expends less disciplined effort on mastering a political problem than he expends on a game of bridge.
April 4, 2025 at 6:58 AM
dmwoodruff.bsky.social
Harvard trying to bargain is pointless. The Trumpists want to see it in the wood chipper. See Vance’s favorite political philosopher (Yarvin) below. Throwing its considerable resources into legal battle and collective action on behalf of universities and science is Harvard’s only practical option.
An early March 2025 quote from Yarvin: The Mandarins and Barbarians are agreed, however, in eliminating the 60% overhead payments on science grants that are generally sent to top academic institutions, such has Harvard. The theory is that Trump was elected to end waste, fraud and abuse, and all the money sent to Harvard is abusively, fraudulently wasted… Comrades! I get it. I don’t want to send money to Harvard. I want to turn Harvard into dust. Into quarks. But this can only be done in the right way—and not at all in the wrong way.
April 1, 2025 at 2:09 AM
dmwoodruff.bsky.social
Labour wants to be the mirror image of their mythological version of Truss 2022—ie Brown in 1998 doing ‘prudence with a purpose’. All will be good once it appeases the bond market gods Truss flouted. But there might have been some external factors at work for Brown…
A graph showing that yields on UK gilts moved largely in step with US Treasury yields
March 22, 2025 at 2:36 PM