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  • Can Sunak steer UK economy through 'profound crisis'?

    From bbc.co.uk

    Rishi Sunak enters Number 10 today having made very few promises and said very little in this leadership campaign. He has experience of "profound economic challenges" having steered the economic response to the pandemic lockdowns, creating from scratch the furlough scheme - the state-funded subsidy of the wages of 11 million British workers. The country faced massive unemployment and possible depression from the impact of Covid. His team at the Treasury and HMRC turned around the furlough and self-employment schemes incredibly quickly, helping keep unemployment at record lows when it was expected to hit double ... (full story)

To think he actually wanted the job?
Quoting nbfx
To think he actually wanted the job?
LOL, I agree, but thank goodness for people like him who are prepared to take on situations like this
Quoting MaverickCT
{quote} LOL, I agree, but thank goodness for people like him who are prepared to take on situations like this
I'll go with that. Maybe we're getting a grown-up this time? We've had the Posh Boys, then the lunatics took over the assylum and Bless her Teresa May did her best to control them, then we had the clown followed by the lettuce. Maybe it's time we cut a break and got someone competent with a bit of support?
Boris is waiting for Sunak to fail and will then come back stronger. There was a good reason for quitting the race so soon.
Quoting Bakker
Boris is waiting for Sunak to fail and will then come back stronger. There was a good reason for quitting the race so soon.
Meanwhile Boris should take "playing piano without hands" lessons from his best friend kewenskij. That will boost his chances significantly.
I would place my bet on Sunak over May, boris and truss - all three combined.

Facepalm to those who still holds their support to boris johnson......and again FACEPALM. The ignorancy of these supporters.
I sincerely hope Sunak can do it, but he got a huge mountain to climb.
Quoting Bakker
Boris is waiting for Sunak to fail and will then come back stronger. There was a good reason for quitting the race so soon.
As I see it, if Boris came back , it would be like Trump becoming president again.
Quoting NotBoris
I would place my bet on Sunak over May, boris and truss - all three combined. Facepalm to those who still holds their support to boris johnson......and again FACEPALM. The ignorancy of these supporters.
The interesting thing is that to be fair to the the Parliamentary Tory Party, they actually wanted Sunak in the first place. The membership were clearly out of step and ill-prepared to analyse the situation properly, being too surprisingly economically-illiterate, wrapped up in charm, loyalty/anti-loyalty or even, whisper it, coloured lenses.
Equally, on the other hand, like a stuck record, large majorities in parliament nearly always result in discord and factions jostling for power instead of being kept honest and focused on the matter in hand.
Quoting DaJoWaBa
{quote} The interesting thing is that to be fair to the the Parliamentary Tory Party, they actually wanted Sunak in the first place. The membership were clearly out of step and ill-prepared to analyse the situation properly, being too surprisingly economically-illiterate, wrapped up in charm, loyalty/anti-loyalty or even, whisper it, coloured lenses. Equally, on the other hand, like a stuck record, large majorities in parliament nearly always result in discord and factions jostling for power instead of being kept honest and focused on the matter...
Good point. It also appears that the membership is open to anyone, anywhere, with no checks in place. Seems like a major flaw to me.

IMO, Sunak made mistakes (and I admit to only seeing this with hindsight - but then I'm not paid to do this) during the pandemic which was a major component of the inflation we are seeing now. He has a lot to do, but he seems intelligent (unlike lizzy) and hard-working (unlike bj), possibly honest (unlike bj) so he has a chance. The big risk that I see is he goes full throttle on austerity, in which case he may just be a safe pair of hands to manage the UK economy down to a lower division.
Wasn't the Brit covid lockdown crap among the most draconian? Hardly a selling point.
Quoting TableTop
{quote} Good point. It also appears that the membership is open to anyone, anywhere, with no checks in place. Seems like a major flaw to me. IMO, Sunak made mistakes (and I admit to only seeing this with hindsight - but then I'm not paid to do this) during the pandemic which was a major component of the inflation we are seeing now. He has a lot to do, but he seems intelligent (unlike lizzy) and hard-working (unlike bj), possibly honest (unlike bj) so he has a chance. The big risk that I see is he goes full throttle on austerity, in which case he...
I agree with your analysis, although I'd add that he had to make those decisions in that moment in time, not with the benefit of hindsight and the knowledge of an energy crisis.
Quoting gat
Wasn't the Brit covid lockdown crap among the most draconian? Hardly a selling point.
He was responsible for the then economical response (the opposite of draconian) rather than the political/health security response to Covid. I'd say they're distinct.
Quoting gat
Wasn't the Brit covid lockdown crap among the most draconian? Hardly a selling point.
Amazingly it was the opposite - as everybody else went completely snowflake mental we just went a little bit. If I had been living in the US, Canada or much of the EU I don't know what I would have done. For that I am grateful.
weather, -minus 20c, energy gain 4000% profit per year.
If the budget announcement does not goes ahead on the 31st Oct, GBP is likely to be under strain again.

Depends on how the new cabinet (with the same faces) spins out of this rumored delayed budget - looking likely to be delayed.
Quoting NotBoris
If the budget announcement does not goes ahead on the 31st Oct, GBP is likely to be under strain again. Depends on how the new cabinet (with the same faces) spins out of this rumored delayed budget - looking likely to be delayed.
I get your point(s) but I'd profer that 31st October would have been quite quick with the previous PM and Cabinet responsibilities, even if it would have been necessary as a fire-fight at the time it was announced.
I'd hope that Hunt is given the chance to make sure THE single-shot on target required, with stable fiscal rectitude (as far as the bond vigilantes are concerned). If it's interpreted as being off-the-cuff or incomplete, it'll set off yet another spiral of intended and unintended consequences.
Quoting DaJoWaBa
{quote} I get your point(s) but I'd profer that 31st October would have been quite quick with the previous PM and Cabinet responsibilities, even if it would have been necessary as a fire-fight at the time it was announced. I'd hope that Hunt is given the chance to make sure THE single-shot on target required, with stable fiscal rectitude (as far as the bond vigilantes are concerned). If it's interpreted as being off-the-cuff or incomplete, it'll set off yet another spiral of intended and unintended consequences.
It's been moved to the 17th Nov.

The fiscal statement (budget) is likely to be more taxes - nothing rockect science to be honest.
Quoting NotBoris
{quote} It's been moved to the 17th Nov. The fiscal statement (budget) is likely to be more taxes - nothing rockect science to be honest.
Agree.

Here's one to ponder, IF fiscal tightening is a given now, to what extent might that impact monetary tightening and future MPC decisions (and of course the terminal rate)?

Another one to ponder, Given the above, what would be the effect on interest rate differentials?

Idle musings on a wednesday morning.......
Quoting nbfx
{quote} Agree. Here's one to ponder, IF fiscal tightening is a given now, to what extent might that impact monetary tightening and future MPC decisions (and of course the terminal rate)? Another one to ponder, Given the above, what would be the effect on interest rate differentials? Idle musings on a wednesday morning.......
We know trussnomics was going to flopped and it did as expected.....

It's ironic what Sunak debated in the summer had all come to pass, by surprise (if any, sic...)!!!!

The market is giving Sunak and his "rishuffle" the benefit of doubt for the moment, hoping another unicorn will appear.

For me - I do support higher taxes, banning/capping banker bonuses, windfall tax on energy firms...alas not a left thought but wishing to reduce the burden, while we can, for the sake of our next younger generations to come.

Though I wish this lot of tory cabinet be sent to oblivion, somehow I am holding some hope in Sunak (not his new team). I don't think Labour has a credible plan nor the abilities to sort out this mess either.

Trussonomics UPWARD and FORWARD we go.....to paradise in hell!
Quoting Emma1
weather, -minus 20c, energy gain 4000% profit per year.
What are you talking about.?.
Warning: A Dangerous Subversive: 1% of comments CoCed
The remoaners think the pretty puppet is good enough to give a chance says it all, apparently he's a brexiteer but no one can prove it.
#doyourownanalysisordietryin
Quoting NotBoris
{quote} We know trussnomics was going to flopped and it did as expected..... It's ironic what Sunak debated in the summer had all come to pass, by surprise (if any, sic...)!!!! The market is giving Sunak and his "rishuffle" the benefit of doubt for the moment, hoping another unicorn will appear. For me - I do support higher taxes, banning/capping banker bonuses, windfall tax on energy firms...alas not a left thought but wishing to reduce the burden, while we can, for the sake of our next younger generations to come. Though I wish this...
Trussonomics was out of place in time. It could really only work if there was a following wind not a storm straight in the face.
We're not on the same page with some of your thoughts BUT right now it is necessary to 'balance the books' and start getting national debt down. I suppose people will get all haughty about that and label it with the acquired-crime title of 'austerity', as if good housekeeping is a sin.
The tax-take as a percentage of GDP is at its highest in generations and it stifles the natural cause of growth and inflation is similar. The goose may not be squawking but if its defeathered there maybe no hope of it flying again.
The UK does NOT have the worst position by any means with regard to the debt-GDP ratio, even in the G7, but if growth is to follow, and that has to happen for a better future, the whole economy and government spending has to be made leaner and more productive.
And AN issue is that society as a whole is financially illiterate with an assumption that Government can always just create, tax and spend all the more money without consequence. It's always someone else's problem, eh.
Quoting DaJoWaBa
{quote} Trussonomics was out of place in time. It could really only work if there was a following wind not a storm straight in the face. We're not on the same page with some of your thoughts BUT right now it is necessary to 'balance the books' and start getting national debt down. I suppose people will get all haughty about that and label it with the acquired-crime title of 'austerity', as if good housekeeping is a sin. The tax-take as a percentage of GDP is at its highest in generations and it stifles the natural cause of growth and inflation is...
There is another option to screwing the poor and middleclasses (yet again) in the name of austerity. The rich increased their net worths by on average 20+% due to Governmant and Central Bank Largesse since March 2020. They could put a 1% tax on assets and make the exchequer very happy indeed. Of course, Tory MP's in particular and many of the more senior figures in the administration might be rather less content. Might go just a very small way towards reducing a tiny bit of the increased inequality that has occured in the last 2 or so years? And of course save the lumpen masses from paying the bill yet again?

(of course the Tories would never dream of doing that and Labour are far too scared...)
Quoting DaJoWaBa
{quote} Trussonomics was out of place in time. It could really only work if there was a following wind not a storm straight in the face. We're not on the same page with some of your thoughts BUT right now it is necessary to 'balance the books' and start getting national debt down. I suppose people will get all haughty about that and label it with the acquired-crime title of 'austerity', as if good housekeeping is a sin. The tax-take as a percentage of GDP is at its highest in generations and it stifles the natural cause of growth and inflation is...
In summary, any other thing under the sun apart from boris johnson, is good for me
Quoting NotBoris
{quote} In summary, any other thing under the sun apart from boris johnson, is good for me
I think that was inplicit in your handle, although Liz Truss did kinda set you off as well?

Inserted Video
Quoting nbfx
{quote} I think that was inplicit in your handle, although Liz Truss did kinda set you off as well? https://www.youtube.com/watch?v=--P3GdP1HIw
Damn me, I forgot about the lettuce! Apologies
Quoting NotBoris
{quote} Damn me, I forgot about the lettuce! Apologies
I feel sorry for Nerine Skinner. Truss was a gift to her to print money with her parodies and there goes the lettuce.
Quoting DaJoWaBa
{quote} Trussonomics was out of place in time. It could really only work if there was a following wind not a storm straight in the face. We're not on the same page with some of your thoughts BUT right now it is necessary to 'balance the books' and start getting national debt down. I suppose people will get all haughty about that and label it with the acquired-crime title of 'austerity', as if good housekeeping is a sin. The tax-take as a percentage of GDP is at its highest in generations and it stifles the natural cause of growth and inflation is...
IMO - Trussonomics was lazy politics and economics - it was probably never going to work. The best case was in a booming economy, the government could lower taxes enough to breeze through the next election. It was ideologically driven with no analysis or scrutiny - hence the market pricing in a significant risk premium. One fringe of the party got them in, and they got to play out their fantasy. There was very little meat, just the ideology of low tax, small government and leaving it to the markets.

The premise of small/no government and leaving everything to the markets is a fantasy. Policing, defence, intelligence/CT, health, social care, big science, innovation (e.g. basic research and directed investment) etc. etc. benefits all in society and the government has a role to play in all of these areas (and others). Libertarian-driven politics is lazy, serving only a small part of the population. A mix of free (but regulated) markets, a situationally aware and strategically capable government (which requires better education for all and political reforms), supported by business (big, med, small - to drive industrialisation) and 3rd sectors (experimenting with new ways of working, and fixing short term issues), is IMO what we should be aiming for.
Quoting TableTop
{quote} IMO - Trussonomics was lazy politics and economics - it was probably never going to work. The best case was in a booming economy, the government could lower taxes enough to breeze through the next election. It was ideologically driven with no analysis or scrutiny - hence the market pricing in a significant risk premium. One fringe of the party got them in, and they got to play out their fantasy. There was very little meat, just the ideology of low tax, small government and leaving it to the markets. The premise of small/no government and...
Broad-brush I agree. I am not sure if you think I was advocating Trussonomics or libertarianism as that wasn't intended. I was merely making the point that the perception that increasing taxes is painless and without unintended consequences is false. If by doing so all that happens is a smaller cake, it achieves nothing other than death-by-a-thousand-cuts.
Quoting nbfx
{quote} There is another option to screwing the poor and middleclasses (yet again) in the name of austerity. The rich increased their net worths by on average 20+% due to Governmant and Central Bank Largesse since March 2020. They could put a 1% tax on assets and make the exchequer very happy indeed. Of course, Tory MP's in particular and many of the more senior figures in the administration might be rather less content. Might go just a very small way towards reducing a tiny bit of the increased inequality that has occured in the last 2 or so years?...
A sort of Robin Hood Tax on everything illiquid owned only by the 1%? Every year? Not the 1.1%? Just the 1% that already pay something like 35 % of the tax receipts? I can think of all sorts of theoretical taxes that would affect anyone else but me but that doesn't make them work nor that they wouldn't have unintended consequences. So, explore the hypothesis a little more . .
Very little, if any, of that illiquid wealth will be just sitting around idle. It will be 'working' in the economy. So, the confiscation would result in removing good capital from the private sector and using it to pay for costs of the country, that once committed, means that the ratchet requires even more to be confiscated.
If you want to be able to pluck the goose, you have to make sure it remains in your jurisdiction first. If the 1% left the jurisdiction you'd be short of 35% of the tax receipts.
And imagine the fees for the Lawyers, Accountants and Private Bankers.
It'd be better to tax at the point of inflow of the wealth, rather than after it was obtained, surely?
Quoting DaJoWaBa
{quote} Broad-brush I agree. I am not sure if you think I was advocating Trussonomics or libertarianism as that wasn't intended. I was merely making the point that the perception that increasing taxes is painless and without unintended consequences is false. If by doing so all that happens is a smaller cake, it achieves nothing other than death-by-a-thousand-cuts.
I take your comments as useful analysis. I find most political discourse ends up being too binary, and one size doesn't fit all.
You know what guys.. its time to realise were at a moment in time when we need to reach for good old Albert E's quotation .. “Problems cannot be solved with the same mind set that created them.” to see the exit.

And as a result all of these media stories, the issues and problems they pose; the threads they spawn, and almost all the analysis they prompt,(much very well researched and informed ) are a waste of time.

Theres a big fat elephant in the room guys. which as analysts/ economists /traders we are being deliberately and systematically being blindsided on, hiding in plain sight.

I wonder if anyone can spot it?
Warning: A Dangerous Subversive: 1% of comments CoCed
Quoting RossEdwards
“Problems cannot be solved with the same mind set that created them.” ...
Completely agree. I'm not sure which big fat elephant you're referring to, so I'll give my take (which is very UK-biased).

Someone once pointed out that 'success breeds inertia'. In my business life, I see it all of the time, for example, in the late '90s it was businesses refusing to see the internet as anything other than a hobby of nerds. These companies mostly disappeared, and even the really big ones are in a steady decline. You see it with many managers in all types of organisations...this is how we have always done things...if it ain't broke...etc. The reason for this inertia is that the individuals/company/organisation became successful using certain strategies and practices, and so this becomes the standard operating model. I worked with one major energy company that had to wait for several directors to retire before they could begin to migrate workload to the cloud as one of these directors put it "we like our infrastructure".

The way I see things is that our political system is from a bygone era. It was fit for purpose once upon a time, but no more. Our governing 'class' appear to have very little situational awareness and strategic capability. Luckily there are many operating in government departments who are both capable and aware and so even with the political clowns changing direction every month/week/day, the government continues to function.

Brexit is a good example of this lack of capability/situational awareness. It didn't have to be the way it currently is. We could have maintained much stronger trading terms while still gaining this elusive 'sovereignty' that folk keep banging on about (just ignore monarchy and HoL). Instead, we got the Trolly and a half-arsed job.

Another problem is we are fishing for 'talent' from a tiny small pool - mostly folk from wealthy or very wealthy families i.e. 'the <1%'. The UKs strict hierarchical societal structure means we have very little social mobility, and those with power have no inclination to change this (and don't see it as an issue).

The UK can probably carry on like this for a long time - there is a lot that is good, and some very good people. The fix - we need some substantial modernisation. 2 key ones for me are education improvements (and shakeup away from standardised GCSE/A-level/Uni system we have today), and improving citizen involvement in politics/government (at the moment people are actively turned-off of politics).
100% agree. cant respond right now..
But at the risk of oversimplification.. you might enjoy this.
https://www.youtube.com/watch?v=H5b1vzARyfI

(His takedown of Media Gurus and politicians is equally incisive.)
Warning: A Dangerous Subversive: 1% of comments CoCed
Quoting RossEdwards
100% agree. cant respond right now.. But at the risk of oversimplification.. you might enjoy this. https://www.youtube.com/watch?v=H5b1vzARyfI (His takedown of Media Gurus and politicians is equally incisive.)
There's loads of us think that way, and I'm glad he's gaining a stronger voice. It can only be a good thing!
Education is one of many mistakes. We have outrightly encouraged a huge number into further education who really should not have been there. At the same time we have been glacially slow to train people with skills - even now apprentices are paid £4.30 per hour. We have much preferred cheap labour. Society has lost the plot in its expectations and its attitude to debt - both personally and governmentally. I could go on and on but suffice to say this does actually need to stop. But I need a government that is closer to the people - there has been complete and utter abuse of power in myriad forms and some people like to point out fraud and inexcusable corruption and yet pretend the trashing of civil liberties hasn't happened. Human nature will always give you leaders like this so I'd like a leader that I can hold to account thank you. It is quite unbelievable that there is NO leader of ANY political persuasion that I have any faith in.
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  • Posted: Oct 25, 2022 4:29am
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    Category: Fundamental Analysis
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