There are occasions in life that stop you in your tracks and you consume a symbolic moment that sets the agenda for future chapters of modern history. May 2023 was symbolic on many levels for me.
- I thought the coronation of King Charges III was everything it should be. Historic and momentous, with just enough profoundness and eccentricity. How very British.
- The realisation that there is no greater lie than “Serves 4”. It’s all around us but no one is talking about it. We treat it in good faith as an accurate estimate. But it’s not. Two is accurate….four is not. There are three of us in our house and we live in a world that totally excludes us. It’s a four family world out there.
- The outlandish situation that allows Australia to redefine centuries of established geographical and political boundaries by being considered part of Europe for the Eurovision Song Contest. How very Eurovision.
- My stark realisation that there is now only one company legally allowed to make the game Monopoly. A monopoly of Monopoly if you will.
- The even starker realisation that our inflation target of 2% is due to a historical accident and is not based on any political, economic or fiscal theory.
This stopped me in my tracks for all the wrong reasons……
It all started in 1989, when Don Brash of the New Zealand Kiwifruit Authority accepted the position of head of the Central Bank of New Zealand. Appearing to have no understanding of basic economics, he and his finance minister devised a plan to combat the surging price inflation of the '70s and '80s. The grand master plan was simply to announce he would try to get inflation somewhere between 0% and 2%. That was literally it.
But it created a kind of magic of its own. Merely by announcing the goals for inflation, New Zealand made that result a reality. Luckily for Brash, inflation in New Zealand was 7.6% in 1989 when the target started and only 2% percent by the end of 1991.
This accelerated the idea that 2% was a decent idea. Canada, Sweden and Britain soon followed……and then came the big one……the United States followed.
So the next time you wince at interest rates going up again, just remember that the political, economic and fiscal theory of the UK’s 2% inflation target is based on a 30 year old whim from a kiwi fruit farmer from a country that makes up 0.11% of the total world economy.
You couldn’t make this stuff up. How very Bank of England.
The Numbers
Yet again, all eyes were on three key Bank of England announcements this month.
Announcement #1 was a further increase to interest rates from 4.25% to 4.50% (their highest levels in almost 15 years) to encourage inflation to fall from 10.1%.
This presented more mortgage pain as the 0.25% interest rate rise adds £12 billion to UK mortgage holder payments.
The implications of the twelfth interest rate rise in a row will be far reaching. We never had such intense interest rate increases in an 18 month period before and the concern is where the casualties will come from.
The obvious answer is homeowners with a mortgage who have seen significant rises to service debt levels. Perhaps the biggest issue is still to come though……42% (1.8 million mortgages) are due to be refinanced in 2023 or 2024. Jumping from paying 1.5% to 3.5 – 4.0% looks like a painful event that hasn’t been factored in.
Announcement #2 later in the month saw inflation falling to 8.7% per cent from 10.1%. This was quite a way above the expected announcement (8.2%), creating anxiety that interest rates would now need to be raised to even higher levels.
And this is the conundrum for the Bank of England……how much interest rate pain are they willing to throw at the UK to get to the 2% inflation target set by a kiwi farmer 34 years ago? It is impossible to reach a 2% inflation target when average wage increases in the UK are running at 6.7% p.a. to help combat food price inflation remaining close to historic highs at 19.1%.
While the Bank of England muddle through that riddle, markets now think that UK interest rates will have to keep rising, even as the likes of the US Federal Reserve and European Central Bank consider pausing their aggressive measures.
Try not to laugh the next time Rishi or Jezza try to conveniently forget their promise to half inflation by Autumn!
Announcement #3 was the news that the UK was no longer heading towards recession. It was only 6 months ago that the Bank of England was expecting the longest recession on record, lasting until 2024. However, there were warnings that unemployment could almost double by 2025 but that might not be a bad thing given the current 1.1 million job vacancies are driving up wages.
Elsewhere……
The UK car industry continues to be battered from every which way. Thanks to the ongoing patheticness of Government attempts to encourage the use of electric cars ahead of the 2030 cessation of petrol car production, electric vehicle take-up runs at around 6 x the pace of charger installation. An electric car is about as useful for getting around England as a horse and cart with no horse (and I speak from experience!).
Centre Parcs was put up for sale by its Canadian owners seeking around £5 billion for the company. Presumably this rises to £125 billion if purchased during the school holidays.
The Conservatives lost more than 1,060 seats in the local elections, with Labour gaining more than 530 and the Liberal Democrats (remember them……how very retro) more than 400. Bizarrely, such capitulation was seen as a success by Rishi as the Tories were expecting it to be worse!
As I said earlier, King Charles III coronation will live long in the memory. You cannot beat a long, live, momentous event to watch humans’ definition of ‘appropriate’ while under immense pressure. It’s a fascinating watch. 2,300 guests watched on by a UK TV audience of 20 million saw the oldest (74) monarch coronated. This was the 40th coronation to take place at Westminster Abbey since 1066, which involved 4,000 armed forces personnel and 19 military bands.
Anyone else come to the realisation that it is no longer possible for any Royal occasion to be conducted without Gary Barlow headlining? Perhaps the wrong person was coronated!
Trump of the Month
The warmer weather brought out the village idiots from hibernation and offered an abundance of candidates this month.
Suella Braverman admitted that she asked civil servants to help her dodge a speeding fine by trying to organise a personal speed awareness course behind closed doors. In completely unrelated news, Rishi cleared her of any wrong doing 5 minutes after Suella announced that she wasn’t going to run as opposition to Rishi in the next leadership contest. The arrogance of power personified.
Penny Mordaunt drew admiration for her Coronation outfit and her upper body strength. The press decided that she stole the show by holding aloft the 8lb (3.6kg) sword of state for 51 minutes. Penny told the Times Radio she had “been doing some press-ups to train for that”.
Her odds were slashed to second favourite to replace Rishi as the next leader of the Conservative Party as apparently carrying a sword in a Star Wars costume is now the most appropriate criteria to be Tory leader. What a state for a political party to get in. Absolute lunacy.
For me though, Liz Truss stole the show as she had the audacity to attend the Coronation and sit in the former Prime Minister corner……like an actor who appeared in one episode of Doctor Who, who now sells signed memorabilia on eBay. “Viewers will remember that, in September, Liz Truss was briefly prime minister,” the ITV commentator said. Sassy.
Diane Abbott sent a letter to the Observer in which she said that racism and prejudice were different things and implied that there was a hierarchy of racism. Certain types of racism should be racism and other types should be reclassified as prejudice (Irish people, travellers, and Jews). Her excuse was that it was sent in error as the letter was an “initial draft”.
Really? So many things have to go wrong for it to be an “error” and end up in the Observer. (1) you write a racist draft (2) you open an email (3) you add an attachment (4) you click send on the email.
The outcome? She has not been sacked and instead has had the whip removed. Oh, yeah……that’ll teach her. Farcical.
Hot on the heels was Andrew Bridgen who said “the vaccine rollout has been the worst thing since the holocaust.” What is it these seemingly intelligent MP’s are lacking……well, er, intelligence.
And no month would be complete without the mention of The Trump himself.
He started the month by telling supporters that “Joe Biden is the most corrupt President in American history.” Oh, Donald……you are far too modest.
However, the Trump of the Month award for May
2023 for services to lunacy can only be……Boris Johnson (with a side
order of Rachel Johnson).
Legal investigations into BoJo and Downing Street parties have continued behind the scenes. BoJo had a cunning plan to show once and for all that he was innocent…..he handed over his diaries to prove that he wasn’t at Downing Street on those dates to attend parties.
However, the diaries proved he was breaking the rules elsewhere with social gatherings at Chequers! It was made all the more beautiful by the joy that this was discovered when his lawyers were preparing his defence for the inquiry.
And just for good measure, his sister wheeled herself out to media outlets in defence of her brother by declaring “all the rules were followed whenever I went to Chequers.” So you followed all the rules, bar the one that prohibited you being there in the first place!
Just to be crystal clear, run that past me one more time. What you’re saying Miss Johnson, on record, to the nation, on TV, is that as a family member visiting Chequers, all the rules were followed at a time when family members weren’t allowed to see fellow family members. Check. Mate.
It’s amazing how the Johnson family collective have more arrogance than intelligence.
Absolute madness.
Trump Lunacy Rating: 10 / 10
And Finally……
"The only thing more dangerous than ignorance is arrogance."
Albert Einstein
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