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Foreign exchange specialists today tell us that the value of the pound has dropped to a nine month low against the dollar and dipped again today as the markets reflect their disappointment at the growth in the unemployed claimant count. Sadly, the only growth that they may see for some time.
If the governor of the Bank of England had not paused the quantitative easing program then the news could reasonably be expected to have been worse than it is.
inflation is up to 3.5% which is above the allowed 2% so the Head of the Bank of England has been required to write to the chancellor explaining why.
Stagnant growth coupled with inflation is a traditional Labour party economic policy outcome.
What disturbs me in particular today, and for me this is by far the most important fact of them all, is the report that in January there was a borrowing requirement of £4.3bn!
January is the month when large amounts of businesses and the self-employed pay their annual tax bill. There has never before been a deficit in January.
This does not bode well!
The chancellor’s forecast was that he would be using the annual January surplus to pay off some of the national debt. Whoopsey!
This throws the budgetary forecast into disarray and will certainly make it more expensive for the treasury to continue selling government debt.
