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Markets side-eyeing winter fuel u-turn

My Financial Times article ft.com/content/460189… on why centralizing infrastructure investment via gilt financing will curtail growth and place greater pressure on the public finances. Instead the Chancellor can unleash billions in investment for large-scale projects using public

Reeves says that defence spending will not rise above 2.6pc until the next parliament. But Treasury pushes back, saying this is a misreading of her words bloomberg.com/news/articles/…

Starmer faces a brewing rebellion over £5 billion benefit cut bloomberg.com/news/articles/… via Ailbhe Rea Lucy White Joe Mayes

Today's OBR Forecast Evaluation Report has been seen by some as an outrider for a forecast markdown that would make the Government's life A LOT harder. That still might happen, but I don't think it's the right take on today's report... obr.uk/fer/forecast-e…

What's more, when you correct for what is going on with Labour Force Survey employment, productivity growth has actually been picking up in recent quarters...

So while the OBR's trend productivity growth assumption looks a bit optimistic (see below), meaning still scope for a fiscally damaging markdown (0.2pp markdown=£17bn extra borrowing), it's not clear from today's report - or the data - that this is happening at the Autumn Budget.

This is looking more significant than ever right now

Flagging my latest for @bylinetimes in which I expressed sympathy for Rachel Reeves, whose "misfortune is to be the teller of hard truths in a country only interested in easy answers." If only her party listened to what the markets are saying about Britain subscribe.bylinetimes.com/edition/75/pol…

For all the latest on backbench Labour MPs' efforts to recreate the 2022 Truss moment bloomberg.com/news/live-blog…

The market reaction of the last couple of hours tells the government, and Labour backbenchers, what they need to know. A change in Chancellor (and on a personal level I wish the Chancellor well) to Cooper/McFadden and you perhaps get status quo with markets - but same policy

My article today - why every leftwinger should have Rachel Reeves as their hero. Her fiscal rectitude lowers interest rates, and allows the government to spend more on healthcare etc. Read (free) in the excellent The House magazine politicshome.com/opinion/articl… (1/2)

What options does the govt have left to restore fiscal credibility and fill the budget hole, now MPs have effectively rules out spending cuts? Changing the fiscal rules, tax rises, going for growth, anti avoidance and the Bank of England QE program bloomberg.com/news/articles/…

Bloomberg Bloomberg Economics scorecard on Labour’s first year in power Growth/living standards: 6/10 Lifting employment: 3/10 Delivering stability: 2/10 Ending austerity: 7/10 Housebuilding: 8/10 Overall: 26/50 Via Philip Aldrick Dan Hanson bloomberg.com/news/features/…

Some really interesting stuff in here by Philip Aldrick. Labour has actually done relatively well on ending austerity and building houses, and ok on growth. But the political circus and rebellions mean voters may well not notice. And now there’s a big problem on fiscal stability.