A brief thread on gilts. Apologies, it's an arcane subject. But the market in government debt, much more than the Bank of England, determines the interest rate homeowners and businesses pay. Today, the yield on 2 year money rose by 26 basis points. 1/6 Inflationary pressures are persisting in the UK more than in other countries, and this is feeding through to 2nd round effects on wages. Employees and employers are being perfectly rational. We are at full employment. Labour has negotiating power, 2/6

I don't want to disappoint those wanting a speedy denouement to current market events. But it's a long and repeated game. We have a floating currency which withstands day to day market pressures. London is one of the deepest capital markets in the world. 1/ Prices can and do adjust. Most mortgage holders have at least a 2 year fixed term; many have 5 year fixes. The Bank of England don't want to be accused of causing panic (see their recent statement). They have a reputation to preserve. 2/

A short thread on the history of direct taxes over the last century. The 1906 Liberal government introduced the principle that "unearned income" should be taxed at a higher rate than "earned income". This was bad news for rentiers and capitalists. Better news for workers 1/ In the People's Budget, Lloyd George widened the differential so that at the standard rate "unearned" income incurred a tax rate more than 50 per cent higher than "earned" income. For the next 70 years, Labour and Tory governments broadly accepted this principle. 2/

Over the next 7 days we will hear a lot about "fiscal rules" . First point: they are not rules. How could they be when they are changed with monotonous regularity? Rather, they are targets, or more correctly, objectives. 1/8 Second point, they only constrain policy for 12-18 months before the consequences of meeting them becomes unpalatable to the electorate and hence to government. At that point, they are suspended and then discarded. 2/8