John Mather
John helped found AgeWage and has become a friend over the years. An adviser to the rich he is now old enough to have seen it all before, I like his views- coming from Madeira , they have the distance that we need to understand Britain economically. The following is from a recent comment.
Thoughts of an expat , faring well!
I sent my note taker so an interesting debate. I was surprised that there was little emphasis on the risks that could give a further shock to the UK economy.
The first risk is the treatment of statistics in the US, the numbers are relied upon by markets and if politicised, say on inflation figures, it could trigger an exodus from indexed bonds. Who know where market sentiment would go???
Government debt per capita in the UK over age 18 is around £52,000 ( in the USA £85,000)
Domestically the report that I have just read is a further reason for concern. It will not take much to tip a fragile market.
https://niesr.ac.uk/publications/uk-economic-outlook-chancellors-trilemma?type=uk-economic-outlook
Summary below for a study group later today
The UK’s Fiscal Balancing Act: A Chancellor’s Challenge
The National Institute of Economic and Social Research (NIESR) has just released its latest outlook—and it paints a rather sobering picture for the UK Government. In what it calls “The Chancellor’s Trilemma,” the report suggests that it’s looking increasingly unlikely the Government can deliver on all three of its major pledges:
– 🎯 Meet fiscal targets set last October
– 🧾 Maintain spending plans announced in June 2025
– 🙅♂️ Avoid tax hikes on “working people,” as promised in its last manifesto
So what does NIESR see coming down the track?
📈 Inflation: A Slow Descent
NIESR projects inflation will gradually drop toward the Government’s target over the next three years:
– 2025: 3.3%
– 2026: 2.8%
That’s slightly higher than the Office for Budget Responsibility (OBR) estimates from earlier this year. Persistent wage growth and April’s National Living Wage increase could keep upward pressure on prices through the short term.
🏦 Interest Rates: Easing Ahead
Despite economic uncertainty, the Bank of England is expected to continue easing rates cautiously:
– Two 25 basis-point cuts in 2025
– Another cut in 2026, bringing rates down to 3.5%
It’s a delicate dance—balancing economic support while keeping inflation in check.
( I can see no reason that inflation will drop RPI is still 3.6% and forward indicators look like 4% before the year end and for the foreseeable future……)
💼 Public Finances: A Widening Gap
The Government is struggling to stay on course with its fiscal mandate:
– £71 billion deficit in 2024/25
– Already £44.5 billion in deficit in the first quarter of 2025—£6.5 billion more than this time last year
– Forecast for 2029/30: a £41.2 billion deficit, well off the target of a balanced budget
As the report notes, “Substantial adjustments in the Autumn Budget will be needed” to comply with existing fiscal rules.
🏚️ Living Standards: A Tale of Inequality
The poorest 10% of UK households continue to bear the brunt:
– 1.3% drop in living standards this year
– Still 10% below pre-Covid levels
Meanwhile, middle- and higher-income households may see modest improvement in 2025/26, but the lowest-income families will likely fall further behind. Rising housing and food costs are outpacing their income growth.
🔍 Final Thoughts
The NIESR report is a timely reminder of the delicate balancing act facing the UK Chancellor. Meeting fiscal rules, avoiding tax hikes, and maintaining spending—all while navigating a fragile economy—is no small feat.
I think it worthwhile considering the position in 1974 https://henrytapper.com/2024/04/04/1974-and-all-that-learnings-from-pension-oldies/
Nothing much appears to have changed – except perhaps for the past decades we appear to have engaged in an international race to the bottom on headline (at least income) tax rates without regard to the future.
Will marginal tax rates up to 98% be our legacy to our children and grandchildren?
I had a delightful client back then, recommended by Lord Asa Briggs. Denis Healey was a pleasure to work with. The 98% tax rate at the time was a powerful motivator for individuals to seek financial planning advice, making 1972 an excellent time to begin a career in financial advisory services.
Asa Briggs had served as Vice-Chancellor of Sussex University and later became Provost of Worcester College, Oxford. His contributions at Bletchley Park during the war are rarely mentioned these days.
Whatever happened to true statesmen?
I set AI a challenge of “true statesmen” in the 21st century and it came back with:
Examples (Often Subject to Debate and Interpretation!):
Angela Merkel (Former Chancellor of Germany):
Many view her as a “statesman” (sic) due to her long tenure, her focus on economic stability, her handling of the Eurozone crisis, and her leadership during the refugee crisis.
Jacinda Ardern (Prime Minister of New Zealand):
Her empathetic leadership style, focus on social justice, and proactive approach to the COVID-19 pandemic have been widely praised.
Nelson Mandela (Post-Apartheid South Africa):
While his leadership predated the 21st century, his legacy of reconciliation and nation-building continues to inspire.
Barack Obama (Former President of the United States):
His election as the first African American president and his focus on international diplomacy are seen by some as defining moments of the 21st century so far.
I can think of a few others, closer to home, but political
heroes and heroines occupy a very subjective space.
The Guardian tells me that a Labour man born and bred, Briggs regarded Clement Attlee – whom he accompanied to Turkey on a 1950s cruise – as Britain’s greatest prime minister; he regretted that a fellow Sussex nonagenarian friend, Denis Healey, never held the top job.
Healey could have been an even more esteemed client for you, John!