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JamesSmithRF @jamessmithrf.bsky.social · 4h

Genuine sympathy with Office for National Statistics on this. What's happened here is a bog-standard HMRC recording error on VAT which the ONS have been commendably open about. On substance, it doesn't change the outlook much as low VAT receipts always looked erratic.

Financial Times @financialtimes.com · 7h

ONS revises down government borrowing estimates after data error on.ft.com/4h1HLGG

ONS revises down government borrowing estimates after data error

Office for National Statistics says there was an error in VAT receipts used to calculate the figures

on.ft.com

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JamesSmithRF @jamessmithrf.bsky.social · 5h

This is the quintessential read on household wealth inequality Britain - is well worth your time.

Resolution Foundation @resfoundation.bsky.social · 6h

🚨 New research published today

'Before the fall' looks at what has happened to the distribution of household wealth in Britain and the impact on families.

Read it here 👉 buff.ly/Ya8kInK

Senior Economist Molly Broome:
"Wealth gaps in Britain are now so large that a typical full-time employee saving all their earnings across their entire working life would still not be able to reach the top of the wealth ladder. These gaps are doubly concerning as wealth mobility in Britain is low – people that start life wealthy tend to stay wealthy, and vice versa.
Rising house prices and changes in the value of pension promises account for most of the growth in wealth gaps since the early 2010s, rather than any active behaviour on the part of individuals, such as buying homes or acquiring new assets.
Soaring wealth and an acute need for more revenue has prompted fresh talk of wealth taxes ahead of the Budget next month. But with property and pensions now representing 80 per cent of the growing bulk of household wealth, we need to be honest that higher wealth taxes are likely to fall on pensioners, Southern homeowners or their families, rather than just being paid by the super-rich."

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JamesSmithRF @jamessmithrf.bsky.social · 5h

We are talking household wealth inequality ⁦at the Resolution Foundation‬⁩ with ⁦Molly Broome, Polly Toynbee, Mike Savage and our very own David Willetts. To read the research, see: www.resolutionfoundation.org/publications...

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JamesSmithRF @jamessmithrf.bsky.social · 6d

This is good from Simon Wren-Lewis on why the country's fiscal woes are not caused by OBR forecasts, the bond market or (most improbably) the frequency of fiscal forecasts.

Simon Wren-Lewis @sjwrenlewis.bsky.social · 6d

This weeks post: Misunderstandings on the left (and elsewhere) about the OBR, independence and the bond market mainlymacro.blogspot.com/2025/09/misu...
The government delegating some technical tasks to independent experts doesn't create a democratic deficit, but it does avoid wishful thinking.

Misunderstandings on the left (and elsewhere) about the OBR, independence and the bond market

I often see pieces from those on the left criticising the OBR. Here is Louise Haigh , for example, talking about the “rigid orthodoxy of t...

mainlymacro.blogspot.com

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JamesSmithRF @jamessmithrf.bsky.social · 8d

Finally, today's revisions only slightly change the broad picture of growth since the financial crisis. GDP per person is now about 0.5% higher than previously thought by Q2 2025 (on a comparable basis) BUT it's still more than 6% below its pre-pandemic trend.

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JamesSmithRF @jamessmithrf.bsky.social · 8d

The pandemic recovery is now thought to be a little stronger with the real economy 0.7% larger than previous thought by Q2 2025. This has taken us past France in terms of the post-Covid recovery and closer to the G7 average.

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JamesSmithRF @jamessmithrf.bsky.social · 8d

Near term growth which was unrevised at 0.7% in Q1 and 0.3% in Q2 - leaving the UK the fastest growing economy in the first half of the year (Rachel Reeves said this yesterday and thankfully for her it is still true today). Growth has been revised down by 0.1ppts in H1 2025 tho.

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JamesSmithRF @jamessmithrf.bsky.social · 8d

ONS published a revised set of national accounts data this morning - key data for BoE and OBR in judging whats going on with the economy. Key takeaway is little change in near term pattern of growth but ONS think the economy is a little bigger than previously thought...

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JamesSmithRF @jamessmithrf.bsky.social · 9d

And, at the risk of stating the obvious, the reason why the Spring Statement went so badly for the Government was not because of the existence of a forecast, it was because policy changes were rushed and not well designed.

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JamesSmithRF @jamessmithrf.bsky.social · 9d

Govt is obv trying to get down to one fiscal *event*. No bad thing. So why did that fail at the Spring Statement? That was because the public finances deteriorated and the govt rightly reacted. This is what transparency looks like. We need more of this, not less.

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JamesSmithRF @jamessmithrf.bsky.social · 9d

There's also a key distinction here between fiscal *events* and fiscal *forecasts*. Two forecasts a year is good for transparency (all rich countries do this), but you don't need to make them full policy events.

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JamesSmithRF @jamessmithrf.bsky.social · 9d

More on the frequency of fiscal events this morning. Most important thing to understand here is that our fiscal problems are NOT caused by too many events (or OBR forecasts)- they reflect weak growth and higher interest rates that have left the public finances stretched, making decisions difficult.

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JamesSmithRF @jamessmithrf.bsky.social · 15d

Disappointing S&P global PMI this morning for the UK - suggests a step down in growth in September. Bad news for the government as it suggests the strong growth in the first half of the year was a blip rather than a new trend. Worrying weakening in growth in the all-important service sector.

LiveSquawk @livesquawknews.bsky.social · 15d

UK S&P Global Services PMI Sep P: 51.9 (est 53.5; prev 54.2)
- Manufacturing PMI: 46.2 (est 47.1; prev 47.0)
- Composite PMI: 51.0 (est 53.0; prev 53.5)
www.pmi.spglobal.com/Public/Home/...

www.pmi.spglobal.com

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JamesSmithRF @jamessmithrf.bsky.social · 19d

Biggest things are VAT and PAYE IT. OBR suggests that cd be erratic tho.

JamesSmithRF @jamessmithrf.bsky.social · 19d

NICs is above forecast, IT is below. The former is related to increase in employer NI at last year's Autumn Budget.

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JamesSmithRF @jamessmithrf.bsky.social · 19d

Quick addendum to this thread - big part of the above forecast borrowing is revisions to the first four months of the year, a chunk of which are in Local Authority borrowing. So deterioration in public finances is not just coming from this month's data.

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JamesSmithRF @jamessmithrf.bsky.social · 19d

OBR analysis of the entrails of this is out now and suggests that lower VAT and IT receipts might be erratic (but that NI increase potentially has more information). This will be something to watch closely next month. See: obr.uk/hero/local-a...

Local authority revisions and lower-than-expected receipts push borrowing above forecast - Office for Budget Responsibility

This morning’s ONS release estimates that borrowing in the first five months of 2025-26 totalled £83.8 billion. This is £16.2 billion above the same period last year and £11.4 billion above the monthl...

obr.uk

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JamesSmithRF @jamessmithrf.bsky.social · 19d

So there isn't huge news in this month's public finances data but weaker tax receipts will be a worry for the govt (as the OBR may mark down its forecast for future receipts). Next month is the final public finances release that will be included in the Budget forecast-so we will be watched closely.

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JamesSmithRF @jamessmithrf.bsky.social · 19d

By contrast, central government spending is just £0.7bn above forecast this month, and is now £0.2bn above the OBR profile for the year to date (so basically in line with the forecast).

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JamesSmithRF @jamessmithrf.bsky.social · 19d

Within receipts, VAT and PAYE Income Tax are the biggest contributors -£3.5bn and -£2.3bn respectively relative to the OBR forecast year to date.

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JamesSmithRF @jamessmithrf.bsky.social · 19d

So what's going on? Unfortunately for the govt the biggest bit of news here was weaker tax receipts- cen gov receipts accounted for about £6.1bn of the £11.4bn overshoot in borrowing relative to the OBR forecast in the year to Aug. This is the bit of the pub finance data that has most signal.

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JamesSmithRF @jamessmithrf.bsky.social · 19d

This morning's public sector finance data were not great for the government ahead of a difficult Budget. Borrowing was £18bn in Aug, £3.5bn higher than last year, highest in 5 years, and £5.5bn above the OBR forecast. Borrowing is now £11.4bn above the OBR forecast in the year to date.

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JamesSmithRF @jamessmithrf.bsky.social · 20d

Overall, while there weren't huge surprises from the BoE, today's announcements will be disappointing both for mortgagors (as rate cuts delayed as BoE frets about inflation) and the Chancellor (given no sign of lower rates and continued QT sales putting upward pressure on gilt yields).

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JamesSmithRF @jamessmithrf.bsky.social · 20d

On growth, BoE doesn't see much news in recent data. Key issue here remains that the OBR is significantly above the BoE in the medium term - so we are likely to see some growth downgrades at the Budget - which is bad news for the government.

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JamesSmithRF @jamessmithrf.bsky.social · 20d

And the labour market continues to loosen, suggesting more slack opening up and more downward pressure on inflation. BoE says it sees employment changes as close to zero, which is stronger than the message coming from @resfoundation.bsky.social admin-based employment measure.

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