In any business, what we need is confidence… Confidence in the product, confidence in the people that we work with, confidence in ourselves, each other, and the plan. 

Guess what?

That is completely what is missing between the UK Government and the Bank of England!

They don’t trust each other, they view the economic answers differently, and they are on a public mission to prove they are each right… and what does this very public spat and open criticism do…? Kill confidence!

Who wants to own or buy something they have no confidence in? NO-ONE!

So what will happen? SELL IT!

So the financial markets, who feed on nothing but confidence, will sell the UK… 

That means sell Government securities (GILTS, and so interest rates go up… Gilt prices down = higher interest rates) and sell Sterling on the Foreign Exchange markets. In turn, this leads to imported inflation and so the spiral of misery feeds itself for a while.

The Bank of England has poured even more fuel on the fire… Totally shambolic!

The reason Central Bank (BOE) intervention works is that it sends a message to the money markets – “thou shall not pass!”. Which is to say that the Bank says “If you sell here… I will buy it and do this for as long as possible, I have bigger pockets than you and you will lose!” 

The one thing financial markets don’t want to do is lose, so they stop selling…

But in this case, the BOE now comes out and says, not so much “you shall not pass”, but “you can’t pass now, but you can in a bit!”… As ‘friends’ would say, “OMG!”

All the BOE is doing is letting the market sell into them knowing that when the BOE stops propping up the market, there will be no buyers… and down we go!! Idiotic messaging!

All this does is further erode confidence, and give anyone with a trading account an opportunity to make money selling sterling… So what does everyone do?… SELL IT!

I am just holding my head in my hands at the total selfish lack of coordination between fiscal economics and monetary economics…

This is lesson 1 in how to do things badly!

Hopefully they bang heads together and realise that each parties’ individual ambitions need to be set aside for the benefit of the country otherwise this ugly picture is becoming ghastly!

I sincerely hope that they stand firm and co-ordinate somehow, but if not…. Oh Dear!