Bait and Switch

Failed Conservative party leader and famous bald person, William Hague, is one ex politician now columnist worth following. Our suspicion is that Mr Hague's new role is unofficial government mouth piece. We will explain why a little later.

As followers of this blog will note we were somewhat perturbed by language used by Theresa May during her maiden conservative party conference speech over BoE interest rate policy and seemingly its very independence. To us this seemed beyond reckless, especially coming after the BREXIT vote. If the governments purpose was to spread fear and panic, while kicking poor old sterling while it is already on the floor then this move seemed like genius. However, despite our concerns over the composition of the current government cabinet, Mrs May does seem to belong to the more sober wing than the swivel eyed side. Therefore the feeling was that there was another game afoot.

The unceremonious booting of George Osbourne from the chancellery seemed to signal at the time that the Government was repudiating austerity. Certainly if there was one obvious culprit for BREXIT it was this. Further comments from the new chancellor seemed to also imply that the government would be looking at infrastructure spending as a way of growing the economy. However, with the the deficit widening, this level of economic support, although widely recommended by most economists and also now by the IMF, would be a hard political sell to conservative voters. Our initial excitement that the Chancellor's Autumn statement would be a bone to the British economy was somewhat tempered.

One week ago we reported on William Hague's blistering attack in the Telegraph on QE and the role of the BoE highlighting our concerns over the implications of this. Following on from todays announcement that the Government was backing Heathrow Expansion, to the tune of £22 billion, Mr Hague had another opinion piece arguing that;

"To soothe Brexit jitters Philip Hammond must go beyond Heathrow – and launch a bold new infrastructure plan."

Assuming that Mrs May and Mr Hague are not actually lunatics, our guess is that they have on the one hand played to their base with a highly populist message on QE and its impact on savers. The aim being to open up the ground for them to push forward with a 'Peoples QE', where instead of buying banking debt, the central bank 'prints' more money to invest directly into the economy. This makes complete economic sense, it is just the politics of it which were a little distracting.

Therefore we expect some very positive announcements to come from the Governments Autumn statements which in turn could be a big boost for sterling.