Julian Jessop

Chart of the Day 🤓

Today's flash UK PMI for November signalled a renewed acceleration in job losses in the private sector, largely due to rising labour costs and additional pre-Budget uncertainty...🙄

www.spglobal.com/marketintell...

FYI, here's the last of my trilogy of notes previewing next week's Budget. I've tried to find some possible upsides, but will leave it to others to judge whether I've succeeded... 🤞

Hopefully see you all on the other side!

julianhjessop.substack.com/p/will-rache...

FYI, here are some thoughts on how Rachel Reeves could increase the tax burden by another £30 billion next week, split roughly £10 billion from broad-based increases in taxes on income and £20 billion from a dog’s breakfast of smaller measures... 🤔

julianhjessop.substack.com/p/how-might-...

UK inflation remains stubbornly high Commenting on today’s inflation figures, Julian Jessop, Economics Fellow at the free market think tank the Institute of Economic Affairs, … Continue reading "UK inflation remains stubbornly high"

Some quick thoughts (for the IEA) on this morning's news that headline inflation fell to 3.6% in October... 🤷‍♂️

iea.org.uk/media/uk-inf...

FYI, I've fleshed out some thoughts on what is likely to be in next week's Budget, starting with a guesstimate at the size of the financial hole... 🤔

(almost certainly wrong, but hopefully in a relatively sophisticated way! 🤓)

julianhjessop.substack.com/p/the-chance...

Even more evidence that Budget speculation is undermining the economy... 🙄

The S&P Global UK Consumer Sentiment Index fell sharply this month, led by expectations for household finances 👇

NB. the more closely watched GfK survey is out on Friday... ⚠️

www.pmi.spglobal.com/Public/Home/...

ps. the ONS deserves credit for updating the way that the data are collected - not criticism! 🤓

The key change is well summarised here... 👇

www.ons.gov.uk/peoplepopula...

But it is still worrying that we do not have a clearer picture of what is actually going on - and the more negative takes may well be right.

2⃣ these data do not tell us why people are leaving - there is a big difference between, say, a young tech entrepreneur fleeing to Dubai, and an elderly couple retiring to Spain...

1⃣ the revisions may simply reflect better measurement (the old survey method was rubbish) rather than a change in the underlying trend - in other words, the number of Britons leaving may always have been higher than previously estimated...

Number of Britons leaving the UK higher than previously thought The Office for National Statistics (ONS) figures come a day after the home secretary announced the biggest shake-up of the asylum system since the Second World War.

FWIW, I'm very willing to believe that more Brits are fleeing the country under this Labour government, but the new ONS data are not necessarily proof that the 'brain drain' is getting any worse... 🤔🧵

news.sky.com/story/number...

FYI, the bond markets - quite rightly - are not buying Labour's spin on the Budget tax U-turn...

Gilt yields closed up between 8 and 16 basis points on the day.

www.bloomberg.com/markets/rate...

ICYMI, here are some thoughts on the latest twists and turns in the Budget saga (only 12 more days of this to go... 🙄)

julianhjessop.substack.com/p/this-is-no...

Really important chart from the ONS... 🤓

The flipside of the fall in payroll jobs is that the UK's performance on labour productivity may actually have improved sharply - just as the OBR is about to downgrade its estimates for trend growth in the Budget 🙄

It is still possible that the Budget itself is not as bad as feared, or at least that uncertainty eases sufficiently to allow some hiring and investment to resume. The reaction in the bond markets will also be crucial.

For now, though, private sector activity appears to be on hold. (5/5)

The manufacturing PMI suggests that the sector recovered a little in October, led by the restart at JLR. But overall GDP growth is still likely to have been subdued, mainly due to pre-Budget uncertainty... (4/5)

The 0.1% monthly fall in UK GDP in September was due in part to the disruption at Jaguar Land Rover - if manufacturing of motor vehicles had been flat rather than slumped by 28.6%, GDP would have risen by 0.1%. However, that would still have been a feeble rate... (3/5)

The monthly data are not very reliable, but it is striking that GDP fell (before rounding) in every month of the third quarter 👇 (2/5)

ICYMI, here was my take on this morning's UK GDP data... 🤔

TL;DR - Growth fizzles out as Budget looms

The latest news on the UK economy confirms that the apparently strong growth in the first half of the year (which was still weaker than in H1 2024) has already fizzled out... (1/5)

How much of our economic mess is Rachel Reeves’s fault? The chancellor was at pains last week to blame everyone else for the tax rises she is likely to announce in the budget

Good piece by Tom Calver on the UK's fiscal mess (and I'm not just saying that because he was kind enough to quote me 😉)...

www.thetimes.com/comment/colu...

📢 Amidst all the talk about increases in tax *rates*, don't forget the other way in which Rachel Reeves is likely to raise a lot more from income tax - extending the freeze on *thresholds*.

Even she said that this would "hurt working people" when ruling it out last year... 👇

Ps. I think he's a terrible person, but imagine he was someone else!

FYI, Musk is not actually going to get $1 trillion...

That figure assumes he hits some nearly impossible targets over the next ten years, and would mainly be paid in shares anyway.

But if does hit those targets, creating many times $1 trillion in value for shareholders, why not? 🤷‍♂️

Breakfasts at No 10: buttering up Labour MPs to avoid a budget backlash Downing Street has been preparing MPs for going back on its manifesto pledge and raising income tax

FWIW, my main takeaway from this piece - once again - is that No.10 has taken control of the Budget (and probably had to do so).

This will be just as much Keir Starmer's gamble as Rachel Reeves', and they will stand, or fall, together...

www.theguardian.com/uk-news/2025...

All fair points, but fixable. Just add a legsl requirement for an annual mileage check. Allow an intra-year check if people sell their car (just like a meter reading if you move house). And I'm not sure 'clocking' is a thing anymore!

Looks like there's just enough public support for a pay-per-mile EV tax to ensure it makes it into the Budget... 👍

The hope is presumably that the markets are impressed by the willingness to break manifesto commitments in order to balance the books. This could sharply lower the government's cost of borrowing and so reduce the need for further tax rises.

But that's quite a gamble... 🤔

(2/2)

Rachel Reeves plans to raise income tax in upcoming budget The chancellor’s submission to Office for Budget Responsibility strongly indicates she will be reversing a key manifesto pledge this month

"Rachel Reeves plans to raise income tax..."

No longer a surprise, but this proposal (2p on all income tax rates, partially offset by 2p off employee NI for lower earners) blows a lot of political capital for not a lot of revenue gain (just £6bn?) (1/2)

www.thetimes.com/uk/politics/...

Annual mileage check, similar to an MOT... No fancy tech required!

FYI, I've pulled together some thoughts on pay-per-mile charging for EVs... 🤔

open.substack.com/pub/julianhj...