The Bank of England’s Former Deputy Governor Sounds the Alarm on Taxes
Sir John Gieve, once the Deputy Governor for Financial Stability, has publicly warned that the Chancellor might have to forgo further tax cuts or face a brutal trim of public services.
In Plain English
- Prestige jewel: Sir John Gieve ex‑BoE stalwart calls for a tax hike.
- Why? The pound is sliding and borrowing costs are climbing.
- What’s at stake? Public services could see heavy cuts if no taxes are increased.
Currency Movements (As of Friday 9 a.m.)
- Pound to dollar: 1.2288 (down from 1.2301 yesterday).
- Euro to pound: 0.8384 (slightly up from 0.8371).
Bond Market Buzz
- Government borrowing heats up as the bond market opens.
- Yield on 10‑year UK gilts jumps to 4.84%.
- Notably, Thursday’s peak was 4.89%, the highest since the 2008 financial crisis.
Bottom line: The fiscal road ahead is rough, and whether the government takes a bigger tax bite or slashes services, the stakes for the economy and everyday citizens are high. Keep an eye on the developments—things could change faster than a currency pair dives!
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In a sharp showdown on BBC Radio, Sir John Gieve didn’t hold back. He warned the Chancellor that the coming Spending Review and the autumn Budget will force her to make one of three hard choices:
- Raise borrowing – but the climbing interest rates could chew away the margins she’s got.
- Increase taxes – a painful but sometimes necessary itch.
- Slash public services – “some very severe reductions and squeezes,” Gieve said, as a way to stay within her rules.
Meanwhile, off‑stage, a trio of economists has raised a red flag. They say Labour’s growth plan might crumble if borrowing costs keep skidding upward.
Goldman Sachs Says Growth Is Slipping
James Moberly from Goldman Sachs chews out the numbers: the economy slips to 0.9% growth this year, a sharp drop from the Office for Budget Responsibility’s earlier 2% forecast. He points out:
- Higher yields are a breeze‑brakes on domestic growth—homes with old mortgages stay locked, and investors hold their hands.
- A recent surge in yields is pushing the economy down by about 0.1 percentage point in the coming 12‑month run.
- “It’s not the government’s new policy changes or a shift in growth expectations,” he argues. “It’s the fear that the UK’s fiscal outlook is shaky.”
Dame Harriet Baldwin Keeps the Pressure Tight
On GB News, Dame Harriet Baldwin sent a stern message to the Chancellors:
“Rebecca needed to pop onto the Commons stage yesterday to explain how she’s planning to move the economy forward, instead of hopping onto a plane and sprinting to China. ”
It’s a laugh‑and‑cry kind of situation where every move of the fiscal team feels like a tightrope walk over a churning sea of numbers.
What’s at Stake?
- Your pension might feel the squeeze if services cut back.
- Household interest is climbing, meaning more pennies on your mortgage.
- The growth of the British economy could stay tiny if borrowing costs don’t ease.
In short, the bellwether questions are: Will the fiscal squad keep their cool, or will they needle it up like a stubborn steel‑cut engine? One thing is clear: the pressure’s never been this thick, and the drama’s just getting started.
