I don't know how many times this needs to be said.
It is serious because the media reporting is just incorrect and gives the public the wrong message...
(I have seen very good IMF presentations splitting out the carry-over effect and the forecast effect, but not in the WEO)
Q4 2026 over Q4 2025 UK growth forecast downgrade is smaller than Japan and Italy's - and the Eurozone for that matter
IMF largely to blame for not highlighting economic activity that is forecast to take place in 2006 rather than that which has already happened
This headline is not true (even though the IMF itself seems to believe it)
The UK's annual average growth forecast downgrade for 2026 is larger than others.
But this is due to what happened in 2025, not what might happen in 2026 due to Iran war...
The Iran war is difficult for advanced economies, but much harder for small Islands and sub-Saharan African countries that are net oil importers
My newsletter www.ft.com/content/32fa...
* great fun *
Tried chatGPT and Gemini to get net oil exports as %GDP.
Both turned out to be masterful bullshitters. Utterly useless.
They kept gaslighting me. Frustrating
Came back from holiday a day early to make this episode of The Economics Show podcast with @chrisgiles.ft.com in which we talk all things Iran
eg I asked him whether the energy shock could pull us into recession
www.ft.com/content/db01...
I had in my mind that readers would think about their lifestyle rather than actually Covid….
I agree and made the point myself that the shock is obviously different.
But if we need to curtail 20mn barrels a day, that is a change in lifestyle of Covid lockdowns. I was using Covid as an example of putting things into a scale that is relevant.
Might have failed, but that was the intent
Over on FT Premium, @chrisgiles.ft.com runs his slide rule against the Iran shock. Reckons maybe half a COVID. www.ft.com/content/b5f9...
But refined fuels (unlike food) are rising appropriately in price to stem demand...refinery margins are exploding
For more analysis www.ft.com/content/b5f9...
Crude prices have risen 60% or so. Forwards will have to rise further to choke off sufficient demand unless the Strait is opened soon
Even after mitigations, the Iran war reduces global liquid fuel supplies by at least 10% (That's half the size of the worst lockdown months of Covid)
And prices of crude oil do not reflect this yet
My newsletter as.ft.com/r/a3833ead-4...
I accept we could have done better. But this is also tinged with rose-tinted hindsight spectacles
Assume we invested a lot more in 2010s - we would be refinancing a lot of that now (there is no way we would have borrowed solely at the long end)
And more HS2s might be all cost and little benefit
Makes some difference - but mostly to security of supply
Hindsight teaches us lessons for sure.
It doesn’t change the calculation now.
Am also not sure storage would have been the magic bullet unless we built so much (half year perhaps) that even ex post it wasn’t worth it
Of course - but it is a fair reflection of opinion at the moment, which will obviously change
Compared with the European Central Bank, the Fed is acting like a rabbit stuck in the headlights...
My column
as.ft.com/r/07d73de8-0...
Quite - as I point out - It both boosts Iran's leverage and increases the urgency of resolving the crisis
Also in newsletter
Remember how the Houthi rebels halved traffic through the Suez Canal in late 2023
it has not come back
Oil prices and futures are currently similar to the ECB's adverse scenario
- My newsletter explains how this fits into its three-pronged war strategy
www.ft.com/content/5a15...
But the whole point is that incentives are different under DC. Those with preferences now for early retirement will need to have more wealth in cross section.
Of course causality. An go both ways, but the IFS report is unsatisfactory because it assumes wealth accumulation is passive
It’s almost by definition that early retirement is among the wealthy.
Choice over savings/consumption would generate this result even if everyone had same income.
This isn’t necessarily bad at all. Just revealed preference
Congratulations!!
That is a good question...
A better one might be whether their actions to do so are the best available
We still don't know how the War on Iran will work out.
Central banks cannot just throw up their hands and curse their fate... they are players here
My newsletter www.ft.com/content/950f...
Thank you - what an idiot!
What we know so far about the economic effects of the Gulf conflict (not much). And the markets are volatile
My newsletter
www.ft.com/content/a2c3...
Lovely event if they have snow 😢
Well known sport for Brits