Over on the right hand side of this site is a projection of how the current polls would translate into seats at a general election tomorrow, if there was a uniform swing. On twitter and suchlike I sometimes see if referred to as UKPR’s current prediction, but I’m afraid it isn’t. Polls don’t predict the next election, they measure support now, so the polling average here isn’t my best guess for the shares of the vote at the next election, it’s a measure of support in an election tomorrow. Of course, there isn’t an election tomorrow, and if there was, the polls probably wouldn’t be as they are – if there really was an election tomorrow then the last three weeks would have been full of manifestos, policy announces, campaigns and debates which may or may not have had some impact.

It’s also worth noting that while uniform national swing is not a bad guide by any means, it can certainly be bettered. To start with it’s definitely worth dealing with Scotland seperately based on Scottish polling figures, it might also be useful to include some assumptions about incumbency effects in seats with new MPs, and some degree of random variation at the margins.

I deliberately don’t make predictions this far out, given the huge amounts of unknowns. I tend to find most people who do predict this far out with any degree of confidence are – probably unconsciously – merely predicting what they would like to be the case. It’s rare to find someone confidently predicting a Labour victory who wouldn’t like a Labour victory (or who has an ideological axe to grind against the Tory leadership), or vice-versa on the Conservative side. Given the prominence of Nate Silver and other election prediction sites at the last US election I would expect a plethora of more academic and sensible election prediction models come the actual election (hell, I know for certain of several groups of academics working on various models), but so far virtually the only prediction I have seen that moves beyond wish-fulfillment to actually come up with a poll-based model is the attempt by Steve Fisher at Oxford here, with an explanation of the model here.

Steve’s model is a simple one – it is purely based upon voting intention polls and how they have tended to relate to the election result that follows*. We cannot assume that the polls will remain unchanged in the run up to the next election, given that in past Parliaments they have tended to change. Past change has not been a random walk, with equal likelihood of government’s gaining or losing in the polls – this is the key to Steve’s model. In the past the polls have rended to regress towards the result of the previous election (usually in the form of the government recovering). What Steve has done therefore is to take the current polls, and then factor in the sort of size and scale of changes that have typically happened to the polls over the last years of previous Parliaments, then based a prediction on that. At past elections this would have proven to be a more accurate predictor than just taking the current polls. That is not to say that that it is a particularly accurate prediction, only that in the past it would have been more accurate than assuming no change.

On that basis, if the polls over the next year behave like the polls in the last year of previous Parliaments the most likely result come the general election is a Conservative lead of 5 points over Labour, which would produce a hung Parliament with the Conservatives the largest party. The most important word in that sentence is probably the “if”, and perhaps the most important thing to note in Steve’s projection are the large prediction intervals around it. Steve’s model predicts the Conservative vote will be 37%, plus or minus 8.5 (so between 29% and 46%), the Labour vote at 32%, plus or minus 6.4 (so between 26 and 39). These are huge gaps. Of course, results towards the centre of those ranges are still considered more likely, but it underlines the imprecision of the projection, and the limitations on using current polling data to predict a general election a year away. Polls a year out from the election are not a very good prediction of the election. It would be wrong to say that anything could happen (Steve’s model, for example, suggests it is unlikely that Labour would get over 40, or that the Conservatives would fall below 29), but certainly a lot of different outcomes could happen.

It also reflects the sheer variety of elections. One criticism I’ve seen of Steve’s model is that this election will be different because of the coalition, the UKIP factor and the realignment of the Lib Dem vote. That may very well be true, but we could say the same about other elections – 1964 had two late changes of leader, 1966 wasn’t a whole term, 1974 was different because the Liberals started contesting all seats, 1979 was different because of the Lib-Lab pact, or the winter of discontent, 1983 was different because of the Falklands and the SDP split, 1992 was different because of Thatcher’s removal, 1997 was different because of the sheer scale of the landslide. 2001 was different because Labour never really had any mid-term blues to come back from. The infrequency of elections means that almost by definition each one has things that make it unique and different – yet Steve’s out-of-sample predictions shows the model would been a better tool at predicting those past elections from 20, 12 or 6 months out than just looking at what the polls 20, 12 or 6 months out were saying (it also underlines the difficulty for political scientists in coming up with any decent models at all – you only get 16 data points and they are all weird).

That doesn’t mean it would have been a particularly good prediction at those past points, just that it was better than the alternative of just looking at the polls 20, 12 or 6 months out. The polls now are a snapshot of public support now, they are not a prediction of what will happen in May 2015. If polls move in the sort of way they have in the run up to past elections we can expect the Conservatives to significantly recover. If they don’t, then they won’t, simple as that. Polls do not move by magic, drawn towards past election results by some invisible force. If they narrow, it will be because of the economy, because of changing attitudes to the parties, because, perhaps, of different factors weighing upon people’s political choices as an election becomes more imminent… that, however, is a post for another day.

(*I should also add that this is NOT Steve’s personal prediction of the election – it’s an attempt to see to what degree you can predict election results months in advance using just national poll data. I expect if Steve was making a personal prediction he probably would ponder what the impact of the economy, the party situation etc would be, but that would be a very different and more subjective model.)


253 Responses to “This is not a prediction”

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  1. @ Colin

    BoE’s holdings of Gilts are no different to anyone elses. The Treasury redeems them at maturity & issues more Gilts to replace them.
    —————-
    Redeeming them at maturity & issuing more to replace them is what they are currently doing with the QE Gilts which have reached maturity! That doesn’t reverse QE, that just rolls it forward into the new Gilts.

  2. AMBER

    If BoE do what they are doing now-ie reinvesting redemptions of their Gilts, QE stock is maintained .

    If BoE change policy on redemptions & start to retain them-withdrawing that liquidity from circulation-QE stock will SLOWLY be reduced.

    If BoE place their Gilts in the market place for sale -prior to maturity-then retain the sale proceeds-withdrawing them from circulation-QE stock will be reduced to zero imediately.

    NONE of this affects the Treasury Funding operation-they just keep repaying mature Gilts & issuing new ones as required to fund State Debt.

  3. @COLIN

    “An interesting OP

    http://www.mcofs.org.uk/assets/pdfs/mcofs-wind-farm-survey-report_2014.pdf

    ———

    Ok, so mountaineers don’t like windfarms near mountains. What about all the potential problems of deploying fracking though. What is your assessment of those?

  4. As others have said, I really don’t see how the Tories can increase their vote share from 2010. The only way is down. They were up against a Labour Party in power for 13 years and destined to defeat – yet still the Tories could only muster 37%.

    As for all those thinking South of England LD seats will be cannon fodder for the Tories, that’s highly unlikely. LDs in many of these areas, albeit close to the Tories economically, have no reason to defect and every reason to remain.

    Labour of late has been up in the high 30s, despite Lab DKs ranking higher than those of other parties. There is therefore every chance Lab will stay there

  5. @Colin

    “The essence of the inflationery problems which escalated through the period was competitive , leap frogging pay settlements..

    I have already provided quotes from leading Union figures who subsequently acknowledged that they could not deliver the SC’s objectives from self-interested organisations.”

    ———-

    Lol, this again? Unions campaigned for more pay. because of the big inflationary effects due to swingeing oil price rises, which quadrupled, then later doubled again.

    Inflation which hit many other countries at the same time, depending on how dependent their economy was on foreign oil. I posted lots of data on it before now.

    (These days, since the oil crisis of the seventies, many countries have moved to be less dependent on oil. We moved to gas generation, Japan have nearly halved their percentage of oil in their energy mix, though that involved nuclear…)

    The data also shows that Labour got inflation down from 25% to just 8%, pursuing a policy of wage restraint which worked… until the second oil spike made inflation shoot up again.

    Contrast with how inflation performed under Thatch before oil prices started falling again.

  6. Unless something dramatic happens in the next 12 months or so, the 2015 general election result in terms of number of seats won by parties will be barely changed on that from 2010 with just a handful of seats changing hands.
    I think the prediction is correct that the Tories will be the largest party with the likelihood of another coalition with the Lib Dems. Some people might write them off but can see them holding on to many of the seats that they currently hold.

  7. “282/322/20 +26

    Can one of our constitutional experts tell me what would happen then.”

    That’s a Labour majority. 3 SDLP, plus the Sinn Fein abstentions would make that a majority of 6.

  8. @Colin

    “NONE of this affects the Treasury Funding operation-they just keep repaying mature Gilts & issuing new ones as required to fund State Debt.”

    ———–

    But then you don’t pay off the debt. It is simply taking out new debt to cover the old. Which is what Amber was saying.

    Amber’s question concerns what happens if you want to reverse the QE instead of rolling it over for hundreds of years…

    You seem to be not engaging with this point at all…

  9. @ALister1948
    Interesting different spin being put upon this. On R4 earlier there was heavy criticism of the childcare scheme because of its regressive nature with the £2000pa saving only available when you spend £10000 on childcare which seems to be about twice the average.
    Setting an earnings ceiling of £300K pa doesn’t sound like good politics for the people billed as the party of the rich.
    In fact, the scheme seems reasonably balanced but quite where it fits into the benefits simplification agenda is another matter!

  10. Twitter acquaintance has just posted this:

    “YouGov poll on 18-24 year olds:

    Lib Dem: 6%
    Con: 16%
    Ukip: 3%
    Lab: 67%”

    Is that an actual poll or is she just reading the age crossbreaks? We know what they’re like.

  11. “I think the prediction is correct that the Tories will be the largest party with the likelihood of another coalition with the Lib Dems”.

    This isn’t what the betting market is thinking. There isn’t a single bookie who is pricing the tories to be the largest party. tories for largest party are 7/5 on Betfair. that’s a 140% return. Go for it! 5/4 on Paddy Power and 5/4 on ladbrokes…these are good returns. if you’re right! please someone, who thinks the tories will be in after May 2015, put their money where their mouth is. please, even if it’s only a token £10…please! it would make it so much more interesting…please!?

  12. Maybe AW could run a book… or at least a sweepstake on vote share. First prize: a day’s immunity from modding. I’d probably get left with LibDems on 35% or summat though…

  13. Good Evening All.

    MRNAMELESS:
    Not reliable figures, I suspect. The 6% Lib Dem figure is very high.

  14. I see the cosmologists have confirmed that there was an unimaginably high rate of inflation just after the Big Bang.

    Osborne is reported as saying that this shows just how badly the economy was managed by previous administrations and that the current lower rate of inflation is more evidence that his “long term plan” is working.

  15. @Lefty

    I was always impressed by the “if it’s not hurting, it isn’t working line.” Imagine if you could get away with that as an engineer. “If the bridge isn’t falling down, it isn’t any good.”

  16. @ Carfrew

    Exactly! :-)

  17. MrNameless – it’ll be a crossbreak.

    Sigh

  18. MrNameless

    Yup it’s just today’s crossbreak:

    http://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/6weftuow4n/YG-Archive-Pol-Sun-results-170314.pdf

    Sample side 154

    Previous poll was

    Con 32%

    Lab 36%

    Lib Dem 13%

    UKIP 8%

    Nats 8%

    I was really hoping for one of those polls where the column ‘proved’ more than 100% of the under-25 population of Scotland were voting SNP, thereby getting two types of crossbreak idiocy at once.

  19. @Roger Mexico

    Yes, Gove’s move raised my eyebrows a little. Hadn’t thought of it in terms of forestalling Boris. I’m so naive…

    I suppose I was thinking about the Eton question in terms of the percentage, that as a percentage, it didn’t seem irredeemably hopeless, but yes, when you consider it in terms of coming so high up the list, it takes on a somewhat different complexion.

    Of course, it depends to some extent what questions are asked. For example, getting paid to sit on the boards of companies they had privatised or otherwise favoured, not resigning and instead letting their spads take the heat, and generally talking a load of reprehensible, disingenuous bollox might all be quite high on the list of some.

    Particularly interesting would be questions on things that could be toxic, but currently aren’t because of lack of media exposure. What are the potential VI time bombs awaiting the parties in future?…

  20. Sample side???

    The second group of figures was the one in the Sunday Times of course and I’m only surprised it didn’t lead to a Spectator think-piece on how the Conservatives were now replacing Labour as the party of choice among the young. Or maybe it did and some equally foolish tweet-mate has already sent it to Mr Nameless.

  21. @Guymonde

    Yes a regressive childcare scheme and another complication without a doubt. As with Help to Buy it may even have the effect of increasing demand and so pushing up prices eventually if these are sensitive to demand.

    Just interested that the two parties seemed to show some awareness of the need to appeal to sections of the electorate. I’m not sure if the free meals for infant school children initiative coincided with a minor spike in Goevernment support, or am I imagining that?

  22. Goevernment-Government, though I had just been reading the posts about Michael Gove.

  23. alister1948

    “ust interested that the two parties seemed to show some awareness of the need to appeal to sections of the electorate.”

    Has there ever been a party anywhere which didn’t do that?

  24. Oldnat

    The Judaen People’s Front (Marxist-Leninist) ?

  25. @Old Nat

    If they’re anything like your average Trotskyists the don’t even appeal to each other.

  26. @OLDNAT

    “Has there ever been a party anywhere which didn’t do that?”

    ——–

    Maybe not, but there’s a case for saying the LibDems have given it a pretty good go…

  27. CARFREW

    You are confusing two separate things :-

    1-Management of the Public Finances by the Treasury.

    Gilts are issued for sale in the Market to fund Government Debt. They have maturity dates , at which Treasury repays the then holder. The Treasury then issues new Gilts to fund the repayment.
    ie a constant issue & replacement of Government IOUs

    2-Management of Market Liquidity by the Bank of England.

    Assessing a Market liquidity shortage ( reluctance/inability to lend by Banks) , BoE enters the Market & purchases Gilts already in issue with electronically created cash. This transaction allows Banks holding Gilts to exchange them for cash, increases the availability of credit .
    As BoE’s Gilts reach maturity, BoE receives repayment from the Treasury. Current policy is to use these funds to purchase fresh Gilts in the Market, thus maintaining BoE Gilt holding & the Liquidity stimulus.
    If this policy is changed , and funds from maturing Gilts are retained by BoE but not reinvested, that much liquidity will be withdrawn from the Market, cancelling out that part of the monetary stimulus given when the electronic cash for their purchase was created.
    Such a policy could not remove the QE stimulus faster than the speed dictated by the schedule of Gilt maturity dates in their portfolio.
    A monetary tightening policy of this sort could be speeded up by selling their Gilts back to the market before they mature-withdrawing larger quantities of cash from the Market.

  28. @Colin

    No I’m not confusing anything. Yes, there is a difference between the BoE and the Treasury. That is not in dispute. I am sure that you are very capable of saying many, many things which are true on the matter, the question is… do they shed light on the matter or detract?

    You keep focusing on the actions of the BoE, whereas I was on about the Treasury aspect. Why is that?

    Here’s why… this bit, when you say ” As BoE’s Gilts reach maturity, BoE receives repayment from the Treasury. Current policy is to use these funds to purchase fresh Gilts in the Market, thus maintaining BoE Gilt holding & the Liquidity stimulus. ”

    Here’s the problem, Colin. Yes, it is true that QE allows the other banks to have liquidity, by buying government guilts off them.

    But the bit you are ignoring, is that this is ALSO a mechanism by which the Treasury can fund its debt. It sells gilts to the banks, then the BoE buys the gilts off them with the printed money.

    So… explain what happens with the government debt, as opposed to the liquidity, when you reverse QE. That is what Amber is on about. We know about the liquidity thing. Sure, funds may leave the market too… but government debt Col. What about that…

  29. CARFREW

    @”So… explain what happens with the government debt, as opposed to the liquidity, when you reverse QE. ”

    I already did.

    Try to see BoE as just another holder of UK Gilts among many others.
    If BoE hadn’t bought & held that £375bn of UK Gilts someone else would.

    ALL Gilts are repaid by the Treasury on their maturity dates to the holder-WHOEVER that is.

    Of course it is true that if BoE entry into the Gilt market with newly created cash hadn’t happened there would have been less buyers, more call on market liquidity, -and higher interest rates .The purpose of BoE’s Asset Purchase Programme was to ease these pressures.

    It is very very unlikely that BoE will seek to shift its holdings of Gilts back into the commercial market quickly, because the massive demand on market liquidity would reverse all the gains from the Asset Purchase Programme in the first place.

    The withdrawal of the liquidity stimulus will occur slowly, I am sure.

    Meanwhile the Treasury will continue to fund its Debt in the usual way as Gilt maturities fall due.

    There is nothing distinct , in terms of Treasury’s liability to repay , about the bit which is held by BoE.

  30. @ Colin

    There is nothing distinct , in terms of Treasury’s liability to repay, about the bit which is held by BoE.
    —————
    Yes there is:
    1. The treasury are not paying interest on it. Technically they are but the Treasury immediately get it back from the BoE when they ask for it. You know they do! It’s right there in Osborne’s figures.
    2. And the Treasury don’t have to pay when the gilts ‘mature’ unless they want to. Which government is going to tax businesses or the working population by £375Bn to voluntarily hand that £375Bn to the BoE so it can be ‘shredded’?

  31. Amber

    @1-True. Not in dispute. A policy I disagree with.

    2-They do.

  32. Amber

    ….and they are-this being the most recent :-

    http://www.bankofengland.co.uk/markets/Documents/marketnotice140306.pdf

  33. @COLIN

    CARFREW

    @”So… explain what happens with the government debt, as opposed to the liquidity, when you reverse QE. ”

    I already did.

    ———–

    No Colin, you didn’t already explain what happens to government debt, though at least in your latest answer, we are getting a little bit closer.

    As usual, you choose your words carefully. When you conclude that “there is nothing distinct, in terms of Treasury’s liability to repay, about the bit which is held by BoE”, this may be true, but once again, how much does it help?

    Because the “liability” to repay is not the only issue, is it? There is also the actual ability to pay, or even whether in practice you have to pay it at all.

  34. @Colin

    “Try to see BoE as just another holder of UK Gilts among many others. If BoE hadn’t bought & held that £375bn of UK Gilts someone else would.

    ALL Gilts are repaid by the Treasury on their maturity dates to the holder-WHOEVER that is.

    Of course it is true that if BoE entry into the Gilt market with newly created cash hadn’t happened there would have been less buyers, more call on market liquidity, -and higher interest rates .The purpose of BoE’s Asset Purchase Programme was to ease these pressures.

    It is very very unlikely that BoE will seek to shift its holdings of Gilts back into the commercial market quickly, because the massive demand on market liquidity would reverse all the gains from the Asset Purchase Programme in the first place.

    The withdrawal of the liquidity stimulus will occur slowly, I am sure.

    Meanwhile the Treasury will continue to fund its Debt in the usual way as Gilt maturities fall due.

    There is nothing distinct , in terms of Treasury’s liability to repay , about the bit which is held by BoE.”

    March 19th, 2014 at 7:50 am

    ———–

    Okies Colin…

    Because the banks know the BoE can buy the gilts off them with printed money, the banks are happy to buy oodles of government debt. And, even better, they will buy it at very low interest rates. Bond yields were at times up above 5% in the months before the crunch and QE, in recent times they have been below 1%.

    So, the government gets to sell its debt real cheap. Given the BoE repatriates the profits back to the treasury, potentially even cheaper in practice.

    What this means in practice is the government can keep rolling over the debt, without having to worry about finding buyers, or interest repayments spiralling out of control.

    So, in practice, they don’t actually have to repay. They can keep rolling it over and let inflation erode its value.

    If it were not for QE, the government would face greater pressure to keep the debt down, or to repay it, because it would be harder to sell and interest rates would be a lot more injurious.

    You keep focusing on things like who holds the gilts, and then saying that this doesn’t matter because there is still a “liability” to repay. Which dodges the point. In practice, it is the ability to keep rolling it over, at very low rates, that means in practice the issue of liability is something of a straw man, because in practice, they don’t actually have to repay. Or at least not until so far off in the future that inflation has reduced its value to a minor inconvenience.

    Thus QE creates a mechanism whereby in practice, the government gets hundreds of billions in debt, without any obligation in the near future to repay, and without much interest to repay either. If they reverse QE, and bond yields shoot up, and it becomes hard to roll over, suddenly the government are in a nasty position of having to face up to the debt in reality.

    So clearly, it makes sense to unwind it very carefully. In the meantime, inflation erodes the debt. Thus, in practice, QE has given the government hundreds of billions of almost-free debt. Which is what Amber was on about. The fiscal impact. Hundreds of billions of easy debt for the government, at very low rates, that they can keep rolling over till inflation renders it close to an irrelevance.

  35. CARFREW

    @” There is also the actual ability to pay, or even whether in practice you have to pay it at all.”

    The ability to pay what?

    Government Debt is funded by the issue of Gilts. These have a fixed term before repayment. UK Debt Management Office issues a range of denominations from a few months to two decades & more , in order to provide a smooth cash flow management. When maturity arrives & the Gilt holder is repaid, new Gilts are issued to replace the funding.

    The only thing which reduces the need for this funding is a run of Annual Surpluses which reduce the Debt quantum.

    As to “have to pay”. See my link in the post above-do you suggest that the Treasury can issue Gilts in the Market WITHOUT a maturity date ? I would like to see examples.

    And remember BoE purchases of Gilts are in the MARKET-ie Gilts already in issue. They do NOT purchase direct from the Treasury.

    The Treasury continues to fund its Debt in the Bond Market, where it is exposed to market sentiment on inflation & interest rate prospects. All of this shapes the rate at which DMO get their Gilt sales through the auctions. It is this process which determines the answer to your question about “ability to repay”.

  36. CARFREW

    You might be interested that Carney has just appointed an Egyptian woman to oversee the exit from QE.

  37. Colin

    Read my subsequent post.

    Your insistence on outlining the details of the mechanism without addressing the point does not change the fact that QE allows the government to get lots of debt without the usual more immediate consequences, and without having to pay the real value of the debt down the line as inflation erodes it.

  38. @COLIN

    CARFREW

    “You might be interested that Carney has just appointed an Egyptian woman to oversee the exit from QE.”

    ——

    Yes, I saw that, and that as we would expect, she plans to do it reeeeeal slow!!

  39. CARFREW

    @”QE allows the government to get lots of debt without the usual more immediate consequences, and without having to pay the real value of the debt down the line as inflation erodes it.”

    No this is not true-though I must confess I’m not sure what you mean.

    You seem to be seeing the BoE holdings of Gilts as somehow distinct from all other Gilts.

    They are not. All Government Bonds get repaid, and replaced with new Bonds. All Government Bonds bear interst ( Amber has highlighted the little fiddle on APF coupon)

    The BoE’ has simply provided a new buyer in the Bond Market.

  40. @Colin

    Nope. I haven’t been on about the BoE holdings. What I said was that because the BoE is prepared to buy them off the banks, this allows the government to sell them to the banks at very low rates, over much longer periods.

    So the government gets to fund the debt far, far cheaper. First because of the low rates, and secondly because by the time they may have to pay it back, it is worth far less in pratice because of inflation. Hence the fiscal benefit.

    You are ignoring this completely and instead inventing something different that you claim I “seem” to be saying.

  41. @Colin

    “The BoE’ has simply provided a new buyer in the Bond Market.”

    —-

    quite a big buyer that buys gilts from the other banks, allowing the government to roll over debt at low rates.

  42. CARFREW

    @”You are ignoring this completely”

    On the contrary-I did make specific reference in an earlier post to interest rates.

    Lower rates was a key objective of QE as I understand it. Yes-a major new buyer has had that effect. At least that’s what BoE say has happened !

  43. @Colin

    True, you did mention rates, that’s why I said we were getting closer. But then you seemed later to be challenging me on it when you said “not true”… it is the fiscal impact of the low rates, and the ability to roll over debt and have it issued over such long terms that provides fiscal benefit.

    I’m not arguing for or against QE, btw…

  44. CARFREW

    Rolling over debt has no connection with QE.

    Rolling over Gilts at maturity is what the Debt Management Office has done since forever. Thats how Government funds it’s debt.

    A final thought following Carney’s new appointments.

    He has a lot of monetary tools in use now-FFL, HTB, QE, Base Rate, Mortgage lending Regs………

    An array of levers are in front of him & they are all connected.

    I don’t envy him the task of pulling them in the right order at the right time.

  45. @ Colin

    You seem to be seeing the BoE holdings of Gilts as somehow distinct from all other Gilts.
    —————–
    The ‘ownership’ structure makes them different! The Treasury & the BoE are both in the custody of the Government. Think of them as subsidiaries of the holding company UK Plc.
    Subsidiary Debtor: BoE £375Bn
    Subsidiary Creditor: Treasury -£375Bn
    Consolidated UK Plc: £0Bn.
    That’s all there is to it, Colin. If you can’t understand that, as a former FD, you just don’t want to understand it!

  46. @COLIN

    CARFREW

    “Rolling over debt has no connection with QE.

    Rolling over Gilts at maturity is what the Debt Management Office has done since forever. Thats how Government funds it’s debt.”

    ——-

    It is true that debt has been rolled over before now without QE.

    But this does not alter the fact that WITH QE, because it helps keep interest costs lower, and allows them to shift more debt over longer terms, the government benefits fiscally.

    It is yet another thing that is true, but another straw man. It’s not quite as bad as the time you just kept repeating that Carney will put up rates, but it’s getting there.

    It does not matter how many true things you may point out that are off the point, the fact remains that with such low interest, and being able to shift more debt, for longer, there is fiscal benefit.

  47. @COLIN

    “I don’t envy him the task of pulling them in the right order at the right time.”

    ——–

    It’s tricky… depends to some extent on how much Osborne has a say, and how much other govt policy assists or hinders. But we’ve been in worse situations and done ok.

  48. @ Colin

    “You seem to be seeing the BoE holdings of Gilts as somehow distinct from all other Gilts.”

    ——-

    Lol, it is obviously not quite the same in the case of the BoE now isn’t it..

    I mean, one big clue is that the Treasury is able to repatriate the interest on the BoE gilts!

    Can they do that with gilts held by all the other banks???

  49. @Amber

    It doesn’t seem to be the case that Colin can tell the difference between the BoE and other banks, or that debt at lower interest over longer terms, in greater amounts, might be a benefit.

  50. AMBER

    You like resorting to personal attacks don’t you?

    You really should be more wary of this sort of thing-or people less charitable than me might more forthrightly point out that if you don’t know what a Creditor or a Debtor is, you are hardly in a position to criticise someone who does-let alone understand Quantitive Easing.

    Your post reminds me very much of Richard Murphy’s effort to prove that QE magically rendered a chunk of Government Debt non-existant. His exchanges with his commentators was hilarious.

    Anyway-briefly :-

    The Treasury OWES £375 bn to BoE on the latter’s Gilt holding-ie a LIABILITY-that means it is a DEBTOR ( not a Creditor)

    The BoE is OWED £375 bn by the Treasury-an ASSET-that means it is a CREDITOR ( not a Debtor)

    If you had understood QE, and taken the trouble to read BoE’s Accounts you would find on the other side of its Balance Sheet, the LIABILITY which arose when it created electronic balances with the Insurance Companies & Banks from which it bought the Gilts.

    Net so fa in thec Public Sector r-ONE Asset & TWO Liabilities -ie a NET LIABILITY.

    But clearly I need to remind you that Double entry Book Keeping demands that for every Debit there is a Credit.

    And the missing ASSET which balances our COMBINED PUBLIC/PRIVATE SECTOR Balance Sheet is in the Accounts of those companies who sold the Gilts to BoE-in the form of DEPOSITs with BoE totalling-yes I expect you guessed- £375bn

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