Day: 17 April 2024

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Bank of England school report: must try harder – a brutal analysis of ‘out of date’ systems

Bank of England forecasts

The Bank of England (BoE) stands as a bastion of economic stability, guiding the United Kingdom through the ebbs and flows of financial tides. 

Modernising the Bank of England’s forecasting system has become a critical necessity. A recent independent review has cast a spotlight on the ‘serious deficiencies’ within its economic forecasting system, calling for an urgent modernisation.

Out of date forecasting methods

What have they all been doing for all these years to not have updated their systems?

The review, led by Dr. Ben Bernanke, a former chair of the U.S. Federal Reserve, paints a picture of an institution grappling with outdated systems and under-investment in critical infrastructure. The Bank’s staff, the report suggests, are hindered by software that is not just out-of-date but also complicates the already intricate task of economic forecasting.

This revelation comes at a time when accurate economic forecasting is more vital than ever. The world is still reeling from the effects of the pandemic, the 2008/2009 financial crisis and the UK faces unique challenges post-Brexit. The Bank’s ability to predict economic trends accurately is paramount in crafting policies that safeguard the nation’s financial health.

Deficiencies

The deficiencies highlighted are not just a matter of outdated software; they reflect a deeper need for a paradigm shift in how economic data is handled and analysed. The report recommends a complete overhaul of the system, emphasizing the need for automation of tasks that are currently performed manually.

Governor Andrew Bailey’s reportedly responded to the review by acknowledging the gravity of the situation, stating that updating the Bank’s systems is a ‘high priority’. This commitment to modernisation is a step in the right direction, but it should be followed by swift and decisive action, surely.

A broken compass?

The Bank of England’s forecasting system is more than a tool; it is the compass by which the nation navigates its economic future. Modernising this system is not just a recommendation; it is an imperative. As the UK charts its course in a rapidly changing global economy, the reliability and sophistication of its economic forecasting are not just beneficial but essential for continued prosperity.

In conclusion, the Bank of England’s economic forecasting system is at a crossroads. The call to modernise is clear, and the path forward must be paved with innovation, investment, and a steadfast commitment to excellence in economic stewardship.

The future of the UK’s economy depends on it.

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Does extreme flooding pose a threat to UK food security?

UK floods

Record-breaking rain has inundated the United Kingdom over the past few months, leaving fields submerged and livestock at risk.

The relentless downpours, likely exacerbated by climate change, are now threatening the very foundation of UK food production.

Challenges faced by farmers

UK farmers are facing the repercussions of extreme weather events. Fields that would normally be abundant with crops are currently waterlogged, making them barren. Livestock are also suffering, unable to graze in the inundated fields, leading to a shortage of feed. The circumstances are critical, prompting the National Farmers Union (NFU) to raise the alarm.

NFU’s concerns and calls for action

The NFU emphasizes that climate change-induced flooding imperils food security. Rachel Hallos, NFU vice president, warns that these extreme conditions could become the norm. Urgent action is needed to safeguard our agricultural systems.

  • Compensation and Support: The NFU urges the government to provide more substantial compensation to flooded farmers. The recently launched Farm Recovery Fund offers grants, but broader and longer-term assistance is essential.
  • Reduced Crop Output: Weeks of incessant rain have already impacted this year’s harvest. Crop quality may suffer, affecting both farmers and consumers.
  • Resilience and Adaptation: We cannot rely solely on imports. A clear government plan is necessary to prepare for the potential effect of extreme weather, adapt to its effects, and ensure continued food production.

Voices from the fields – case study example

A recent report from a mixed dairy, beef, and arable farmer in Gloucester whose land lies in the floodplain reportedly said that floods occurred every six years, but now they occur with alarming frequency. Cattle, unable to graze, face dwindling feed supplies. Livelihoods hang in the balance.

The farmer went on to say, ‘climate change affects us all. It threatens our food supply and prices. We must think about resilience and feeding the world amidst a changing climate.’

Conclusion

Extreme flooding transcends a natural disaster; it poses a threat to our very sustenance. In the face of such challenges in the UK, it is imperative that farmers, policymakers, and communities collaborate.

Prompt action is essential to safeguard our food security and foster resilience for the future.

Building and farming on low-lying land, often on floodplains, is likely a big part of the problem, along with the potential effects of the ever-changing climate and weather patterns.

Safety valve

Low lying land has always flooded – isn’t it natures safety valve? We cohabit with nature and low-lying land, as good as it is for farming (and building), will always flood – as it has for thousands of years.

But we do need to do more to protect our food production in the UK.

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UK inflation eases to 3.2% but down less than expected

UK inflation data March 2024

Inflation in the U.K. eased to 3.2% from 3.4% in March, the Office for National Statistics said on Wednesday 17th April 2024.

But a higher-than-expected reading creates more concern as investors push back bets on the timing of the first Bank of England (BoE) rate cut.

Economists expected 3.1% as inflation has been falling gradually since it peaked at 11.1% in late 2022.

Food prices provided the biggest downward drag on the headline rate, the ONS said, while motor fuels pushed it higher.

The core inflation rate, excluding energy, food, alcohol, and tobacco, was reported at 4.2%, slightly above the forecasted 4.1%. Services inflation, closely monitored by U.K. monetary policymakers, decreased from 6.1% to 6%, still surpassing the expectations of economists and the Bank of England (BoE).

The March core inflation figure, remaining above 4%, is expected to fuel speculation that inflation is more persistent than recent projections indicated, potentially delaying the anticipated timing of initial interest rate reductions.

UK inflation 3.2% March 2024

UK inflation 3.2% March 2024