The Rest Is Money 129. How Serious Is The UK’s Debt Mess?
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Jan 13, 2025 
Dr. Gerard Lyons, an influential economist and Bank of China board member, joins Steph and Robert to dissect the UK's pressing economic dilemmas. They explore the implications of asking China for investments and the future of UK tax strategies. Lyons sheds light on rising borrowing costs tied to inflation and the necessity for structural reforms to bolster confidence. The conversation further navigates the shifting UK-China relationship amidst geopolitical tensions and the urgent need for public spending reforms in a stagnant economic landscape.
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OBR Update
- The Chancellor's request for a fiscal update from the OBR in March could put her in a difficult position.
- If the update shows no headroom, she may need to raise taxes or cut spending, further impacting growth.
OBR Credibility
- Gerard Lyons asserts OBR's credibility, despite his past alliance with Liz Truss.
- He emphasizes their accuracy in economic forecasting.
Monetary Policy Effectiveness
- Monetary policy's effectiveness is questioned, given the global impact on UK inflation and rearview mirror approach.
- High cost of living persists despite monetary policy adjustments.