London Daily

Focus on the big picture.

Gas prices, interest rates, NHS waiting lists - charts reveal what may happen in 2023 I Ed Conway

Gas prices, interest rates, NHS waiting lists - charts reveal what may happen in 2023 I Ed Conway

Given the drama of 2022, there is no guessing what 2023 will throw at us.

Still, that needn't stop us having a shot, so without further ado, here are some of the charts that might help tell the story of 2023.

1. The gas divergence

One of the most curious things about 2022 was that even as it faced a serious gas price spike, the UK was awash with natural gas. This was in large part a consequence of the industrial geography of the gas market, where prices and flows are in large part a consequence not just of supply and demand but of something far simpler: where the pipes are and where the gas comes in.

The UK typically tends to send gas across the pipelines running over the channel into the continent during the summer and sucks it back in the winter. The reason it was drowning in gas even as we faced a so-called "shortage" earlier in 2022 was that at that point, Europe was crying out for extra gas and one of the only places to get it was via big liquefied natural gas carriers, most of which had to dock in the UK before sending their cargo through British pipelines over to Europe to be stored.

There are a couple of interesting points here. First, the UK played quite an important role in helping provide gas throughout for Europe to fill up its storage. But the other consequence was to cause a big gap between UK and European gas prices.



You can see the result in the accompanying chart. Both UK and European prices rose but the European prices (red line) rose far more than the UK prices. The interesting question for 2023 is whether this goes into reverse. Because the UK is now reliant on European gas during cold weather, does it face higher prices than Europe? Is Europe happy to send that gas over in the face of a shortage (or Russia cutting off its supply)? And, in the summer, does this pattern repeat, where the UK gets lower gas prices?

Much will depend on how quickly Europe can build its new terminals to suck in extra gas, but the important consequence of all this is clear. These wholesale prices influence the prices we all pay for our gas bills. The gas market's strange peccadilloes never mattered all that much before last year. All of a sudden they're all important.

2. The ever-growing waiting lists


One of the defining features of 2022 was the swelling ranks of people on NHS waiting lists, which mounted, all told, to over 7 million by the latter half of the year. The big question is how quickly the NHS will be able to clear these backlogs.


The likeliest prospect is that these numbers carry on rising this year and do not peak until 2024, making this another tough 12 months for the NHS. The problem is that not only is it trying to deal with the increasing burden of an ageing and less healthy population and the growing cost of pharmaceuticals, it is also facing this enormous overhang from the COVID period. Oh and this is before one considers the impact from the industrial action over the winter. In short, if you thought 2023 might be the year the NHS would disappear from the headlines, think again.

3. A tidal wave of bonds


This chart is quite complex but once you get your head around it it's pretty astounding. The back story here is that the government bond market, once upon a time one of the most boring corners of the financial system, became very exciting in 2022 following the mini-budget and it might continue to be exciting (and not in a good way) in 2023.

The overarching point here is that this market, where the government auctions bonds (IOUs - sometimes called gilts) in order to raise money, is facing a potential spate of indigestion.


The bars are showing you the amount of UK government debt entering the market in the coming months. Anything above the line is money being sold to private investors. Anything below the line is bonds being bought off private investors.

And you can see a few things emerging here. Look first of all at the dark blue lines. That's debt being issued by the UK government - it's all those bonds they auction to finance much of their spending (remember they still borrow a lot more than they raise in taxes). You can see a few big peaks in bond issuance: around the 2008 crisis and recession and then again in 2020 when COVID struck. It's the flip side of saying there were big deficits those years.

But there's something else going on too. Look at the light blue bars. These are the bonds the Bank of England is buying/selling. And you can see how, through its quantitative easing (QE) programme it was buying up LOTS of government bonds in years gone by. That 2020 splurge of debt by the government was almost entirely "cancelled out" by the fact that the Bank of England was simultaneously buying hundreds of billions of pounds of bonds off investors via its QE scheme.

Now roll onto 2023 and because the Bank of England is no longer buying up those bonds from investors but reversing quantitative easing and selling them, the light blue bars are now above the line. The upshot is that the private sector is being asked to absorb an unprecedented amount of government debt. The red line - which nets out the blue bars - is the one that matters here. It's higher than ever before in the coming years. No one knows how easily the market will digest that debt but we're about to find out. It could be a bumpy ride.

4. Interest rates


For many households, this is the main chart that matters this year. We became quite used, over the past few years, to interest rates at rock bottom levels. But that has begun to change. The only question now is how high those rates get.


While it's hard to know for sure where they'll end up (just as it's hard to know what Vladimir Putin is planning next) the market has some guesses. But what's striking is how much those guesses have evolved in recent years.

Think about it. Less than a year ago traders in money markets were still expecting that rates would rise no higher than about 1.5% in the coming years. That of course began to change as the year wore on, a combination both of rising inflation and of the change in government in the UK. Even so, what happened after the mini-budget was quite extraordinary: the expected peak rose from around 4.5% to as high as 6.4%.

Now, the Truss government didn't last long and the rates dropped back thereafter. All the same, money markets still expect interest rates to get to 4.5% by the middle of next year. The question, then, is whether this turns out to be right, or whether the Bank stops short of this, as it has frequently hinted it would. The other question is whether rates begin to fall quickly thereafter.

The consequence for many households, however, is that the cost of borrowing, for a decade or so something they rarely had to think that much about, will be considerably higher. Mortgage misery - the subject of many discussions in the 1990s - will be back again. On the one hand, a sizeable number of older households are now lucky enough to have paid off their mortgages. On the other hand, for those who have mortgages (or for that matter those renting) property costs are only going in one direction. In much the same way as the cost of living dominated 2022, this is very likely to be one of the stories of 2023.

Newsletter

Related Articles

London Daily
0:00
0:00
Close
Unelected PM of the UK holds an emergency meeting because a candidate got voted in… which he says is a threat to democracy…
You Are So Beautiful
Rob Schneider explains California reparations legislation.
Postmodern Jukebox European Tour Version
Who knew badminton could get so intense?
An old French tune (by Georges Brassens) Pomplamoose ft. John Schroeder
Farmers break through police barriers in Brussels.
Sattahip Motor Show 20
London's Iconic British Telecom Tower Sold To Become Hotel
SONATE AU CLAIR DE LUNE - Moonlight sonata
Ukraine Arrests Father-Son Duo In Lockbit Cybercrime Bust
A kiss to build a dream on
US Offers $15 Million For Info On Leaders Of Cybercrime Group Lockbit
Wonderful Tonight - Eric Clapton (Boyce Avenue acoustic cover)
Russia Claims UK Cultural Agency Spied for Ukraine
Mean Blues
Apple warns against drying iPhones with rice
La Chansonnette
Alexei Navalny: UK sanctions Russian prison chiefs after activist's death
Pattaya Addicts
German economy is in 'troubled waters' - ministry
Franz Liszt - Liebestraum - Love Dream
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Dream a little dream of me
New video
Unchained Melody sung like you've NEVER heard!
Tucker Carlson says Boris Johnson wants "a million dollars, in Bitcoin or cash, from Tucker Carlson to talk about Ukraine.
Dave Brubeck - Take Five
Russia is rebuilding capacity to destabilize European countries, new UK report warns
Édith Piaf - Non, Je Ne Regrette Rien (Sofie)
EU Commission wants anti-drone defenses at Brussels HQ
Rondo Alla Turca
Von der Leyen’s 2nd-term pitch: More military might, less climate talk
Kiss of fire
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Tom Jones - I´ll Never Fall In Love Again 1967, 1989, 2001
Prince William Urges End to Gaza Conflict
Israel Cachao López - Guajira Clásica
UK court to hear Assange's final appeal against extradition to the US, where he faces charges related to his journalistic work—the publication of a classified video in 2010 that exposed US war crimes against humanity.
Edward Maya - Stereo Love (feat. Vika Jigulina) (Extended Mix)
About 50-60% kids either chose to be YouTuber or influencer
Strauss - Radetzky March - Karajan
A viral video of Nationals MP Barnaby Joyce lying on a Canberra footpath is celebrated by his media mates.
La vie en rose
European Countries React to Navalny's Death by Summoning Russian Diplomats
The Temptations - My Girl (Smokey Robinson Tribute) 2006 Kennedy Cent
Israel has gone ‘beyond self-defence’ in Gaza, says Labour’s Streeting
Orlando Cachaito Lopez Redencion
English farmers to be offered ‘largest ever’ grant scheme amid food security concerns
Edith Piaf - NON, JE NE REGRETTE RIEN
Cameron government knew Post Office ditched Horizon IT investigation
RADETZKY MARCH-2008-Wien, New Year Concert
EU Calls for Immediate Ceasefire in Gaza Conflict
Only you (And you alone)
EU Vows To Hold Putin "Accountable" After Meeting Alexei Navalny's Wife
Strangers In The Night
EU Launches Probe Into TikTok Over Child Protection Under Digital Content Law
Charles Aznavour - La Boheme
The EU Initiates Naval Mission to Defend Red Sea Trade Routes
Summer time
EU and UK Announce Joint Effort on Migration
Sting and Stevie Wonder - Fragile (from Sting's 60th birthday concert)
Brazil's Lula Likens Gaza Operation to Holocaust, Israel Says "Red Line" Crossed
Aux Champs Elysees
Ministers Confirm Proposal to Prohibit Mobile Phone Usage in English Schools
Stand By Me - Ben E. King (Boyce Avenue acoustic cover)
Microsoft-backed OpenAI valued at $80bn after company completes deal
La Mer (Beyond the Sea) – Avalon Jazz Band
‘Alexei would want to tell Russia not to give up fighting’
She
Rwandan Footballer's Dismissal Sparks Concerns Over UK Asylum Plan
Nathalie Song by Enzo Petrachi Stjepan Hauser Cello
Whisky Challenges China's Baijiu Market During New Year Celebrations
Shape of My Heart - Sting (Boyce Avenue acoustic cover)
Avdiivka - Symbol Of Ukrainian Resistance Now In Control Of Russian Troops
Radiohead - Creep
Putin Critic Alexei Navalny's "Killers" Refusing To Hand Over Body, Say Allies
Quizás,Quizás,Quizás - Andrea Bocelli - Jennifer Lopez
"Historic Step": Zelensky Signs Security Pact With Germany
Perhaps, Perhaps, Perhaps - Multi-Couples
"Historic Step": Zelensky Signs Security Pact With Germany
Pentatonix Havana
20 Tech Giants Sign Effort To Fight AI Election Interference Across Globe
Paula Cole - Autumn Leaves
Joe Biden Accuses Putin of Causing Navalny's Death
Oscar Benton Bensonhurst Blues
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
OH NANANA vs ABUSADAMENTE
Tucker Carlson grocery shopping in Russia. This is so interesting.
Nina Simone - ”I Put A Spell On You”. Vezi aici cum cântă Jeremy Ragsd
Julian Assange's Wife Warns of His Death if Extradited to US
NIGHTWISH - The Phantom Of The Opera
‘A lot higher than we expected’: Russian arms production worries Europe’s war planners
Motorshow 2016 Tanjay Negros Oriental
Greece Legalizes Same-Sex Marriage and Adoption Rights
Monica Bellucci - Ti Amo
Hungarian Foreign Minister: Europeans will lose Europe, the Union's policy must change drastically
Michael Jackson - Billie Jean Milena The Voice France 2018
In Britain Homeowners are receiving CPO’s (Compulsory Purchase Orders) so their homes can be redistributed to migrants
Michael Buble (Help Me Make It Through The Night) feat Loren Allred
Memories Canon In D - Maroon 5 (Boyce Avenue piano acoustic cover)
Matteo Simoni - Marina
Maroon 5 - One More Night
Maroon 5 - Memories
Mark Knopfler - Brothers In Arms (Berlin 2007 Live)
Mark Knopfler & Emmylou Harris - Romeo And Juliet (Real Live Roadrunni
Marina, Marina - The LUCKY DUCKIES intimist live concert at Guimarães
Major Lazer & DJ Snake – Lean On Mauranne The Voice France 2016
Love Theme from Romeo and Juliet - Joslin - Henri Mancini, Nino Rota
LoLa & Hauser - Love Story
Linkin Park Jay-Z - Numb Encore (Live 8 2005)
Hallelujah Mennel Ibtissem, The Voice France Leonard Cohen
Leonard Cohen - Dance Me to the End of Love
Leonard Cohen & Natasha Rostova - Dance me to the end of love
La casa de papel - Bella Ciao
La Camisa Negra
L'italiano (Toto Cutugno) - The Gypsy Queens
Juanes - La Camisa Negra
Jonathan and Charlotte - Britain's Got Talent 2012 Live Semi Final - U
John Powell - Assassin's Tango
Joe Cocker - You Can Leave Your Hat On (LIVE in Dortmund)
Joe Cocker - Unchain My Heart 2002 Live
Joe Cocker - A Whiter Shade Of Pale
Jay Z & Alicia Keys - Empire State of Mind LIVE
Jason Mraz - Im Yours (live)
Jarrod Radnich - Bohemian Rhapsody - Virtuosic Piano Solo
James Blunt - You're Beautiful
James Blunt - You're Beautiful & Bonfire Heart (Live at The Nobel Peac)
If You Go Away - Helen Merrill & Stan Getz (Tribute to Virna Lisi)
I'LL BE MISSING YOU
I Say a Little Prayer
Hotel California ( Eagles ) 1994 Live
Historia de un amor - Luz Casal. Vezi interpretarea Biancăi Sumanariu
Here Comes The Sun - The Beatles (Boyce Avenue acoustic cover) on Spot
Heart - Stairway to Heaven Led Zeppelin - Kennedy Center Honors
HAVANA by Camila Cabello Zumba Pre Cooldown TML Crew Kramer Pastra
HAUSER and Señorita - I Will Always Love You
HAUSER - Waka Waka
HAUSER - Sway
HAUSER - Lambada
HAUSER - Historia de un Amor
HAUSER - Despacito
Great Pretender
Georgia May Foote & Giovanni Pernice Samba to 'Volare' - Strictly Come
Gary Moore - Still Got The Blues
GIPSY KINGS VOLARE Penelope Cruz
Fugees - Killing Me Softly With His Song
French Latino - Historia de un Amor
For A Few Dollars More The Danish National Symphony Orchestra (Live)
Flashdance • What a Feeling • Irene Cara
Filip Rudan - “Someone You Loved” Audicija 4 The Voice Hrvatska Sez
Eric Clapton - Wonderful Tonight
Enya - Only Time
Enrique Iglesias - Bailando (English Version) ft. Sean Paul
Enrique Iglesias - Bailamos
Elena Yerevan Historia de un amor
Ed Sheeran - Shape of You (Official Music Video)
Ed Sheeran - Perfect Symphony [with Andrea Bocelli]
Ed Sheeran - Perfect (Official Music Video)
Easy On Me - Adele (Boyce Avenue 90’s style piano acoustic cover) on S
ERA - Ameno
ELENA YEREVAN- Cancion Del Mariachi-IN STUDIO-2017 DPR
Dust In The Wind - Kansas (Boyce Avenue acoustic cover)
Don't Let Me Be Misunderstood
Despacito x Shape Of You - Pentatonix
Deep Purple - Child In Time - Live (1970)
David Foster When A Man Loves A WomanIt's A Mans World (SealMichael Bo
Dance me to the end of Love ( Pi-Air Design )
Coolio - Gangsta's Paradise (feat. L.V.) [Official Music Video]
Conquest Of Paradise (Vangelis), played on Böhm Emporio organ
Cielito Lindo
Chico & The Gypsies - Bamboleo
Canción Del Mariachi - Antonio Banderas, Los Lobos • Desperado
Camila Cabello - Havana (Audio) ft. Young Thug
Camila Cabello - Havana ( cover by J.Fla )
California Dreamin' - The Mamas & The Papas José Feliciano (Boyce Ave
Buster Benton - Money Is The Name of The Game
Hallelujah Pentatonix
Bobby McFerrin - Don't Worry Be Happy (Official Music Video)
Bob Dylan - Knockin' On Heaven's Door Emilia The Voice Kids France
Besame Mucho - Cesaria Evora
Ben E. King - Stand by Me Sax Cover Alexandra Ilieva Thomann
Bella Ciao
Bella Ciao - INSTRUMENTAL
Beautiful in White x Canon in D (Piano Cover by Riyandi Kusuma)
Bad Romance - Vintage 1920's Gatsby Style Lady Gaga Cover ft. Ariana Savalas & Sarah Reich(1)
BELLA CIAO 2020 - KARAOKE ITALIANO
BAMBOLEO - Gipsy Kings • Antonio Banderas, Katya Virshilas
BAILANDO (original)
Awesome Ukrainian yodeler - SOFIA SHKIDCHENKO (with English subtitles)
Avicii - The Nights
Atom - The Great Gig in the Sky
Aretha Franklin - (You Make Me Feel Like) A Natural Woman (Official Ly
Antonio Banderas - Cancion del Mariachi (Desperado)
André Rieu - Zorba's Dance (Sirtaki)
André Rieu - Can't Help Falling In Love
André Rieu & Mirusia - Ave Maria
Andrew Reyes Elton John - Don't Let The Sun Go Down The Voice 2020 (
Andreas Kümmert Whiter Shade Of Pale The Voice of Germany 2013 Showd
And I Love You So
All About That Bass - Postmodern Jukebox European Tour Version
Alan Walker - Faded (Piano Cover)
Ain't No Sunshine -- Bill Withers (cover by Canen 12 y.o.)
African music
Adriana Vidović - “Creep” Audicija 4 The Voice Hrvatska Sezona 3
Adriana Vidović - “Believer” Nokaut 3 The Voice Hrvatska Sezona 3
A Fistful of Dollars - The Danish National Symphony Orchestra and Tuva
4 Beautiful Soundtracks Relaxing Piano [10min]
2CELLOS - Whole Lotta Love vs. Beethoven 5th Symphony [OFFICIAL VIDEO]
2CELLOS - Smooth Criminal (Live at Suntory Hall, Tokyo)
2CELLOS - Smells Like Teen Spirit [Live at Sydney Opera House]
2CELLOS - Despacito [OFFICIAL VIDEO]
13 Year Old Girl Playing Il Silenzio (The Silence) - André Rieu
094.All About That Bass
00 - SADNESS PART 1
(Ghost) Riders In the Sky (American Outlaws Live at Nassau Coliseum, 1
(Everything I Do) I Do It For You - Bryan Adams (Boyce Avenue ft. Conn
What a wonderful world
Moon river
×