Britain is living beyond its means

Today’s figures on the public finances and retail sales will bring some relief to Rachel Reeves; both show a small positive direction. In November, they reveal, the government had to borrow £11.2 billion, which was £3.4 billion down on the same month last year. Retail sales were up 0.2 per cent in November, following a 0.7 per cent fall in October. It means that the Chancellor can avoid further negative headlines at the end of the year – but really there is little to detract from the underlying story that the government has succeeded in creating an economic downturn out of thin air.

One of the factors behind the slightly improved public finances picture is that a drop in the Retail Prices Index (RPI) reduced the cost of servicing index-linked government debt.