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James Heale

China hits back against Trump’s tariffs

Donald Trump has sown the wind – and now America must reap the whirlwind. Beijing has today announced plans to slap an additional 34 per cent tax on all US imported goods from next Thursday. China had already applied tariffs – ranging from 10 to 15 per cent – to a range of American agricultural products after the last round of charges from the Trump administration. But now, after Chinese goods were hit by this week’s hike, taking the rate to 54 per cent (the US had existing tariffs on China), Beijing has delivered fresh retaliation. Export controls have been imposed on seven rare earth elements critical to the production

Spotlight

Featured economics news and data.

What’s the point of foreign aid?

The UK signed up to a UN target of spending 0.7 per cent of GNP on aid way back in 1970, but didn’t hit that level until 2013. In 2020, aid spending was cut to 0.5 per cent and last week Keir Starmer reduced it further to 0.3 per cent. This will save about £4 billion which will instead be allocated to military spending. There were predictable howls of anguish from aid advocates at the news, and the development minister resigned. There was also begrudging praise from Starmer’s Conservative opponents. But few seemed to question what the point of aid is, and whether a spending target, at any level, makes

Ross Clark

Falling inflation may have rescued Rachel Reeves

Clothing retailers have saved Rachel Reeves from having to go naked into the debating chamber. As the Chancellor rises to deliver her Spring Statement today, she will have the comfort of knowing that the Consumer Prices Index (CPI) has fallen from 3.0 per cent to 2.8 per cent – and unexpectedly at that. The main reason is that clothing retailers cut their prices by 0.3 per cent in February – against a 2.1 per cent rise in February 2024. The fall will help ease pressure on households, but nothing like as much as it will ease pressure on Reeves herself. A revival of the cost-of-living crisis is the last thing

Michael Simmons

Is Reeves brave enough to give the economy the medicine it needs?

Rachel Reeves has wanted to downplay the significance of the Spring Statement this afternoon. But with every leaked proposal and briefing, the statement feels increasingly like a full-blown Budget. Soaring borrowing costs, and a growth forecast set to be slashed in half, have wiped out the Chancellor’s £10 billion headroom against her ‘ironclad’ fiscal rules. Reeves’s statement could now include civil service reforms, NHS productivity measures and an ‘austerity-lite’ stance on future spending. There will be no major tax decisions, barring a possible extension to fiscal drag. But today’s announcement is a crucial one for the Chancellor. Reeves’s didn’t expect the outlook for Britain’s economy to be so bleak. Yet

Ross Clark

Rachel Reeves’s Spring Statement looks like a missed opportunity

The Spring Statement was supposed to be a fiscal non-event, but instead, it is shaping up to be a mini-Budget. We have been primed, however, to expect only spending cuts – not tax rises (and presumably not tax cuts either). So what can we expect? So far, Liz Kendall has announced changes to welfare benefits that are supposed to save £5 billion a year by 2029–30, the last – partial – financial year of this parliament. In addition, it has been mooted that reforms to government administration – perhaps meaning up to 50,000 job losses in the civil service – will save £2 billion by the same year. Why the

If Bailey won’t call for radical growth reforms, no one will

It was hardly the message Chancellor Rachel Reeves would have been looking for a day before a Spring Statement which could well make or break her political career. The Governor of the Bank of England, Andrew Bailey, delivered a speech yesterday warning that growth was going to prove very hard over the next five years. The Governor is completely right to emphasise how hard it will be to expand the economy. But he should be making the case for far more radical reforms. If he won’t, no one else will. Bailey is staying within the ‘managed decline’ consensus To paraphrase PG Wodehouse on Scotsmen, ‘the difference between the Governor and

Ross Clark

Is Rachel Reeves brave enough to slash the civil service?

Chancellor Rachel Reeves is seeking to trim £2 billion from the government’s £13 billion administration budget, with up to 50,000 jobs being cut in her Spring Statement. The Prime Minister Keir Starmer said the government was ‘looking across the board’ for savings. But do Reeves and Starmer really have the courage, and the political capital, to carry out such a purge? On paper, Labour’s task looks straightforward enough. Civil service numbers over the past 15 years have performed a bungee jump. Between 2010 and 2016, the coalition, followed by David Cameron’s majority Conservative government, succeeded in trimming civil service numbers from 492,000 to 384,000. Then they began to climb again,

The Bank of England should stop worrying about inflation

As the government makes growth its top priority, one critical lever risks being overlooked: monetary policy. Ministers are busy wrestling with fiscal constraints and the pressures of a sluggish economy, but too much focus remains on spending pledges and supply-side fixes, and too little on the frameworks that shape demand and investment. Ahead of this week’s Spring Statement, they must ask a harder question: is the Bank of England’s inflation-targeting regime now holding back Britain’s recovery? The Bank of England remains bound to its rigid 2 per cent inflation target As I argue in my new Institute of Economic Affairs paper, Rethinking Monetary Policy, inflation targeting is no longer fit for

Michael Simmons

The Spectator reflects on Covid five years on

Five years ago this weekend, the nation was plunged into what was expected to be a three-week lockdown. Weeks turned into months and years, lives were upended, and society was reshaped. But with the Covid inquiry rumbling on and the threat of a new pandemic ever present, it is worth reflecting on what happened.  That’s what we did for today’s special episode of Spectator TV. We wanted to look back on the conversations our contributors were having at the time, so this morning’s show starts with an episode from during the pandemic, hosted by Cindy Yu. She interviews two University of Oxford bioethics professors, Julian Savulescu and Dominic Wilkinson, about why – at

Toby Young

Were we right to lock down? Michael Gove vs Toby Young

31 min listen

On 23 March 2020, then-Prime Minister Boris Johnson announced the unprecedented decision to put the UK into lockdown. To mark the 5th anniversary of that announcement this weekend, we have brought together our editor Michael Gove – then a cabinet minister under Boris – and our associate editor Toby Young – an ardent critic of the decision – to answer the question, was the government right to lockdown? Was the decision a necessary and reasonable health measure based on the available evidence at the time, or a significant and avoidable violation of civil liberties by a government that was meant to champion liberal freedoms? You decide. Produced and presented by

Ross Clark

We’re all paying the price for Ed Miliband’s net zero rush

Pursuing net zero is the ‘opportunity of the century’ which will create tens of thousands of well-paid green jobs and slash our energy bills. That is this Labour government’s official line, at least, as it was the last Tory government’s. Now we know, thanks to a leaked study, that is not quite how the Department for Business and Trade sees it. Rather, it seems, net zero threatens the recession of the century. The Macroeconomic Impacts of the Net Zero Transition, prepared by the Economic and Strategic Analysis team at the Department for Business and Trade in November 2023, warns that net zero targets could provoke an economic shock on the scale

Michael Simmons

Britain’s borrowing is out of control

Rachel Reeves is having to borrow more and more money to keep Britain’s show on the road. Figures on the public finances, published this morning by the Office for National Statistics (ONS), show that in the financial year to February we borrowed over £132 billion. That is nearly £15 billion more than at the same point in the last financial year and is the fourth-highest borrowing period since records began in 1993. The Office for Budget Responsibility (OBR) had expected borrowing to total £128 billion for the whole financial year and, by this point, that forecast is already more than £20 billion short. The OBR’s budgetary boffins will update that

Michael Simmons

Bank holds interest rate over inflation fears

The Bank of England has held interest rates at 4.5 per cent. The Monetary Policy Committee (MPC) voted eight to one to hold the base rate at its current level after reducing it by 0.25 percentage points six weeks ago. Markets and pundits had expected the decision, despite figures last week revealing the economy had contracted slightly in January. The Bank shares the government’s alarm at the lack of growth, warning in its report last month that ‘GDP growth has been weaker than expected, and indicators of business and consumer confidence have declined’. However, its fears that inflation may creep back up again – which the Bank predicts will peak

Michael Simmons

The British state is bigger than ever

The state is bigger than ever. The number of workers employed in central government has hit 4 million for the first time. Figures just released by the Office for National Statistics (ONS) show employment in the public sector hit 6.14 million in December, up 53,000 in a year. Employment in central government hit a record high and was up 105,000 in a year. Those employed by the NHS hit a record high too, of over 2 million, and was up by nearly 50,000 in a year. Yet, as Katy Balls and I point out in today’s cover story for the magazine, productivity has not kept pace. Meanwhile, the unemployment rate in the

It’s time for Rachel Reeves to stop gambling

Next Wednesday Rachel Reeves will stand up in the House of Commons to deliver what she is calling her ‘spring forecast’. As so often with political language, everyone in Westminster knows it is no such thing, just as there was nothing ‘mini’ about Kwasi Kwarteng’s Budget of September 2022. The ‘spring forecast’ will be an emergency Budget, and the reasons for it reveal a surprising truth about the Chancellor of the Exchequer: she is an inveterate gambler. Unless everything turns out to be a brilliant exercise in expectation management, the worst-kept secret in Whitehall is that Reeves has already broken her ‘iron-clad’ fiscal rules. The Chancellor’s team will receive the

Stephen Daisley

No one will thank Liz Kendall for doing her job

There are three thankless posts in a modern Labour government. There’s the Chancellor, who has to announce the tightening of belts and the hiking of taxes; the Home Secretary, who must busy themselves cracking down, banging up and throwing away the key; and the Work and Pensions Secretary, who is charged with Scroogeing every last penny out of the benefits system. These are the ministers Labour’s grassroots and its graduate liberal voters love to hate, but they likely do more to keep Labour in power than their more popular colleagues. Labour liberals have an outsized influence in policy debates, overrepresented as they are in the BBC, the NGOs and academia,

China’s BYD could kill Tesla

Tesla and its hyper-active boss Elon Musk are having a bad month. On both sides of the Altantic, there have been protests against the ‘Nazi-mobile’ and the ‘Swasti-car’. The electric vehicle (EV) manufacturer’s sales are collapsing across Europe, and its stock is in freefall. On top of all that, its main rival, China’s BYD, has just announced a super-faster charger that allows you to ‘fill up’ your EV as quickly as you once could your petrol car. All companies go through bad patches, especially when they are leading a new industry. But Tesla is losing its technological lead to China. That could prove fatal. There is growing evidence that China’s

Gus Carter

Pensioners, it’s your turn to cough up

The welfare state is grotesquely unfair. There are people who receive thousands of pounds from the taxpayer with little government oversight, even when they have no genuine need for the cash. They spend it on things like cars, flat screen TVs and other luxury ephemera. And there is a sense of entitlement among these scroungers, a feeling that they are somehow owed the fruits of other people’s labour. These people are of course pensioners. ‘But, but, but,’ I hear them gargle through Wine Society crémant, ‘I’ve paid into the system all my life, I’ve earnt my pension!’ No you haven’t. You very unwisely handed over your taxes to successive governments

Ross Clark

Starmer is taking a big gamble with his welfare cuts

That the welfare bill needs bringing under control is pretty undeniable. According to projections by the Office for Budgetary Responsibility (OBR) an unchecked welfare bill could rise over the next five years from £64 billion to £100 billion. That is not to mention the effect on the economy of increasing numbers of people being shunted onto sickness benefits and never expected to work ever again. If the case is made properly, and the focus is kept on the public finances, the government should enjoy widespread support for a policy that trims the welfare state. Yet there is still a risk that this could all go horribly wrong for the government. And

Michael Simmons

The OECD’s growth downgrade is yet another headache for Reeves

In more bad news for Rachel Reeves as the Chancellor prepares for next week’s Spring Statement, the OECD has downgraded Britain’s growth prospects. The organisation forecast the UK’s economy to grow 1.4 per cent this year and then just 1.2 per cent next year – compared with the 1.7 per cent and 1. 3 per cent that they’d previously estimated. In fairness, the whole world is seeing slower growth, according to the OECD’s estimates. America’s growth forecasts were also downgraded to 2.2 per cent this year, followed by 1.6 per cent in 2026 compared with the 2.4 per cent and 3.1 per cent that had originally been forecast. The report’s

Ross Clark

Is Rachel Reeves tough enough to cut disability benefits?

There are, as Rachel Reeves keeps telling us, some tough choices to be made. Whether she is personally tough enough to make them is another matter. It seems as if the government is already retreating on proposed plans to freeze Personal Independence Payments (PIP) in the Spring statement in ten days’ time. A putative backbench rebellion has grown in size to a level at which even a government with a majority of 160 cannot be sure of success. There were also rumoured threats of ministerial resignations. It shouldn’t really come as a surprise. Many Labour MPs have it in their heads that they were elected to protect the poor and

It’s been a poor five years from Andrew Bailey

The pound has not collapsed. You can still trade shares, bonds and currencies in the City of London. And inflation, while still high, at least doesn’t come with ‘hyper’ as a prefix, at least not yet. If the Governor of the Bank of England Andrew Bailey wants to celebrate today’s fifth anniversary of taking charge of the UK’s central bank he can at least reflect on a few modest achievements. The trouble is, they are very limited. In reality, Bailey has proved a poor if not catastrophic Governor – and everyone in the City knows it. When Bailey took over, he was the antithesis of his predecessor. The globe-trotting Mark