2025: a year of tears, tariffs & taxes
Michael Simmons reflects on some of the economic highs and lows of 2025.
Economy
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A Green Christmas would be more awful than you could imagine
Would promising to rejoin the EU save Labour?
How a late lunch can save Britain
Spotlight
Featured economics news and data.
Cutting Britain's giant welfare bill would be an act of kindness
Does having money really matter that much? There are those, usually with quite a bit of it, who want us to care less about materialism. But, unequivocally, money really does matter – not because of any status it supposedly brings, but for the freedom it buys: freedom to choose how we live and how we look after others. Considering this, it seems that the deep disillusionment with mainstream politicians in recent years stems from a protracted and ongoing period of stagnant living standards over which they have presided. But the truth is that the average person has not got poorer since the global financial crisis. They have got a little
Thursday
Does Farage know the difference between populism and a plan?
Gathered beneath the marble columns of the old Banking Hall in the City of London, Nigel Farage did what he does best. He assembled journalists, lobbyists, wonks and a few business representatives for another hour of gesticulations and clarifications. But this time was slightly different; here, there was talk of sensible reform alongside the usual messaging. Talk of ‘common-sense economics’, nods to tax, promises to put ‘Britain first’. Plenty of sound rhetoric, yes. But precious little sound policy. Reform shouldn’t be a party of loud statements, here-today-gone-tomorrow policies and U-turns We left with a similar sense of deja vu: bold themes, grim but correct forecasts about Britain’s economic decay and little
Income tax must rise – but Rachel Reeves must go
Call me hard-hearted, but I doubt even a magic mushroom-induced tantric visualisation of a harmonious universe could transport me into a state of sympathy for Rachel Reeves. Her content-free but don’t-blame-me speech on Tuesday morning did nothing to make me feel more benign. Yes, it’s not entirely her fault that a Labour cabinet can’t deliver welfare cuts, that defence spending must rise and that the UK has a chronic productivity deficit; and yes, the Tories left a mess behind. But in every other respect she’s in a trap of her own making, in which the only Budget move that might restrain out-of-control public borrowing, namely raising income tax, is also
Wednesday
The Bank of England won't risk bailing Rachel Reeves out
After yet another dreadful week, the Chancellor Rachel Reeves must be praying the Bank of England helps her out by cutting interest rates tomorrow. It would reduce the huge amount of interest the government has to pay, it would put more money in people’s pockets, and it might even stimulate growth. The trouble is, the Bank’s governor, Andrew Bailey, can’t afford to bail Reeves out of the hole she has dug for herself. If the Bank does, it will be risking its independence. Even the City’s experts have no clear idea what the Bank will decide on interest rates this week. The markets have priced in a one in three
The ‘John Lewis approach’ won’t fix workshy Britain
Like the John Lewis Partnership he used to run, Sir Charlie Mayfield, who has just completed the government’s ‘Keep Britain Working’ review, comes across as terribly nice and civilised. It’s just a shame he can’t quite bring himself to put the boot in and deal properly with the problem of mass worklessness he correctly identifies. Had the job been given to a more ruthless business operator – perhaps someone from Amazon, Aldi or one of the other businesses which is steadily devouring John Lewis’s lunch – government might actually have a hope of a workable solution. Mayfield all but ignores the real problem: it has become far too easy to
Could private credit cause the next financial crash?
The recent bankruptcies of a little-known auto-parts supplier called First Brands and auto lender Tricolorhas sparked talk about a looming financial crisis in a booming but much misunderstoodcorner of finance. Jamie Dimon, the CEO of JP Morgan, sent shivers through financial markets earlier this month when he referred to these bankruptcies as a ‘cockroach’ and warned: ‘When you see one cockroach, there are probably more.’ His comments were taken as a broadside against private credit, a niche corner of debt markets that has seen blazing growth in recent years. In private credit, non-bank financial firms such as Apollo Global Management, Blackstone and KKR pool capital from investors to lend out to corporations, and,
Tuesday
Is Brexit to blame for Britain’s economic doom loop?
22 min listen
Rachel Reeves is preparing for her first major Budget – but is Brexit really to blame for Britain’s black hole? Host Michael Simmons speaks to independent economist Julian Jessop about the OBR’s productivity downgrade, Labour’s tax plans, and whether Reeves is right to point the finger at Brexit.
Can the last 'working person' in Britain please turn out the lights?
Early morning surprises can be lovely, but not when they involve Rachel Reeves. Probably the last thing anybody wants to see as they wipe the sand from their eyes is the Chancellor looming over them. The sudden, unexpected appearance of Reeves at cock crow this morning – ‘My office, first thing, sharp!’ – felt like a dawn raid, the age-old military tactic for attacking when the human body is at its weakest. Well, it didn’t work. The recent wranglings over the exact definition of ‘working people’ wouldn’t fool a four-year-old We learnt today that despite Reeves having ‘fixed the foundations’ last year (don’t laugh!), ‘the world’ keeps throwing ‘challenges’ her
Britain's stingy state pension is good news
That Britain has the least generous state pension in the G7 should be recognised for what it is: good news. The fact that it won’t be celebrated tells us a lot about the mismatch between policy and politics around pensions in the UK. The nature of Britain’s state pension isn’t an accident or a failure. It’s the product of deliberate design. For the past three decades, British policymakers have chosen to provide retirement income largely through private saving rather than tax-funded state benefits. They’ve done so quietly, but rationally. The alternative would be to copy France – a country that still treats the state pension as a social guarantee and
What does Rachel Reeves really mean that we must all 'do our bit'?
It is three weeks until the Budget – and Rachel Reeves wants to get her narrative out there. The Chancellor held an early morning press conference today to, in her words, ‘set out the circumstances and the principles’ guiding her thinking on 26 November. One line in particular stood out: ‘If we are to build the future of Britain together’, Reeves said, ‘we will all have to contribute to that effort. Each of us must do our bit’ Her speech followed a familiar pattern. First, there was the evisceration of the ‘austerity’, ‘reckless borrowing’ and ‘stop go of public investment’ which characterised the last 14 years. Then came the global
Budget tax rises will mark the beginning of the long end for Labour
So just what was the point in dragging political journalists out of bed to be addressed by Rachel Reeves in Downing Street this morning? We could – and should – have had the Budget by now. Instead, we got a half Budget speech – a desperate attempt to blame the Tories, a vague suggestion that taxes are going to go up (which we know anyway) without any details. We heard yet more about Liz Truss and Kwasi Kwarteng, despite the fact that they have been out of office for more than three years. Reeves herself has been in office approximately ten times as long as Truss and Kwarteng were. Reeves is fooling
Monday
Nigel Farage is right to abandon tax cuts
Nigel Farage has shelved massive tax cuts in favour of slashing public spending in a bid to balance the books. The Reform leader said in a speech this morning that ‘substantial tax cuts given the dire state of debt and our finances are not realistic at this current moment’. The ‘back-of-a-fag packet’ economics that characterised Reform’s election manifesto last year have been disposed of No doubt a fair few Reform supporters will be disappointed: it means that, if Farage wins power at the next election, the tax burden will remain at a post-war high for at least a couple of years. We won’t be hearing very much about the Laffer
Farage: Trust me with the economy
With Reform leading in the polls, Nigel Farage is determined to ensure that nothing can impede its growth. This morning he sought to bolster his credibility on an area that the Tories think could be his Achilles heel: the economy. Reform’s £90 billion programme of tax cuts promised at the last election has been constantly used as a stick with which to beat its leader. So today, Farage took to the stage in the City, to – once again – formally bury ‘Our Contract with You’ – the platform on which he was elected in July last year. This morning’s speech was all about Reform claiming the mantle of fiscal
The hypocrisy of Labour's international 'greenwashing'
There can be no more Panglossian document than the UK international climate finance results published by the government last month. Apparently, since 2011 UK taxpayers have helped prevent 145 million tonnes of greenhouse gas emissions, given 33 million people improved resistance to climate change and saved 717,000 hectares of ecosystem. How proud we can all feel of ourselves. Except, that is, we are beginning to learn a bit more about how our money – £11.6 billion of it between 2021/22 and 2025/26 alone – is being spent. There is £52 million, for example, on a road driven through the rainforest in Guyana and millions for a rewilding scheme in Uganda
Reeves must break Britain's borrowing habit
If Rachel Reeves was being judged on her ability to come up with excuses, then she’d be top of her class. From Brexit to fourteen years of Tory government, from the Truss mini-Budget to the weather, the Chancellor has compiled a comprehensive list of reasons why she needs to hike taxes in this month’s Budget and why it’s taxpayers who have to tighten their belts, rather than the Treasury. Even as the economic pressures are mounting, Reeves’s answer is always the same: squeeze households harder When she stands up on the 26th of November to deliver her second Budget, Reeves will do so against a backdrop of genuine fiscal crisis.
Thursday
The rich are leaving Britain – and making you poorer
Are the rich fleeing Britain? That’s what the numbers suggest, but some activist groups have hit back saying that the data is dodgy. For the second episode of Reality Check, The Spectator’s economics editor Michael Simmons explains why the data shows that the wealthy are leaving Britain, and why this matters for everyone else.
Is Reeves plotting to short-change the self-employed?
It seems pretty certain now that having flirted with just about every tax rise under the sun, Rachel Reeves is going to increase income tax in her Budget on 26 November. That much became clear when Keir Starmer declined to take Kemi Badenoch’s invitation to rule out a rise in income tax rates at Prime Minister’s Questions yesterday. Previously when asked the question, he had always suggested that the government would stick to its promise not to raise the main rates of income tax, National Insurance or VAT. Reeves will no doubt blame Brexit (as she already has done), the Tories (ditto) and Donald Trump for her fiscal black hole
Who would want to be a housebuilder in Britain?
In a radio discussion of the Renters’ Rights Act which passed into law this week, I heard ‘Britain’s housing emergency’ referred to as a given fact. If that’s so, then the housebuilders who create supply and feed home-owning aspirations ought to be public, political and stock-market heroes. But they’re not – and it’s worth asking why such an essential sector has fallen so far out of favour. Think back to Sir Lawrie Barratt, who built 300,000 houses and achieved fame with 1980s television ads featuring a strong-jawed actor as Barratt himself arriving by helicopter to inspect the latest show house. Less well known was Duncan Davidson, the swashbuckling grandson of
Wednesday
Why doesn't Kate Forbes want the SNP to talk about currency?
What’s the Gaelic for ‘Streisand effect’? I would guess buaidh Streisand but someone should ask Skye, Lochaber and Badenoch MSP Kate Forbes, who is experiencing first-hand what the ‘The Way We Were’ singer learnt the hard way two decades ago: attempts at censorship only bring attention to the material you wish to keep secret. The deputy first minister, it is claimed, told a meeting of her local SNP branch two months ago: ‘We must avoid publicly talking about currency. The priority is an element of stability, and then move to a Scottish currency.’ And so, naturally, the purported quote has been leaked to the Times, with the SNP declining to
Tuesday
Migration, the customs union & a £40bn black hole?
14 min listen
There are reports that the OBR will downgrade Britain’s productivity growth forecasts, increasing the size of the black hole facing the Chancellor at the end of the month. This continues the spate of bad news for the Chancellor on the economy – but can we trust the figures? James Heale and Michael Simmons join Patrick Gibbons to talk about what this means ahead of the budget, whether anger over the money wasted on asylum hotels can be linked to the cost-of-living crisis and what Rachel Reeves is doing in Saudi Arabia this week. Plus: is a debate over the customs union really what Britain wants right now? Produced by Patrick
A tariff alliance won't stop Britain's steel industry collapsing
The British steel industry has been staggering from one crisis to another for the whole of this year. Half of the industry has fallen into effective state control, and what’s left is teetering on the edge of collapse. The government has finally come up with a plan to rescue it. In collaboration with the US and EU, it wants to create a ‘ring of steel’ protecting all the major Western industries from cheap Asian imports. It sounds simple enough, but there is just one catch. This plan won’t do anything to fix soaring domestic costs – and that is the real problem. The government certainly needs to do something to