Economy

Rachel Reeves is reportedly considering a 2p increase in income tax, taking the basic rate from 20 to 22 per cent. That might seem modest by historic standards, yet it would be a clear breach of Labour’s manifesto promise, made just over a year ago, not to raise any of the big three taxes. More importantly, it underscores the scale of the structural pressures facing Britain’s public finances – pressures that cannot be addressed by minor tax tweaks alone. If Reeves truly wants to strengthen Britain’s economic foundations, she should turn her attention to welfare reform – not as a matter of cruelty but of common sense. Britain’s welfare state

I’m delighted to announce the launch of my new podcast and newsletter Reality Check. In each episode I’ll cut through the spin and explain the numbers behind the noise. For the first installment I sat down with the American economist Arthur Laffer. ‘Course you would,’ is not the answer I expect when I ask tax-cutting American economist Arthur Laffer if he’d break manifesto promises and raise the big three taxes – income tax, national insurance and VAT – if he were in Rachel Reeves’s shoes. It’s an astonishing remark from the man who built his reputation preaching the gospel of low taxes. Britain’s finances, it seems, are now so dire that

Prices are still rising fast. The Consumer Prices Index rose by 3.8 per cent in September – the same pace as in August but nearly double the Bank of England’s 2 per cent target. Markets, and the Bank itself, had expected inflation to reach 4 per cent, so the fact it has remained flat will come as a small relief to the Chancellor as she prepares for her November Budget. ‘Significantly,’ the ONS noted, food and drink inflation fell for the first time since March – down to 4.5 per cent from 5.1 per cent. Core inflation, which strips out volatile items, and services inflation both eased too. The Bank

Britain continues to be consumed by debt. Figures just released by the Office for National Statistics (ONS) show that last month the state had to borrow £20.2 billion to stay afloat. That was £1.6bn more than in September last year and the highest September borrowing total for five years.  ‘Debt interest, the cost of providing public services, and benefits all increased compared with last year, more than offsetting from [taxes],’ the ONS said. This continuation of Britain’s fiscal doom loop led to us borrowing just shy of £100bn in the financial year so far, some £11.5bn more than the same six-month period in 2024 and the second highest April to

Who knows what Rachel Reeves reads in bed. Perhaps she dips into her own debut book, The Women Who Made Modern Economics (2023), and dreams of those carefree pre-government days when serious people, Mark Carney for one, thought she might make a decent Chancellor. But if she’s also burning midnight oil over drafts of her Autumn Statement, I hope her boxes are packed with granular data on the state of the UK job market. September normally sees a recruitment surge, but not this year. A summary of recent stats in IFA Magazine shows vacancies down by 119,000 from a year ago and entry-level graduate jobs down by as much as

Wasn’t Labour supposed to be tackling the scourge of insecure employment, doing away with exploitative zero hours contracts and giving employees protection against unfair dismissal from the first day they start their jobs? How odd then that so far it seems to have achieved the exact opposite. The latest labour market figures released by the Office for National Statistics this morning shows that the number of payrolled employees between June and August was 115,000 lower than in the same period last year. Over the latest quarter the fall was 31,000. An apparent rise of 10,000 payrolled positions in August seems to have been reversed in the provisional figures for September. This follows what