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Kate Andrews

Will higher wages lead to more inflation?

Good news for workers: wages are up. According to the latest data, released by the Office for National Statistics this morning, annual pay increased by 5.2 per cent in the three months leading up to October.  Despite inflation returning broadly to the Bank of England’s 2 per cent target, these above-inflation wage increases will be providing relief, still, for workers who are still coping with significantly higher prices as a hangover from the inflation crisis. But a positive story for employees is often more worrying news for Threadneedle Street, which insists that wage increases risk second-round inflationary effects. Today’s news has markets speculating that the Bank may slow its rate-cutting

Spotlight

Featured economics news and data.

Steerpike

Revealed: Reeves’s tax rises expose Labour’s misleading manifesto claims

Casting his mind back to the election, Mr S recalls a heated debate about which party would raise taxes most. In the final televised debate before the national poll, Sir Keir Starmer was quick to accuse then-PM Rishi Sunak of ‘repeating a lie’ – that Labour were going to raise taxes by £2,000 per person. And, to be fair, he had a point: on Sunak’s own maths the Tories would have raised taxes by, er, £3,000 per person. Awkward… Mr S’s friends at The Spectator’s DataHub have crunched all the manifestos put out at the time to see just who really would be responsible for the greatest tax hikes – with

Matthew Lynn

We don’t need Rachel Reeves’ ‘industrial strategy’

It is not hard to imagine what will be in Rachel Reeves’ ‘industrial strategy’. There will be lots of ‘green industries’, along with plenty of ‘cutting-edge technologies’, all designed to nurture ‘national champions’ in the ‘sectors of the future’. And presumably Lord Alli, the Labour donor who has been footing the bill for Keir Starmer’s wardrobe, will be put in charge of overseeing all the details. Alongside the tax rises in the Budget planned for next month, the Chancellor’s promise of a full-blown industrial strategy is a troubling prospect. ‘Around the time of the Budget we will publish a green paper on a new industrial strategy focused on driving and

The Peter Jay I knew: the BBC’s aloof, brilliant economics editor

I was the junior researcher, and he was the living legend. When I started working at the BBC on the Money Programme, I was assigned to work with Peter Jay, who was presenting various documentaries, and I had never previously met anyone quite so aloof. I had no idea if he even knew my name, and it was many months before I had evidence that he did. But in the end, my entire career at the BBC, ultimately as economics correspondent appointed by him, was interwoven with his, and I developed a certain fondness. Jay was ferociously bright, which often manifested itself in slightly strange ways Peter always had an

Kate Andrews

Why has Rachel Reeves suddenly become cheery?

Can Rachel Reeves inject some optimism into the debate around Britain’s economy? That seems to be her ambition today, as she prepares to address Labour conference – and the country – this afternoon, where she will look forward to a ‘decade of national renewal’ and promise ‘no return to austerity.’ The change in language is striking. Having used this summer to prepare people for a ‘painful’ and ‘difficult’ Budget in October that will have to include tax hikes and spending cuts, Reeves is now talking about the fiscal event as ‘a Budget to rebuild Britain’, and pointing to a much more positive future: a economic ‘prize’ of a more stable

Matthew Lynn

Smart meters aren’t so clever

Smart meters were meant to make our lives easier. They were designed to help us reduce energy consumption and cut bills. Over the last five years, the government has been pushing energy firms to install these meters as quickly as possible. Millions of homes have been fitted with one. The flashing screen monitoring how much power is being used has become a ubiquitous feature in households across Britain. We’re constantly nudged to switch off a couple of lights, or skip a load in the washing machine, as we see what this energy use is costing us. But there’s a big problem with smart meters: millions of them don’t work properly.

Should Huw Edwards be stripped of his BBC pension?

With the Huw Edwards court case complete – and the disgraced BBC News presenter given a six-month prison sentence, suspended for two years, after he admitted charges of making indecent images of children – attention has returned to the fact that he could still receive a £300,000-a-year BBC pension. Many are horrified by this. There have been demands that some way should be found to withhold payment from Edwards. I disagree. Imagine if we did decide that those convicted of crimes such as Edwards’ have no property rights A pension is part of the remuneration we receive for work done. It isn’t some extra perk or discretionary bonus handed to

Kate Andrews

Britain is spending beyond its means

This morning marks a milestone – but it’s nothing to celebrate. Public sector net debt as a percentage of the economy has exceeded 100 per cent: a level not seen since the early 1960s. And there are no signs of course correction.  The latest update from the Office for National Statistics shows, once again, that the government is spending plenty more than it takes in, with borrowing figures for August coming in at £13.7 billion – £3.3 billion higher than last year and £2.5 billion higher than had been forecast by the Office for Budget Responsibility in March.  Meanwhile debt servicing payments continue to take their toll, coming at £5.9 billion

Ross Clark

Is Rachel Reeves damaging the High Street’s recovery?

The former boss of Sainsbury’s, Justin King, warned on the Today programme this morning that Rachel Reeves has damaged the economy through her constant warnings of tax rises to come in October’s budget, causing anxious shoppers to draw in their horns until the big day. But if shoppers really are holding off purchases for fear that the Chancellor will raid their savings or hit them with tax rises there is scant sign of it in the Office for National Statistics’ (ONS) retail sales figures for August. They show that sales volumes increased by 1.0 per cent over the course of the month. July’s figures were also revised upwards from a 0.5 per cent

Kate Andrews

Was the Bank of England wrong not to cut interest rates?

The Bank of England has held interest rates at 5 per cent. This was the expected outcome of the Monetary Policy Committee’s latest meeting, which saw members vote 8-1 to maintain the base rate.  Was it a mistake not to cut rates? The latest economic data appears to have persuaded the MPC to lean into their (now) hawkish tendencies and keep rates steady. The headline inflation rate is almost on target but the rise in core inflation in August (which excludes more volatile prices like food and energy) and in services inflation – as well as mixed signals from the labour market – gave the Bank good reasons to wait until later in the Autumn

Martin Vander Weyer

In defence of McJobs

The burden of higher taxation must fall on those with ‘the broadest shoulders’, says the Prime Minister, and City folks assume that means yet more raids on banks. Soft targets because no one loves them, they have also profited from higher interest rates. But they’re already subject to a surcharge on corporation tax and an extra levy on the size of their balance sheets – one effect of which has been to shrink their appetite for the corporate lending which is essential for Labour’s growth ambitions. Loans to small- and medium-sized enterprises fell for five successive quarters to the end of last year and the level was still lower in

Kate Andrews

Labour’s economic doom and gloom doesn’t match reality

Inflation was 2.2 per cent in the 12 months to August, unchanged from the month before, today’s update from the Office for National Statistics reveals. This is ever so slightly above the Bank of England’s target of 2 per cent, but it’s in the ballpark of where it’s supposed to be. And while the Bank expects inflation to rise slightly by the end of the year – to just under 3 per cent – it is due to fall again in 2025 and remain around target for the years to come. These figures are good news for Labour, but they raise question marks over how long the government can continue the

Matthew Lynn

Electric vehicle targets are completely pointless

Labour might relax the ban on the sale of new petrol cars that is scheduled to come into force in six years’ time, according to reports today. The government will reportedly allow hybrids to still be sold until 2035, on the grounds that they are proving far more popular with consumers than the entirely battery driven cars. In truth, this tinkering doesn’t really matter: government targets for electric vehicles are completely meaningless anyway. By definition, it is impossible to know what technical breakthroughs may be made over the next few years The 2030 ban already looks ambitious. The European Union is only aiming for 2035, with the German auto-makers putting

Matthew Lynn

The real reason the Treasury can’t find the fiscal ‘black hole’

The Chancellor was so shocked when she received the briefings from Treasury officials that she had no choice but to scrap her election commitments. It was so serious that it was about to crash the markets. It had to be fixed so urgently that the winter fuel allowance had to be cut, and we will need huge tax rises in a ‘Horror Budget’ next month. The Chancellor Rachel Reeves and the Prime Minister Sir Keir Starmer have made the ‘black hole’ in the public finances central to their government agenda. But hold on. In the kind of twist that would puzzle even the most distinguished astro-physicist, when you look closely

We all know the NHS is broken – but can Labour fix it?

There are few surprises in Lord Darzi’s review of the National Health Service, not least because much of it has already leaked out. Health Secretary Wes Streeting declared immediately after Labour won the election that the NHS was ‘broken’. Darzi, a surgeon and former Labour health minister whom Streeting commissioned to undertake the probe, appears to have reached a similar conclusion in today’s report, though not in as few words. ‘We have crumbling buildings…and parts of the NHS operating in decrepit portacabins,’ Darzi says ‘We have crumbling buildings, mental health patients being accommodated in Victorian-era cells . . . and parts of the NHS operating in decrepit portacabins,’ Darzi says. His diagnosis is that Britain

Kate Andrews

Britain’s GDP has stagnated – again

There was no economic growth in July, according to the Office for National Statistics. The latest GDP figures show that a boost in services output – 0.1 per cent – was offset by a tumble in production and construction output – 0.8 per cent and 0.4 per cent, respectively – leading to no overall growth in the month of the election.  It’s surprisingly bad news, as markets had expected a modest 0.2 per cent increase in July. Instead, Britain had two consecutive months of no growth.  There is also growing concern that the improvement in services output in July won’t necessarily carry into the latter half of the summer. The

Brendan O’Neill

The EU’s Apple tax ruling is a bleak day for Ireland

For those of us who grew up singing songs about Irish nationhood, today is a depressing day. As youths we crooned about how Ireland, ‘long a province’, will one day be ‘a nation once again’. We stood in stiff attention to the Irish national anthem with its promise that Ireland will never again ‘shelter the despot or the slave’. Now we switch on the news and what do we see? A foreign court bossing Ireland around. Ireland must now go after Apple and demand billions of euros from it Today, the European Court of Justice (ECJ) ruled that Ireland granted Apple ‘unlawful aid’ and must now badger Apple for £11

James Kirkup

The state pension system is unfair. Reeves is right to change it

Rachel Reeves is cutting £1.4 billion of pensioner welfare payments with her winter fuel payment means-test. It sounds like a big number, but it’s not. £152 billion is a big number. That’s the total value of welfare payments to pensioners in 2024/25. It’s more than we spend on the NHS. Taking the £1.4 billion annual cut into account, by 2027, that total bill will be around £166 billion. Relative to the wider economy, pensioner benefits are currently around 5.4 per cent of GDP. That will rise next year to an all-time high of 5.6 per cent, before dropping back to 5.4 per cent in 2027/28 – unless policies like the

Kate Andrews

Can Labour get young people back to work?

The UK still looks set to get another interest rate cut (or two) by the end of the year, but is that now the main indicator of a healthy labour market? This morning’s update from the Office for National Statistics shows average wage growth slowed to 4 per cent in the three months leading up to July. Wage growth is still outpacing inflation, but it is moving in the right direction – for the Bank of England anyway, which is watching closely to see if its first rate cut is going to have any major impact on wages, risking a secondary round of inflation spikes. Adjusting for inflation, overall wages

This could be far worse than axing the winter fuel payment

You won’t find me mounting the barricades in defence of the winter fuel payment, though I’ll miss the pleasant surprise when it landed in my bank account sometime before Christmas. I do, though, have a bit of a bone to pick with those well-heeled and often still lucratively-employed pensioners who dusted off their metaphorical loud-hailers (in the form of letters to newspapers and social media posts) every autumn to protest that they didn’t need it, that it was a waste of taxpayers’ money, and that they a) gave it to charity, b) spent it on Christmas presents or c) ordered another case of good wine.  Ending the single occupier discount

The sneaky way that Russia is still evading western sanctions

The leaders of the European Union can give themselves a pat on the back. They have, on the face of it, delivered on a promise made following Vladimir Putin’s invasion of Ukraine to end the export of European goods, machinery and parts critical to Russia’s war effort. Yet things are not quite as straightforward as they seem. Exports from the bloc to Russia in June plummeted to a mere €2.4 billion (£2 billion) – a third of the €7.5 billion (£6.3 billion) shipped during the last peacetime June of 2021 before the war, according to data from the EU’s statistical body Eurostat. The figure for June this year is the lowest

Why the SNP keeps failing in its war on child poverty

The poor are always with us, Jesus said, and that has never been more true than in Scotland over the past 25 years. One in four children is still languishing in poverty, according to the Scottish government’s own statistics. This ratio never seems to change, whoever is in power and however much is spent on it. First Minister John Swinney recommitted himself to the Quixotic objective of eradicating poverty in his programme for government this week. He said ending child poverty will be the ‘single greatest priority’ of his government – just as it was for Humza Yousaf and Nicola Sturgeon and all first ministers since the dawn of devolution. The only certainty is that he will fail – even though