Money

It was the absence of the Office for Budget Responsibility’s judgment that was blamed for the bond market crisis after Liz Truss’s mini-Budget. Truss and her chancellor Kwasi Kwarteng had rushed to enact their vision for a fast-growing economy without waiting for the wisdom of the government’s official fiscal watchdog. For Truss, the OBR is just another part of the establishment that was out to get her. But then, can the OBR be entirely trusted anyway? It seems that it has created a black hole of its own making – by overstating Public Sector Net Financial Liabilities (PSNFL). PSNFL is the measure that Rachel Reeves has chosen to use for

The more investors dig into Labour’s first Budget, the less they seem to like it. After the Office for Budget Responsibility published its assessment of the Chancellor’s measures yesterday afternoon, some immediate (and expected) volatility set in. But rather than settling down, market jitters seem to have worsened today, as a gilt sell-off saw government borrowing costs hit their highest level in 2024 this afternoon, with the 10-year gilt yield reaching 4.52 per cent and the five-year gilt yield reaching 4.41 per cent. So far the situation is manageable for the government – but is a strong indication that the markets are not quite as on-side with their plans for

It has been a good day for investors in the Alternative Investment Market (Aim), with the index of the top 100 Aim shares up 4.3 per cent. But that merely serves to undermine the damage that Rachel Reeves had done to the market by previously suggesting that she might remove the exemption whereby Aim shares were free of inheritance tax (IHT). In the event, she made Aim shares liable for 50 per cent of the normal rate of IHT – hence the relief rally. Yet Aim shares are still down 2 per cent since election day. By contrast, the Ftse small cap index – smaller shares within the main London

Aside from debates as to what actually constitutes a ‘working person’, the Labour government does ostensibly seem clear as to whom it wants to shield in the forthcoming Budget: the less well-off and those who continue to struggle financially. It is therefore perverse that it should remove a benefit that has been a blessing to precisely that demographic: the £2 cap on bus fares. The government looks set to be making another long-term error This measure, an initiative of the last Tory government, was introduced last January and implemented in England outside areas that already have devolved powers over transport. It’s been an invaluable aid for those who use the

Where did it all go wrong for Volkswagen? The German carmaker is said to be planning to shut several factories and lay off thousands of staff. Workers who do keep their jobs could see their pay cut by as much as ten per cent, according to VW’s top employee representative, Daniela Cavallo. If the revelations are correct, the three factories will be the first to be shuttered in the company’s 87-year history. It is hard to overestimate the scale of the shock that the claims about VW, a company that has always been emblematic of the country’s post-war economic miracle, has delivered to the German economy today. Yet Germany –

Remember Gordon Brown’s ‘golden rule’ – that over the course of the economic cycle the only net borrowing he would allow was to fund investment? As for current spending, he told us, he would pay down debt in the good times so that he could borrow in the bad. It sounded reassuring, until Brown started to fiddle with the figures in every conceivable way. He shunted debt off the public balance sheet via private finance initiatives.  Is anyone confident that Reeves really will invest her extra £20 billion a year in such a way that it will earn the taxpayer a return? He kept stretching out his idea of the

Ahead of the Budget on 30 October, Rachel Reeves is being bombarded by lobbyists urging her to loot their enemies. The New Economics Foundation wants a ‘jet-setter tax’ on frequent fliers of €100 per flight. Action on Smoking and Health wants a levy on tobacco companies. Greenpeace reckons it can raise at least £26 billion a year by levying a wealth tax on the ‘super-rich’. An assortment of think tanks and pressure groups linked to the Labour donor Derek Webb think they can squeeze another £3 billion out of the gambling industry by doubling gaming and betting duties. Meanwhile in Scotland, the neo-temperance lobby are demanding a ‘levy’ on alcohol retailers who, they claim, are getting rich off

There is a big danger in today’s government borrowing figures for September being a little less bad than was expected by many observers. It will lead to claims that the Chancellor has enjoyed a ‘windfall’ prior to next week’s Budget, therefore lessening the need for spending cuts. No, there is no windfall. Until recent years, the idea that the government would have to borrow £16.6 billion in a single month would have been received with horror. True, September is not generally a great month for government finances, and the level of borrowing in the year to September – at £79.6 billion – is only around half the size of the

As Rachel Reeves prepares what is potentially the most difficult Budget in a generation, a question occurs: what if the Conservatives had, somehow, won the election? Historians hate counterfactuals, considering them unhelpful parlour-games. Personally, I enjoy a good ‘what if’ – not least because they can help put current political events in context. In that spirit, I’m pleased to present here the October 2024 Budget speech that Chancellor Jeremy Hunt might give in a parallel universe where the Conservatives remained in office after the election. As well a Budget address, this is also my resignation speech ‘Madam Deputy Speaker, it gives me no great pleasure to present this Budget statement

If the public is worried about what lies in store in Rachel Reeves’ first Budget, there are few signs of it yet in their shopping habits. The latest retail sales figures, released by the Office for National Statistics this morning, show that sales volumes were up by 0.3 per cent in September. Over the three months to September – a more reliable figure as it is based on a lot more data – sales were up a very strong 1.9 per cent. It seems that the long covid winter in the retail world may finally be coming to an end: though sales volumes in September were still 0.2 per cent down

Dubai, Italy or perhaps the Bahamas? Many multi-millionaires are discussing where they should flee to as the Rachel Reeves prepares to raid their bank accounts in the ‘Horror Budget’ scheduled for the end of this month. But not, as it turns out, Patriotic Millionaires, the group that campaigns tirelessly for higher taxes on the rich. Its members want Reeves to take more of their money. The papers are dominated by reports of wealthy entrepreneurs, and the few remaining non-doms, securing a bolt hole somewhere where Reeves will not be able to reach them, but Patriotic Millionaires has a very different message. A report out today, written by IPPR (a think