Money

Kate Andrews

Britain just can’t stop spending

Will Jeremy Hunt have scope to deliver more tax cuts before the next election? Tory MPs certainly hope so, as cuts to employee National Insurance in last year’s Autumn Statement and this month’s Budget have yet to move the polls. Something like an income tax cut, they think, would be preferable. But this morning’s update from the Office for National Statistics is an uncomfortable reminder that those kinds of tax cuts are hard to deliver: for as much as the government insists it wants to bring down the tax burden, it likes to spend money too. Public sector net borrowing in February was £8.4 billion – significantly higher than the

Five takeaways from Rachel Reeves’s Mais speech

We live in an age of stunts and soundbites so it was refreshing to hear a politician stand up and, for the best part of an hour, explain their political philosophy to an audience savvy enough to shred it. That’s what Labour’s Rachel Reeves did at last night’s Mais lecture.  She summoned the ghosts of heterodox leftists Karl Polanyi, Joan Robinson and Marie Curie to explain that Britain stands on the brink of a global economic regime change just as big as the one begun in 1979, that the Tories have left us bystanders, and that Labour is the only party that can make it happen.  Though she didn’t mention

Rachel Reeves
Kate Andrews

How big will Rachel Reeves’s state be?

Every year the Mais lecture, hosted by Bayes Business School, gives its speaker a chance to lay out their vision for the economy. It’s how we knew Rishi Sunak would prioritise fiscal prudence over tax cuts long before he entered Number 10. Last night it was Rachel Reeves’s turn.  The message seemed to be: build up the state to get it out of the way As expected, there were no big policy announcements about what Labour might do in power. But that wasn’t the point of the speech. Reeves formally committed to keeping Jeremy Hunt’s fiscal rule, to get debt falling as a percentage of GDP in a rolling five-year forecast. This

Isabel Hardman

Rachel Reeves is making mischief for the Tories

Rachel Reeves has a busy day: the shadow chancellor is giving her big speech tonight, where she is expected to outline the broad brush of her economic policy and claim there is a ‘new chapter in Britain’s economic history’ just waiting to start under a Labour government. Reeves was in the Commons this morning for Treasury Questions, and her focus there was on whether the Tories had a sequel planned for their own National Insurance policy. Labour has decided that it’s worth exploiting the suggestion As I reported from the Commons yesterday, Labour has decided that it’s worth exploiting the suggestion from senior Conservative figures that they would like to

Rachel Reeves will regret promising growth

Growth will be turbo-charged, animal spirits will be unleashed, and foreign investment will flood back into Britain. Shadow chancellor Rachel Reeves is promising a Thatcher-style revival of the British economy if Labour wins power. But there’s a problem with the pitch that she will deliver in her keynote Mais lecture on the economy today: a Labour government isn’t going to deliver this promised growth. Reeves is setting herself up for failure.  Labour’s proposals are painfully thin With at most only a few months left before she takes charge of the Treasury, as she inevitably will, Reeves is making it clear that she expects the UK to return to the 2.5

James Kirkup

A pension crisis is brewing

Ten years ago, George Osborne blew up the British private pension system. Because pensions are boring and complicated and move slowly, a lot of people didn’t really notice. But the shrapnel from the blast continues to ricochet today and is starting to hit.  Chancellor Osborne’s Budget on 19 March 2014 contained the surprise announcement of ‘pension freedoms’. Previously, people retiring with a Defined Contribution pension (a pot of money and very different to a Defined Benefit pension that is an entitlement to a certain income) effectively had to take their pension savings and use them to buy an annuity, a financial product  delivering an income for life. Under the Osborne reforms, once

Isabel Hardman

Has Labour spied an opportunity in the Tory National Insurance pledge?

A curious attack from Labour in the Commons this afternoon: shadow work and pensions secretary Liz Kendall used her slot at the regular departmental questions to ask how a policy that the government doesn’t yet have would work. She referred to the statements made by the Chancellor and the Prime Minister about their ambition over the long term to scrap National Insurance as a ‘double taxation’, pointing out: Labour obviously thinks that talk of abolishing national insurance is a way into the pensioner vote ‘Your NICs record helps determine your entitlement to the state pension. So if that’s scrapped, how will people know what pension they will get?’  Work and

Revealed: the extent of Sadiq Khan’s splurge of taxpayers’ cash

Londoners don’t agree on much, but on one subject many of the capital’s residents are united: Amy Lamé, the mayor’s ‘night czar’, is a colossal waste of money. Whether you’re on the left or right, a cyclist or motorist, religious or not, it’s hard to defend her £120,000-a-year salary for ‘ensuring London thrives as a 24 hour city’. But Lamé isn’t the only beneficiary of the Mayor of London Sadiq Khan’s largesse: more than 1,100 staff working for various public sector organisations in the capital, including City Hall, Transport for London (TfL) and the Metropolitan Police, were paid more than £100,000 last year. Khan certainly thinks these fat cats are worth

Kate Andrews

Sunak says the economy is doing better. Is he right?

Is Britain’s economy ‘turning a corner’? Rishi Sunak thinks so, but convincing his fellow MPs and the public is going to be difficult. At the ‘SME Connect’ conference in Warwickshire this morning, the Prime Minister spoke about the ‘tough couple of years’ the country has been through, insisting the UK economy is now heading ‘in the right direction.’ Perhaps there is more to come in the way of tax cuts On several metrics, Sunak is right. January’s growth figures, coming in at 0.2 per cent, suggest the UK is likely to consign its technical recession to the end of last year. Forecasters expect April will return the inflation rate back to the

How Ozempic fattened up Denmark’s economy

It’s official: weight-loss wonder drug Wegovy (also marketed as Ozempic) makes US celebrities shrink but makes the Danish economy grow. This week, the most amusing Oscars clickbait featured not the typical best- and worst-dressed actors, but instead celebrities who have experienced recent miraculous weight loss. The Daily Mail helpfully split this award category between those confirmed to have taken Wegovy, and others who have merely inexplicably and rapidly shrunk. Their collective weight loss is Denmark’s economic gain: this week, Denmark’s statistics agency confirmed the Danish economy grew 1.8 per cent in 2023 – but without the contribution of Wegovy’s owner, Novo Nordisk, it would instead have shrunk 0.1 per cent. Free market

Kate Andrews

Britain’s recession looks like it’s over

Is the UK already out of recession? It’s a question that won’t be confirmed for months, but this morning’s update from the Office for National Statistics offers a positive hint that Britain’s economic contraction will be confined to 2023. According to the ONS, the economy grew by 0.2 per cent in January – thanks largely to improved services output, which rose by 0.2 per cent, and a bounceback in wholesale and retail trade. Construction output also turned a corner, growing by 1.1 per cent after three consecutive months of contractions. Is this the spectacular economic turnaround that Britain has been waiting for? GDP still fell 0.1 per cent in the

Will Erdogan ever get to grips with Turkey’s sky-high inflation?

Inflation and the cost-of-living crisis dominates the agenda in Turkey, ahead of local elections at the end of March. Year-on-year inflation reached 67 per cent in February, according to the Turkish Statistical Institute, breaking a 15-month record and puncturing hopes that high interest rates would put a lid on rapidly increasing prices. For years, president Recep Tayyip Erdogan was a bitter opponent of high interest rates. ‘Interest rates are the reasons, inflation is the result,’ he roared regularly at political rallies, defying traditional economists. He cites Islamic traditions whereby high interest rates amount to usury, to justify his unorthodox monetary policies. Erdogan was a bitter opponent of high interest rates

Michael Simmons

Britain’s worklessness disaster

Whilst Jeremy Hunt’s cut to National Insurance may grab the headlines, the real story of today’s Budget was hidden in the official forecasts accompanying it. These forecasts point to a disaster for Britain’s labour force. The UK already had one of the worst post-lockdown workforce recoveries in the world, with a record 2.8 million people off work due to long-term sickness. But today the OBR said things are only going to get worse. Spending on welfare now makes up the second biggest portion of your tax bill –  narrowly pipped to the post by our NHS The OBR gave the Chancellor credit for expanding childcare provision, attempting to reform welfare

Jeremy Hunt cuts National Insurance in Budget

Jeremy Hunt’s Budget was short on surprises. The Chancellor cut National Insurance for workers by another 2p in a bid to address the Tories’ poll slide ahead of the upcoming general election. Hunt also announced a shake-up to child benefit charges, said that ‘non-dom’ tax status would be scrapped and said that alcohol and fuel duty would be frozen. Here are the Budget announcements in full: Follow all the analysis as it unfolded on our live blog:

More people should have second jobs

Long gone are the days when you had a job for life. But, for young folks especially, it seems we don’t just do one job in a week. The strivers are scrambling for second jobs. Though it is hard to ascertain exact numbers through official statistics, some surveys suggest more than two-thirds of British Gen Zs are now supplementing their income with side hustles.  A side gig could well be the most sensible way to improve your prospects Some of this is out of necessity, thanks to stagnant wages and rising living costs. But it is also being driven by attitude changes, and a desire to choose more purpose and freedom in

It’s time to take a chainsaw to the British civil service

Slashing Whitehall waste is a pledge that brings to mind Augustine’s prayer for the Lord to make him virtuous – but not yet. It is something repeatedly promised by governments, but rarely delivered. Here we are again, days out from the final Budget before voters go to the polls in a general election, and Jeremy Hunt is announcing a crackdown on bureaucracy in the public sector. He intends to reduce the civil service headcount by 66,000, returning it to pre-pandemic levels. Do we need a Department for Culture, Media and Sport? Voters are likely to feel cynical. Britain’s public sector is riddled with entitlement and waste at levels described by the Chancellor as

Ross Clark

John Kerry has unwittingly exposed the climate change wheeze

Here’s a good wheeze: prod every last inch of your own country, open the taps and become the world’s largest producer of fossil fuels. Then, when other countries start to try to develop their own resources, tell them they mustn’t, for the good of the planet. In other words, make them all dependent on you. That is pretty well what John Kerry, the outgoing US special envoy on climate change, suggested on the BBC’s Today programme this morning.  The US is shamelessly using climate change to promote its own industries ‘We do need gas to keep our economies moving but we don’t need to open a whole raft of new

Ross Clark

Andrew Bailey: Britain’s recession may already be over

We’re not cutting interest rates because we think the recession may already be over and we’re not even sure we are in recession anyway. That was the gist of Governor of the Bank of England’s evidence to the House of Commons Treasury Select Committee this morning. Bailey fell back on the traditional excuse of CEOs who get it wrong and send their businesses into a downwards spiral: the weather Andrew Bailey reminded the committee of what happened ten years ago when Britain seemed to be on the verge of a triple dip recession. In the end, revisions of the GDP figures revealed that we had never even entered a double

Melanie McDonagh

How to help the 400,000 workers who want to return to their jobs but can’t

Question: what’s a way of getting up to 400,000 willing workers into the workforce without importing them from abroad? The clue is that these are carers of elderly or disabled dependents who left paid employment because they couldn’t combine work with their responsibilities. If they were women with very young children, there would be practically nothing the government wouldn’t throw at them to enable them to stay in work – and I’m not even sure that’s wise, certainly with pre-school age toddlers. But these are people who could work, who want to work, but can’t work because it’s too difficult financially and practically.  And the answer? I refer you to

Kate Andrews

Inflation stays at 4 per cent – despite Red Sea disruption

The government had been facing two economic challenges this week, ahead of the by-elections in Kingswood and Wellingborough: the publication of the latest inflation figures and the economic growth figures for the last quarter of 2023. It has just about survived the first challenge. This morning’s update from the Office for National Statistics shows the inflation rate sticking at 4 per cent on the year in January, unchanged from December. This is still double the Bank of England’s inflation target, but it is better than expected news, as economists were predicting an uptick to 4.2 per cent. A combination of factors – including the January sales for home goods and furniture and