Money

So, the doomsters have been proved wrong again – not least the Bank of England, which a year ago forecast recession throughout 2023. GDP figures released by the Office of National Statistics this morning show that the economy grew by 0.2 per cent in August, partially reversing a sharp contraction of 0.6 per cent in July.  Across the three months to August – which is a rather better guide to what is happening than the volatile monthly figures – show growth of 0.3 per cent. It is not possible now – by the usual definition of two consecutive quarters of negative growth – for Britain to suffer a recession in 2023, and

The biggest hinderance for the Conservatives is that they have nothing to offer young voters. The Labour party, however, just might. It seems that Keir Starmer will announce in his conference speech a plan to return to the idea of post-war new town corporations, which were able to compulsory-purchase land at agricultural value. It could – just possibly – mean a sharp fall in the price of new housing, massively expanding the number of first time buyers.  The great shame is that the Conservatives couldn’t bring themselves to introduce a similar policy You don’t have to be a socialist to feel aggrieved at your inability to afford a home, something that you

To no-one’s surprise, house prices fell again last month. Average prices were down by 0.4 per cent in September, according to Halifax, with the typical property now worth £278,600 compared with the peak of £293,500 in June 2022. Much of this, inevitably, has to do with high interest rates. For three decades until last year the housing market was pumped up by a downwards trend in interest rates, which increased the amount that buyers could borrow. Now that has come to an end, buying power is contracting. There is unlikely to be any rapid recovery. If rates remain high – and gradually it is dawning on markets that this is likely to

In the run-up to the Conservative party conference, Rishi Sunak was promoting himself as a serious politician who wanted workable policies that respect consumer choice. No more war on motorists! No more pie-in-the-sky net zero promises! Here was a practical man in tune with the concerns of ordinary people. Having teed himself up as a pragmatic, back-to-basics Conservative, it was all the more puzzling when, in his keynote speech, he announced a preposterous anti-smoking gimmick borrowed from Jacinda Ardern that no one was asking for. New Zealand is the only country to have taken seriously the idea of increasing the age at which people can buy cigarettes by one year

Speaking at the Centre for Policy Studies fringe event at Conservative party conference this afternoon, Jeremy Hunt reiterated once again that there would be no big tax cuts this year. ‘Debt interest payments have gone up so much in the past six months’, he told CPS director Robert Colvile, taking estimates for debt servicing payments over the £100 billion mark this fiscal year. The Autumn Statement, the Chancellor said, will lay bare just how dire the situation is: ‘It’s likely that our debt interest payments… are going to go up by more than £20bn pounds a year in the Autumn Budget compared to what was predicted in the spring.’ In other

The whispers going around last year’s party conference largely centred on the state of government – how it was deteriorating so quickly. This year’s whispers are about something that is by no means as dramatic, but possibly as existential to the future of the party: the prospect of tax cuts. The official line is simple: no tax cuts this year. Chancellor Jeremy Hunt has spent his summer trying to quell expectations that his Autumn Statement next month will include any major changes to the tax burden, which is set to reach a post-war high by the time of the next election. This morning he said now is ‘not the right

The last time a Conservative Chancellor was in the business of cutting taxes, he pointed out that they reduce the incentive to work, invest, and start a business. This was why Kwasi Kwarteng proposed to abolish the 45 per cent additional rate of income tax last year. We really, really, shouldn’t have a tax system that can have a 68 per cent marginal rate, let alone a 20,000 per cent one He was right about the impact taxes have on incentives, but he was wrong to focus on 45 per cent as the highest rate of tax people pay in the UK. In fact, there are millions of people paying

Bond yields are soaring. The cost of debt, and very soon mortgages, is rising. And the government is getting nervous about how it is going to borrow the next ten or twenty billion. This might sound like the opening of a one-year-on post-mortem of Liz Truss’s ill-fated mini-Budget (we have all been treated to those recently). But in fact, it is a description of what is happening right now across Europe. The eurozone is facing its Liz Truss moment, and the results are likely to be every bit as catastrophic.  Across Europe the bond markets are starting to look jittery. Over the last couple of days, the yield on ten-year

No one was expecting a big tax cut this year. Rishi Sunak’s government has been clear that 2023 is for the ‘difficult decisions’. If the Tories are to offer up a tax cut, it is much more likely to be announced in the Budget next March. Still, that didn’t make Jeremy Hunt’s comments on LBC last night any cheerier. Speaking to Andrew Marr, the Chancellor said that tax cuts were ‘virtually impossible’ due to soaring interest payable on government debt.  Hunt has a point: one of the many painful consequences of soaring inflation and higher interest rates has been the impact on public finances. In July, interest payments reached their highest

Will the government have room for tax cuts before an election? Politically, it’s thought to be non-negotiable that they must. Having put the tax burden on course for a post-war high by the end of this Parliament, Rishi Sunak and Chancellor Jeremy Hunt are going to have to relieve some of that pressure on taxpayers before going head-to-head with Labour next year. But will the public finances allow for it? On the surface, today’s update from the Office for National Statistics (ONS) appears to offer up some good news: public sector net borrowing in August came in at £11.6 billion. That’s £3.5 billion higher than August 2022, but £1.4 billion below the Office for

Jeremy Hunt has been warning for weeks that inflation could rise over the summer due to an increase in fuel prices. Economists said much the same: the consensus was that the headline rate would jump to 7.1 per cent on the year in August. But this morning the Office for National Statistics (ONS) revealed that the rate of inflation continued to slow last month: rising to 6.7 per cent on the year in August, down from 6.8 per cent in July. This is a rare occasion where ministers have under-promised on the inflation figures, triggering headlines like ‘surprise fall.’ In truth, it’s the smallest of dips – and prices are still going

In his promised review of net zero policies, Rishi Sunak has already ruled out postponing the proposed ban on the sale of new petrol and diesel cars from 2030. Indeed, from the end of the year manufacturers are going to be under a mandate to make sure that a certain proportion of their sales are electric – although the details have not yet been published. But what chances of the car industry actually getting there? While sales of electric cars might seem to be healthy – the Society of Motor Manufacturers and Traders (SMMT) records that 193,221 pure electric cars were sold in the first eight months of 2023, up