Money

This morning’s release from the Office for National Statistics shows the UK economy grew by 0.3 per cent in January – an improvement on December 2022 figures, which saw the economy contract by 0.5 per cent. There are no revisions to the last update: the UK still avoids the technical definition of recession, and January’s growth was higher than expected (the consensus was that it would be 0.1 per cent). But overall, the economy remains stagnant: the three months to January produced precisely zero growth. What really sticks out in today’s release is just how dependent the UK economy is these days on one-off interruptions. January’s rebound is largely credited to the return of

Shadow chancellor Rachel Reeves has promised to tackle what businesses tend to fear the most: instability. ‘In recent years, corporation tax has gone up and down like a yo-yo, while the government has papered over the cracks with short-term fixes like the super-deduction,’ Reeves told the manufacturing group Make UK’s annual conference this morning. Under a Labour government, she pledged, there will be a clear ‘roadmap for tax which lasts over a parliament’. Reeves said this would give business leaders a better sense of what to expect, hopefully creating an atmosphere for investment. Promising a review also puts pressure on Reeves to come up with answers to some of the

As tax rates rise in the UK, so do business jitters. The windfall tax on oil and gas companies – raising tax on profits to 75 per cent this year – has energy companies openly discussing plans to divert money elsewhere. The looming hike in corporation tax – from 19 per cent to 25 per cent for the largest companies – also has the businesses talking about future investment strategies.  So far, Chancellor Jeremy Hunt seems unconvinced that investment threats will amount to much. His Budget next week is expected to confirm the corporation tax rise in April. But the backlash is growing: from MPs in his own party who are worried

It would have been bad enough if just one major British company had decided to list its shares in New York rather than London in the space of a single week. But two? First it was the chip-maker Arm, one of the UK’s very few major technology companies. Then came the building materials giant CRH. Shell also said they came very close to shifting their base to the US. The moment has surely arrived for the UK to radically deregulate its listing regime – or else watch the City slowly wither away. At this rate, within a few years there might only be a couple of retailers and a bus

Fulfil your civic duty. Get married. Have children. That was the message from Miriam Cates, the increasingly prominent Conservative backbencher, to guests at a drink reception earlier this week. In what even her fiercest critics would have to concede was an impressively bold speech, Cates suggested that many of her female constituents want to work less and spend more time with their children. She claimed that politicians belonged to a class that had been protected by marriage and family, insulated from family breakdown to such a degree that they fail to realise how important it is. Few politicians can ride out a Twitterstorm without some sort of retraction, and Cates is no

There have been celebrations this morning about a government surplus of £5.4 billion last month, and people are even talking about a ‘windfall’ for Chancellor Jeremy Hunt in next month’s Budget. But all this shows is how conditioned we have become to appalling economic news – and that we will grab at anything which seems to indicate a shaft of light. Nevertheless, any talk of a government ‘surplus’ masks the very real problem the government still has While any surplus is to be welcomed – and last month’s borrowing figures are far better than the Office for Budget Responsibility predicted – we would be in serious trouble if the government had not

Do over-fifties need to get back off the golf course and into work? That’s the narrative that ministers have been pushing recently, with Jeremy Hunt saying later life ‘doesn’t just have to be about going to the golf course’. Work and Pensions Secretary Mel Stride is conducting a review of the factors keeping people out of the workplace in time for next month’s Budget. But a report out today from pensions consultancy LCP suggests ministers might be barking up the wrong tree. LCP’s analysis points out that there are fewer people of working age who are retired now than at the start of the pandemic, and that the missing workers

It was only a few weeks ago that Liz Truss started commenting on domestic policy again, speaking to The Spectator not just about what happened during her time in No. 10, but about what she sees as prescriptions for Britain’s stagnant economy. Today she weighs back in on foreign policy. In Tokyo this morning, the former prime minister made her first international speech since leaving office and it combined her favourite topics: economic freedom and taking a tough stance on China. Truss is calling for world leaders to band together and create an ‘economic Nato’ – which would include agreeing to a tough package of economic sanctions on China, were

Inflation remains at near a 40-year high – but finally, we’re starting to see some signs of good news. This morning’s update from the Office for National Statistics shows CPI falling to 10.1 per cent in the 12 months to January 2023, down from 10.5 per cent in December 2022.  It’s a better update compared to January, which revealed a much smaller dip in CPI between November and December last year. Core inflation – which excludes energy and food – fell too, from 6.3 per cent on the year in December down to 5.8 per cent in January. Crucially, this easing beat the consensus, both for CPI (the expectation was

The latest labour market update – published by the Office for National Statistics this morning – looks a lot like last month’s update: that’s to say, a mixed bag of news. Unemployment rose again, up 0.1 per cent between October to December, to 3.7 per cent. But this quarterly rise was once again off-set by a fall in economic inactivity: down 0.3 percentage points, largely thanks to young workers entering (or re-entering) the workforce.  Overall, it’s a trade-off worth making: the official unemployment figure has failed for some time to reflect the true number of people out of work, as over two million people of working age are thought to be

We’re all familiar with the usual trade union cliches: it’s not about us, it’s about passenger safety; staff morale is low; and strikers are being ‘victimised’. Or, in the words of Aslef general secretary Mick Whelan on ITV’s Good Morning Britain, train drivers are being ‘demonised’. More so than government ministers, who are forever portrayed by union leaders as callous evil-doers?     But it is what Whelan said next that really catches the ear. Asked whether he thought the public should be sympathetic towards train drivers on £60,000 a year turning down an offer which would take their pay to £65,000 a year, he said: ‘It isn’t about what we earn, it

It is ‘obscene’ and ‘an insult to working families’, according to the TUC. If there was one thing more predictable than the doubling of profits of the energy giant Shell – given that the stuff it sells has soared in price over the last year – it was the storm of protest that it ran into following the announcement today. ‘No company should be making these kind of outrageous profits out of Putin’s illegal invasion of Ukraine,’ said the Lib Dem leader Ed Davey. Inevitably, there are now calls for higher windfall taxes, and even for state-ownership. But hold on? Shouldn’t we celebrate a major British company making lots of

It will be a charter for fraudsters. It will usher in an open-season mindset for money launderers and criminals. And it will drag down the reputation of the City. There will be plenty of critics of today’s government decision to push forward with a regulated cryptocurrency market in London. In the wake of the FTX scandal, one of the largest in corporate history, many would rather see it banned completely. But crypto is more resilient than that – and the UK, if moves quickly, it can carve out a lucrative space as its leading hub.  No one could accuse Rishi Sunak or Jeremy Hunt of taking any risks with the

Just what is a UK government supposed to do to keep the IMF happy? This morning it has issued a bulletin predicting that the UK will be the only major economy to shrink in 2023 – by 0.6 per cent – and blaming it on ‘tighter fiscal and monetary policies’. This represents an even-bleaker outlook than the IMF foresaw in October, when it pencilled in growth of just 0.3 per cent. Yet this is the same IMF which last September condemned Kwasi Kwarteng’s mini-Budget for slashing taxes, saying 'given elevated inflation pressure in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as

As the UK – and indeed the world – faces the prospect of an economic downturn this year, what exactly can the government do about it? This remains an ongoing debate within the Tory party, as Rishi Sunak continues to emphasise the importance of stability, while Liz Truss’s most loyal supporters keep pressuring the government to revive her focus on economic growth.  This morning a trio of cabinet members showed up in the City to suggest that it doesn’t have to be one or the other. Culture Secretary Michelle Donelan, Business Secretary Grant Shapps and the main act, Chancellor Jeremy Hunt, opened this morning’s conference at Bloomberg by insisting the

Every month, we are bombarded with the Consumer Prices Index (CPI), the main inflation measure. It is currently running at 10.5 per cent, and although this is slightly down over the past two months, it is still far, far above the Bank of England’s target of two per cent. But what about inflation for people who are running businesses? The Office for National Statistics (ONS) also publishes a Producer Price Index (PPI) covering inflation for commercial organisations. If you think living costs for consumers are high, count yourself lucky you are not running a factory: the PPI of input prices (i.e. prices of raw materials and other goods) for December has come

Rishi Sunak ruffled his own party’s feathers last week when – in reference to last autumn’s market turmoil – he told an audience in Lancashire: ‘You’re not idiots, you know what’s happened.’ This was quickly interpreted as the Prime Minister branding the MPs and business leaders calling for immediate tax cuts as ‘idiots’, sparking not only backlash but also another round of debates on a topic that has been dividing the Tory party since last summer. Just how quickly and aggressively can the party start to cut the tax burden down from its 72-year high? Today’s public sector finance update for the month of December certainly doesn’t settle this debate,

I have to tip my hat to Civitas. The ‘Tufton Street’ think tank made quite a splash on Monday, including bagging the front page of the Daily Mail, with two striking claims. One was that more than half of UK households now receive more in benefits from the government than they pay in tax. The other is that the top 10 per cent of earners pay more than half of all income tax. Both headlines are correct, but a bit more analysis is needed to interpret these figures properly. For a start, this is not new information. The Civitas report acknowledges that it is simply repackaging data which was first published by the Office