Money

Is cutting, or abolishing, inheritance tax the key to keeping the Tories in power? Inheritance tax is certainly unpopular and is described by some voters as a ‘death tax’. Back in 2007, the Tories were in a similar predicament to the one they find themselves in now: they consistently trailed Labour in the polls. But that year, the party made a surprise announcement, pledging to raise the inheritance tax threshold. The Tories subsequently regained their lead and went on to win the next general election. As the next election looms, and Labour continues to lead in the polls, Conservative MPs are feeling nervous. Some think that a major announcement to

‘There are obviously lessons to be learned,’ said Bank of England Governor Andrew Bailey at today’s House of Lords Economic Affairs Committee. It was a point he repeated many times over, in reference to the inflation crisis that has plagued Britain for close to two years now. ‘We have to learn lessons from the experiences we’ve had, of course we must… We have to work out what those lessons are.’ But despite repeating this sentiment over and over again, Bailey could not meaningfully come up with one good example of such a lesson, nor could he go into much detail on the mistakes the Monetary Policy Committee has made over the

Is the government ready to start cutting taxes? After taking the burden to a post-war high, it seems ministers are preparing to change direction – in one area, anyway. This morning Jeremy Hunt announced that the energy levy on oil and gas companies, known as the ‘windfall tax’, will come to an end in 2028 – a direct response to growing fears that the effective 75 per cent tax on profits was driving business and investment out of the country. Divestment from the North Sea has become a heavily contested topic. Keir Starmer announced that Labour would ban all new production in the North Sea, perhaps putting into perspective for

The UK will narrowly avoid a formal recession this year. That’s the consensus that is emerging based on the current data. This morning’s Economic Outlook from the OECD – which forecasts 0.3 per cent growth in 2023 – reflects similar projections from the IMF’s latest update and the Office for Budget Responsibility, which have revised their figures upwards in recent months. But to what extent will this modest growth actually be felt by Brits? Here the picture is far less positive. Inflation – which remains stubbornly high, in Britain especially – continues to eat away at real wages. The OECD predicts that the UK will continue to suffer from some

It wasn’t long ago that supermarkets stood accused of selling food too cheaply. Their price wars and two-for-the-price-of-one deals were destroying farmers, undermining local shops and making us fat. How long ago that now seems, with the government now considering 1970s-style price controls. While the measures would apparently be voluntary, they would fix the prices of a number of basic foodstuffs – the sort which Jack Monroe keeps her eyes on. The price of price-fixing is likely to be more pictures of empty shelves, which of course will be blamed on Brexit You don’t need to have studied economics in any depth to understand the problem with price controls. In

The government is delighted with today’s inflation update. Rishi Sunak released a clip this afternoon, talking about his government’s efforts to ‘halve inflation’ by the end of the year. ‘I know it’s still tough’ he says, but ‘the plan is working, and we are delivering.’ The problem is that it is not in his gift to deliver on his particular pledge. The economics in this video rival his chancellor’s coffee cup video from a few months back – in that they simply don’t add up. Politicians do not control inflation. They have no reliable mechanism for doing so. Windfall taxes do not bring down inflation, as he suggests in the video; and

One of the UK’s biggest economic problems is having so many people out of work – and the slowest return to pre-pandemic workforce levels in Europe. This is costly and slows growth, as taxpayers foot the bill for benefits while employers struggle to fill vacancies. Today’s figures show that it is getting better – but slowly.  The official unemployment count crept up to 3.9 per cent in the latest statistics. This is, ironically, a good sign as it shows more people are actually looking for work (about 12 per cent of the working-age population are on out-of-work benefits, although this is a figure that ministers seldom update and never publicise).

The Bank of England has hiked interest rates again, taking the base rate from 4.25 per cent to 4.5 per cent. This is the 12th consecutive rise, voted for 7-2 by the Bank’s Monetary Policy Committee (MPC). It takes rates to their highest level since 2008. The Bank had hoped it could stop raising interest rates months ago. It would require evidence of ‘persistent pressures’ on prices for them to keep hiking the base rate, the MPC said in February. But since then, we’ve had two more rate rises: one in March, which took the base rate from 4 per cent to 4.25 per cent. And another today. So when will

We might have thought Trussonomics was dead and buried for a generation after its author’s short-lived premiership last autumn. But all of a sudden it has a high-profile, if slightly unexpected, convert: Sir Keir Starmer. In an interview with BBC Radio 4’s Today programme this morning, Starmer was sounding a lot like Kwasi Kwarteng last September: We’ve got the highest tax burden since the second world war. What we’ve had from the government is tax rise upon tax rise on tax rise. If they’ve proved one thing, it’s that their high-tax, low-growth economy doesn’t work. The Labour leader is absolutely correct, even if he is a little late to the

Hollywood will be backing him en masse. The major newspapers will be rooting to put him back in the White House. And most of corporate America, in between filling in the forms for the next round of ‘green subsidies’, will be quietly hoping for another four years of lavish spending and protectionism to keep out all those irritating foreign competitors. As he launched his re-election campaign this week, President Joe Biden could count on plenty of mainstream support. There is just one problem: the Federal Reserve is about to torpedo his campaign – by tipping the American economy into recession.  GDP figures for the US released today showed an economy

It was, admittedly, not quite as thrilling as an action sequence from Call of Duty. Even so, the statement put out by Bobby Kotick, chief executive of US video game publisher Activision, following the UK’s bizarre decision to block the company’s acquisition by Microsoft was about as bloodthirsty as any ever put out by a major corporation. The ruling ‘contradicts the ambitions of the UK to become an attractive country to build a technology business,’ he argued. Even worse, ‘it does a disservice to UK citizens, who face increasingly dire economic prospects’, and, to cap it all off, it shows that Britain is ‘closed for business’. Of course, it would

The rate of inflation has come down, barely. This morning’s update from the Office for National Statistics shows inflation fell to 10.1 per cent on the year in March, down from 10.4 per cent in February. The rate remains in the double digits, where it has hovered since September 2022. Today’s update takes the rate back down only to where it was in January.  A trend has emerged with inflation data in the UK. As predicted across the board, energy prices are falling at significant pace, with the largest ‘downward contributions’ in March coming from a drop in motor fuel prices – which fell by 5.9 per cent in the year to

The UK’s labour market is cooling down, slowly. Although unemployment rose from 3.7 per cent to 3.8 per cent, figures published by the Office for National Statistics this morning show that job vacancies have fallen for the ninth consecutive period. They’re now down 47,000 but still stand at over a million. The number of people out of work and not seeking it (economically inactive) fell too, as students started hunting for work. The most startling figures, however, were those for wage growth. They showed that average pay rose 6.6 per cent in the three months to February. Hefty pay raises in normal times – but adjusted for inflation, that’s a

The chip maker ARM decided against listing its shares in London, despite plenty of arm twisting from the government. The building materials group CRH decided last month that New York was a better place for its equity to be traded, leaving the FTSE for good. The mining giant BHP has moved its listing from London to Sydney, while another materials group, Ferguson, switched from London to New York last year. And now hotel group IHG may make the same journey.  At these rates, no one will need the Prime Minister’s new plan to boost numeracy to count the number of companies still listed on the London market. The fingers of

February was a no-growth month, according to the latest update from the Office for National Statistics, published this morning. A rise in construction was offset by a fall in services, resulting in zero headline growth. The strikes are taking their toll. The biggest contribution to the fall in services came from education and public administration, as striking teachers downed tools. Education fell by 1.7 per cent. Meanwhile public administration fell by 1.1 per cent, as ‘this industry also saw industrial action take place within the civil service during February 2023.’ An optimist might note that while the strikes offset economic activity in other sectors, at least there was some growth to point