Money

A year ago Boris Johnson lost his place in his speech to the CBI annual conference. He started blathering on about Peppa Pig World, after having treated young Wilfred to a day out there the day before. It was excruciating, but at least it was fun. It is hard to say the same about Rishi Sunak’s address to the CBI this morning.  The CBI ought to be a natural habitat for Sunak, yet he didn’t seem entirely comfortable. His voice seemed a tone higher than normal, so his usual enthusiasm sounded something more like a desperate appeal. He wanted us to know that innovation is a good thing which improves

What exactly happened at FTX and its sister company Alameda Research is unclear, and will be for some time. What we do know is that what’s currently unfolding is a sort of economic Jurassic Park; we are being given a brief glimpse of financial life in the 18th century, before centuries of bitter experience coalesced into the financial regulations we love to hate. It’s a common joke that cryptocurrency is gradually learning why all the boring rules and regulations of the traditional financial world exist. It’s also entirely true. The earliest explanation for the sudden crash of FTX was very simple: the exchange had become something like a bank, taking

The teenagers are once again in charge of UK fiscal policy. The teenagers are not the Chancellor and his team, but those who set the tone of the fiscal debate in the media and the financial markets. The reasons the Conservatives are now embracing austerity is the fear that higher interest rates will kill house prices. This is mad The teenage scribbler is usually a young, pro-austerity banker, with no formal education in economics or economic history. The scribbler pretends that whatever happens is happening for the first time. The scribbler was still on the playground when the previous generation of scribblers talked their governments into austerity. That was not

Jeremy Hunt’s Autumn Statement had a curious omission: childcare. The pleas of desperate parents who gathered on Whitehall last month during ‘The March of the Mummies’ appear to have fallen on deaf ears. Demonstrators gathered outside Downing Street banging drums and shouting: ‘Dear Rishi Sunak, we want our choices back.’ So why didn’t the Chancellor listen? Britain’s childcare costs are already among the highest in the world, with the recession and soaring inflation increasing pressures on parents. One way to reduce the burden would be to make nurseries cheaper. For many parents, is cripplingly unaffordable, especially as the current subsidy of 15 hours a week only applies to three and four-year olds.

There had been quiet but growing optimism from some economists that inflation in Britain was nearing its peak as the CPI headline rate had fluctuated slightly – in and out of double digits – over the past few months. But that optimism was put on pause this morning when the Office for National Statistic revealed that inflation rose by a full percentage point from September, taking CPI to 11.1 per cent on the year last month. CPI is at its highest level since 1981, and above the Bank of England’s most recent prediction for where inflation would peak. Meanwhile, real-terms wage increases are failing to keep up with price hikes.

What does Jeremy Hunt want us to know about the Autumn Statement? The Chancellor is in the final hours of writing the economic announcements for Thursday, and today he had his last Treasury questions in the Commons before he gives his long speech. Hunt has been rolling the pitch more assiduously than an MCC groundsman over the past few weeks, with endless briefings about black holes, tax rises and unpopular spending cuts. Today, he was talking again about how ‘difficult’ things were going to be. He said: ‘Despite the difficulty of the package I will be announcing, I will sadly not be drinking any whisky as I do so.’ Hunt

There is a conundrum at the heart of Jeremy Hunt’s comments leading up to the Autumn Statement. Hunt describes inflation as an ‘​​evil’ that ‘erodes the pound in your pocket’: uncontroversial. So Autumn Statement, he says, has been designed by his Treasury to ‘help the Bank of England bring down inflation.’ But controlling inflation is the Bank of England’s remit, so any action will be indirect. By tightening fiscal policy, Hunt is lifting pressure off the Bank to keep pushing raising interest rates. This will be by design on the part of the Treasury. After Liz Truss and Kwasi Kwarteng’s disastrous mini-Budget, markets were predicting rates headed for over 6

Anyone with a mortgage will be in serious trouble. Small businesses will go to the wall. Demand will be hammered. And the cost of government debt will soar. After the Bank of England upped interest rates yesterday to 3 per cent, the highest level in more than a decade, there was one point on which everyone agreed. The Bank might be moving too fast or too slow, but it is imposing steep rises in rates. But hold on: is that right? After all, when you take into consideration rising inflation, the real cost of money has hardly ever been cheaper.  The Bank’s decision to hike rates by 0.75 percentage points

There is no such thing as free money. This was learned the hard way last month, when investors made clear after Liz Truss’s mini-Budget that the era of cheap money was over. Mass borrowing for day-to-day spending was going to have a big premium attached: a bill so large that no government would want to pay. Rishi Sunak understood this delicate dynamic, and said so many times over the summer. His willingness to admit the truth – that the government’s many promises can’t be delivered for free – is what, eventually, landed him in No. 10. But now in power, Sunak and his chancellor Jeremy Hunt risk making another ‘easy

So much for those ‘stranded assets’ which former Bank of England governor Mark Carney and many others tried to warn us about. It wasn’t long ago that climate activists were urging the world to dump shares in oil companies, not just because we should want to punish them for climate change but because, they said, oil companies’ fortunes were on a downward trajectory as the world turned green. ‘The exposure of UK investors, including insurance companies, to these shifts is potentially huge,’ Carney said in 2015. ‘Once climate change becomes a defining issue for financial stability, it may already be too late.’ But that’s not how it looked in BP’s boardroom

Britain’s economic problems can, of course, be laid at the door of Brexit. We know this because it was asserted on a BBC podcast which went viral over the weekend – and no one would question the BBC’s objectivity. But maybe there ought just to be a scintilla of doubt in the heads of the staunchest remainers given this morning’s news that eurozone inflation has reached 10.7 per cent – even higher than Britain’s latest CPI figure of 10.1 per cent. Markets had been expecting Eurozone inflation to stay a little below the 10 per cent mark. Far from Britain parting off from the rest of Europe and entering a

When Rishi Sunak entered No. 10 on Tuesday, he paid lip service to the aims of his predecessor. Liz Truss ‘was not wrong to want to improve growth in this country’, he said outside Downing Street. But ‘mistakes were made’ which is why he was installed as Prime Minister: to fix the economic fiasco that has overwhelmed Britain over these past few weeks. This morning’s news about looming growth forecasts brings both statements to the fore. Just over a week ago, Chancellor Jeremy Hunt thought he had to find upwards of £30 billion worth of spending cuts and tax hikes to fill the black hole in the public finances. But

Given the swift defenestration of his predecessor after her mini-Budget panicked the markets, it is not surprising that Rishi Sunak has delayed the Treasury’s autumn statement until 17 November. No set of fiscal plans will satisfy everyone, but markets and public opinion do seem to be especially sensitive to changes in fiscal policy at present. And there’s this: left-leaning thinktank the Resolution Foundation this morning said delaying the statement for just two weeks will reduce the apparent black hole in the public finances as the cost of government borrowing comes down. The two-week delay could create the illusion of an extra £15 billion in the government’s coffers (or rather £15

Inflation, asserted Rishi Sunak in his first PMQs, makes us all poorer. That is not entirely true – people relying entirely on the state pension, for example, will be fully compensated for this year’s high inflation, and no doubt some of Sunak’s former colleagues in the hedge fund industry have found a way to profit, too. But generally, he is right. Working people have on the whole suffered a large drop in their real wages. In the year to April, median weekly pay rose by 5 per cent from £610 to £640. In many years that would be a substantial rise, but when adjusted for inflation it comes out as