Money

The ‘rabbit out of the hat’ in Kwasi Kwarteng’s mini budget this Friday is likely to be a cut in stamp duty on property purchases. If so, it will be a popular and wise decision. Not only might it help generate extra activity in a housing market which looks like flagging as interest rates bite – or maybe mitigate a decline in activity – it should help to promote labour mobility by making it easier for job-seekers to move around the country to look for work or further their careers. Moreover, depending on at what level it is set, a stamp duty cut might well generate extra revenue, too.  Never

Critics say that scrapping the cap on bankers’ bonus will encourage a return to excessive risk taking. It will provoke retaliation from the European Union, they warn. And perhaps, worst of all, it could prove fatal politically, rewarding a few rich Tory friends while the rest of the country struggles with the cost-of-living crisis. Chancellor Kwasi Kwarteng will get lots of criticism if, as predicted, he does decide to bin the cap in his upcoming financial statement. Even so, he should ignore the naysayers. It will certainly be a controversial move. The controls on City bonuses were imposed right across the EU in the wake of the crash of 2008/2009. These

This morning’s surprise update from the Office for National Statistics shows headline inflation at 9.9 per cent on the year to August, down slightly from 10.1 per cent in July. While consumer inflation remains at a 40-year high, the drop from double digits back into single digits has the optimists whispering: might inflation have peaked? This update is no doubt good news, but this is likely to be a brief moment of calm in an ongoing storm. The slight fall in headline inflation has primarily been driven by easing fuel prices, as the cost of oil has been on a downwards trajectory. That at least is an early sign that global markets

One implication of the Russian gas shut-off is that Norway has now become the EU’s largest single supplier of natural gas. According to the country’s energy ministry, they are expected to export 122 billion cubic metres of gas south to the EU over the course of 2022. This compares with the 155 billion cubic metres of gas which the union imported from Russia in 2021. Getting gas from Norway is obviously preferable to Russia: Norway is a friendly country, and Nato ally, and has gone out of its way to facilitate as much exports to the EU as possible. Over the summer, the country’s government effectively put a stop to

One of Liz Truss’s suggestions on the leadership campaign trail was that her economic agenda could avoid recession. But one of the (many) gambles attached to these comments was what had already happened to the economy before she entered No. 10. This morning we got some more insight about how the economy fared over the summer, as the Office for National Statistics revealed that GDP grew by 0.2 per cent in July: a small uptick, following a 0.6 per cent contraction in June. The small, but still positive, growth was mostly a result of a boost to services industries, which fell by 0.5 per cent in June, with the largest

It’s all getting a bit Latin American in Britain and not in a good way. Inflation is stuck stubbornly in the double digits, the current account deficit is at record levels, our new Prime Minister is preparing to spend the annual budget of the NHS on subsidising energy purchases, and regional separatists are tightening their grip on the Scottish economy by introducing price controls. At least the weather’s still good. Nicola Sturgeon’s plan to freeze all rents in Scotland would be a disaster for Scots. Economists almost universally agree that rent control is one of the worst possible ways the government can intervene in a housing market. The short-term consequences

It is not unusual for promises made during an election campaign to fail to survive a headlong impact with reality, but if, as expected Liz Truss, announces an energy price freeze tomorrow, it will leave many Conservative party members who voted for her feeling somewhat cheated. For most of the leadership campaign Truss denounced the idea of government help with energy bills and insisted she would tackle the problem with tax cuts instead. Taxing people and then giving them some of their money back in handouts, she said, was ‘Gordon Brown economics’. Yet it now seems that not only will she spend large amounts of money to bail out householders’

Labour will attack the new prime minister from the left and the right. From Liz Truss’ exposed left flank, Labour and the majority of the electorate will hammer her for not extending the windfall tax to cover the estimated £170 billion in profits Vladimir Putin has gifted gas and electricity generators. Do not imagine for a moment that it won’t be effective. The attack from the right is less obvious but gets to the heart of the risk Liz Truss is running with the UK economy. ‘We need to paint her as fiscally irresponsible,’ one adviser to Labour’s Treasury team told me. ‘That’s as important as showing she has the wrong

‘It’s fair to give wealthiest more money back – Truss’. That’s the headline on a BBC News story following Liz Truss’ interview with Laura Kuenssberg today, where she was asked about the merits of cutting National Insurance. Don’t worry if you missed the headline though. You’ll get plenty more chances to see it when Labour MPs repeat it over and over again, offering it as proof that the Tories are the party of the rich, a tag that Conservative leaders have sought to drop for the last two decades. So striking is the prospect of a would-be Tory leader clearly defending a policy that benefits the rich more than the poor,

Rishi Sunak presents an alarming picture of what happened during lockdown in last week’s Spectator interview – one echoed by lockdown sceptics who claim that Covid policy was a disaster, stoked by fear and based on questionable scientific advice. Worst of all, they cry, the trade-offs were not even discussed. But none of this is true – it is Covid revisionism. I know because I sat around the cabinet table as politicians, scientists, economists and epidemiologists agonised over the extent to which lockdown would devastate lives and livelihoods. It was not an easy decision for anyone. We locked down because we knew the cost of ‘letting Covid rip’ was far

It is reported this morning that one of Liz Truss’s first acts as prime minister, assuming she wins the Conservative party leadership election, will be to grant new licences for North Sea oil and gas extraction. But will it be enough – and quick enough – to alleviate the energy crisis? There are still substantial known oil and gas reserves in the North Sea left to be exploited. According to a report produced by the Oil and Gas Authority last September, known reserves of oil and gas in the North Sea at the end of 2020 amounted to 4.4 billion barrels of oil equivalent (BOE). This is just a tenth of

A new poll about the NHS, the Sunday Times tells us, has discovered ‘a decline in support’ for the National Health Service. The story spoke of ‘wide dissatisfaction about the state of the health service’, under the headline: ‘Britain falls out of love with the NHS’. The figures from the poll itself tell a slightly different story. The headline finding was that three people in five are now not confident that they would receive timely treatment were they to fall ill tomorrow. But these three people in five aren’t necessarily saying they’ve ceased to approve of the NHS. It seems to me that they are simply affirming what they’ve read

The confirmation of the huge jump in the Ofgem cap on domestic energy bills in October, and forecasts of even worse to come, have fuelled more calls for prices to be frozen at current levels. This is not a completely daft idea, but it is not a good one either. There is no shortage of suggestions for how to solve the energy crisis. Labour has proposed a six-month bills freeze, financed by higher taxes on energy producers, the redirection of the £400 energy discount, and assumed (but largely mythical) savings on the debt interest bill due to lower RPI inflation. An alternative, being promoted by the energy suppliers, is to