Money

The new year may have rustled up some surprise stand-offs for the Labour government (mainly calls from X founder Elon Musk for Keir Starmer to resign), but the rise of new problems does not mean the old problems have disappeared. A harsh reminder has been dished out this morning, as long-term borrowing costs reached a 27-year high, calling into question yet again exactly how the Treasury is going to make good on its spending commitments while sticking to the Chancellor’s own fiscal rules. Thirty-year gilt yields hit 5.21 per cent this morning – a level that surpasses the surge in borrowing costs following Liz Truss’s mini-Budget in 2022. The ten-year

When the British government spent £400 million on the satellite internet start-up OneWeb back in 2020, it was seen as precisely the kind of active, tech-led industrial strategy that could re-boot the British economy. There were hopes the deal would help secure a place for the UK at the heart of the emerging space economy. Then prime minister Boris Johnson saw it as a key part of launching ‘Galactic Britain’. But four years on, the taxpayer is on the hook for a £300 million paper loss after shares in OneWeb’s parent company sank to a record low. The money poured into OneWeb has proved to be remarkably poor value Even

This is hardly how 2024 was supposed to end for Labour. Free from the shackles of ‘14 years of Tory misrule’, the economy was supposed to take off. ‘Growth, growth, growth,’ Keir Starmer told us, a little unconvincingly, were going to be the government’s three main priorities. Indeed, Britain was going to tear away as the fastest-growing economy in the G7 – although he never offered us any explanation as to why this would be the case, still less which of his policies was going to achieve it. This morning’s revised GDP figures from the Office for National Statistics (ONS) reaffirm just how big a failure the government’s economic policies

More than half of Britons receive more from the state than they pay in taxes, according to figures from the Office for National Statistics. The proportion of those receiving more through benefits than they paid in taxes last year fell slightly to 52.6 per cent, down a percentage point compared with the year before. The data – which factors in use of public services, such as schools and the NHS, as well as welfare payments and benefits – highlights the fundamental problem underlying the British state: how do we support a population that is aging, getting ill and becoming increasingly workshy? As you’d expect, more than 85 per cent of

Interest rates have been held at 4.75 per cent. The Bank of England’s Monetary Policy Committee voted 6-3 to maintain the base rate, with the minority voting to further reduce rates by 0.25 percentage points. This is an unsurprising move from the Bank of England. Markets weren’t optimistic that another rate cut would follow so soon after last month’s 0.25 percentage point cut. But after this week’s labour market data – showing that wages are up – and inflation data – showing prices up, too – it was highly unlikely a cautious Bank was going to push ahead with another rate cut this month. Today’s minutes reflect these concerns. ‘Services consumer price inflation has remained

Donald Trump is right that some of Nato’s European members are essentially freeloaders. That these countries are holding talks about increasing the alliance’s target for defence spending to 3 per cent of GDP at its annual summit next June comes too little, too late. Countries like Germany and France have consistently underspent on defence, leaving Europe reliant on the United States as an ultimate guarantor of the continent’s security. When he takes office in January, Trump won’t stand for this. The political chaos in France is unlikely to reassure the president elect that Europe has got its act together when it comes to defence spending. The fall of Michel Barnier’s

At last some good news for owners of second homes: Ofgem has ordered electricity providers to offer tariffs which have no standing charges, but where instead householders pay more per unit of electricity consumed. True, it isn’t second-home owners which Ofgem had in mind when it came up with the idea, rather low income consumers whom it believes are losing out under the current system. But there is no question as to whom will be the biggest beneficiaries: people who only use their properties occasionally. If you visit your Cornish clifftop mansion for only four weeks a year you stand to make a substantial saving. Standing charges have become the

The economy would crash, the markets would be in open revolt, and he would swiftly be evicted from office by the IMF, and replaced by some ‘grown-ups’. When Argentina elected its chainsaw-wielding, libertarian President Javier Milei a year ago, the economic and political establishment confidently predicted he would only last a few weeks. And yet, not only has Milei managed to stay in power, all the evidence suggests that he is turning Argentina around. The real question now is this? Will a stagnant and moribund Europe pay attention? With inflation running at 25 per cent a month, with the largest IMF loan in history to pay back, and with the

Another day, another flurry of bad news on the fallout from October’s Budget. The BDO Monthly Business Trends indices – which pull together the results of all the main UK business surveys – show that confidence has fallen to the lowest level in almost two years, with output and employment down, and only inflation up. Meanwhile, KPMG and REC have published their UK Report on Jobs, which reveals a sharp fall in permanent recruitment in November. It seems many firms are reassessing their ‘staffing needs’ amid reports of a growing number of redundancies. It is a reminder that Labour’s first Budget was certainly grim. But just as the new government

The very wicked French novelist Michel Houellebecq recently asked: “It should be strange for the British: they voted for Brexit to have no more immigrants and you have more?” Yes Michel, it is strange – and not just for Britain. Migration to the western world has reached record levels, despite popular blowback in nearly every country. Migration demonstrably lowered wages for native workers Even excluding refugees (from Ukraine and elsewhere), permanent migration to the OECD hit a new high in 2023. Over a third of OECD countries registered their highest levels ever, particularly the United Kingdom, but also Canada and France. The unlikely key to this story isn’t politicians but economists. There

In the weeks since Rachel Reeves’s Budget and its shock attack on agricultural property relief, we’ve seen various armchair pundits pontificate on farmers’ lives – a source of mounting exasperation for farmers themselves. The peak of pundit-on-ploughman contempt came, unsurprisingly, from LBC’s James O’Brien First, there have been the panicky announcements from the government – that the threshold for agricultural tax relief is £1 million, or that no, actually, it’s £3 million if you’re under 5’8” and are married to a woman called Susan or…“Ooh, look over there! A bird!”’ We’ve had Owen Jones on Jeremy Vine declare that farmers were overreacting due to ‘inflammatory’ rhetoric from the media, that

Is the OECD doing Labour’s PR for it? I ask only because of its bullish prediction for UK economic growth in its latest economic outlook, published this morning, and the contrast with what it has been saying about Britain over the past few years. An economy that was supposed to be hammered by Brexit has suddenly been transformed into one of which Rachel Reeves is able to say: ‘The OECD upgrade will mean the UK is the fastest growing European economy in the G7 over the next few years.’ The OECD has pencilled in growth of 0.9 per cent in 2024, followed by 1.7 per cent in 2025 and 1.3

Russia’s ruble is in trouble. The currency has plunged to its lowest rate against the dollar since the weeks after the outbreak of war against Ukraine. On Wednesday, the ruble hit 110 against the dollar for the first time since 16 March 2022. The currency has recovered slightly, to 108 against the dollar this morning, but in Moscow people are worried. There are no good remedies for the Russian economy’s malaise apart from ending the war Russians who lived through the tumultuous years after the collapse of the Soviet Union know all about the dangers of currency devaluation. While, clearly, things aren’t as bad as they were in the 1990s,

For the first time ever, France’s borrowing costs have risen above those of Greece. As of today, the bond markets have decided that French debt is a riskier bet than Greece, the country that 15 years ago almost crashed the entire euro-zone with its fiscal extravagance and irresponsibility. True, to some degree that reflects an improvement in Greece’s position, as well as the decline of France’s. Yet the harsh reality is this: France is in a sorry state and president Emmanuel Macron will struggle to patch things up. The bond markets have decided that French debt is a riskier bet than Greece This moment of crisis was bound to happen

Labour talks of having the ‘bold ambition of an 80 per cent employment rate’. But who should they target to get there? The government published its white paper this week on ‘getting Britain working’ and tackling the growing health and disability benefits bill, which is forecast to hit £120 billion.  Figures slipped out by the Office for National Statistics today give more insight on which groups could perhaps be better targeted. These figures split out employment rates by parental status, and show that already more than 80 per cent of married (or cohabiting) mothers and 93 per cent of married (or cohabiting) fathers with dependent children are working. This doesn’t leave a

It turns out it wasn’t just China after all. Mexico, and indeed Canada, are just as much in the firing line. President-Elect Trump announced last night that he will impose an immediate 25 per cent tariff on imports from both of the US’s two largest land neighbours, threatening huge disruption to their economies. Trump may think he is being clever by weaponising access to the American market, and in the short-term he may even by right. The trouble is, he is going to break the global trading system – and it will be very hard to put back together afterwards.  This is a recipe for constant market chaos It is

Rachel Reeves was probably expecting to be cheered for restoring ‘stability’, for rebooting ‘growth’ and crafting a British version of Bidenomics to create ‘the industries of the future’. Instead, the Chancellor’s ‘fireside chat’ at the Confederation of British Industry (CBI) conference today is likely to be rather uncomfortable. There probably won’t be any heckling, walk-outs, boos and cat-calls. Yet the business world has made it all-too-clear that Reeves’s Budget will hit both jobs and growth hard. Reeves is going to get a rough ride this afternoon – and deservedly so. Labour’s relationship with business is now broken beyond repair The CBI made it clear this morning what it thinks of