Money

The tech bloodbath won’t last forever

To paraphrase the American senator famously talking about government spending, a trillion dollars here or there and very soon you are talking about serious money. Over the last week, a massive $1 trillion has been wiped off the value of the major American technology companies, and, if measured since the start of the year, the carnage is far worse. But is it all as bad as it seems? Sure, some of the excesses of lockdown are being trimmed, and rising interest rates are starting to hurt some wildly over-valued companies. But nevertheless, tech is still where the growth is. And in reality the bloodbath will soon be over. It would

Ross Clark

Is the bond bubble about to burst?

First, the good news: US inflation is down. Now the bad news: US inflation isn’t down by as much as a lot of people were expecting. Cue quite a lot of confusion on the markets. First, the S&P 500 plunged by 0.5 per cent, then it rose by 1 per cent, then it was more or less back to where it started the day. The FTSE100 has performed a similar gyration: first erasing its daily gain and then regaining it, to finish nearly 1.5 per cent up on the day. So, is it positive or negative news that US consumer inflation has fallen from 8.5 per cent in March to

When will Boris face up to the real challenges facing Britain?

It’s rarely a good sign when, moments after a major set piece event such as yesterday’s Queen’s Speech, the government’s PR machine kicks into overdrive to defend it. Though Labour’s claims that Boris Johnson isn’t doing enough to support squeezed households were wearyingly predictable, the Tory narrative about turbocharging the economy and slashing EU red tape has quickly fizzled out. And Michael Gove’s surreal media performance this morning won’t do much to allay concerns that Boris’s government is up a creek without a paddle. Brits are currently facing rising energy bills, inflation is forecast to hit ten per cent and wages are failing to keep up with the increase in prices.

Ross Clark

BlackRock is right to abandon eco-activism

Is this the end of climate activism from pension providers and other institutional investors? BlackRock, which manages $10 trillion in assets, has toned down its enthusiasm for blocking company boards that are not sufficiently committed to a carbon-free future. In January 2020, BlackRock’s CEO Larry Fink shook up the world of investment by writing an annual letter to the CEOs of companies in which he invests, warning them that in future BlackRock would take a more critical view of their climate change policies. He wrote on that occasion: Last September, when millions of people took to the streets to demand action on climate change, many of them emphasised the significant

In defence of Liz Truss’s retro economics

One of the many curious things about Foreign Secretary Liz Truss is that she has the capacity to drive some people around the twist. There are the Trussites, hovering over her Instagram posts in political adoration, and then there are others who consider her a menace who is about to be made Prime Minister in a sinister conspiracy by Brexiteers. At least she is willing to challenge the groupthink of the Bank of England and the Treasury, both of which are full of clever people who have manifestly failed to manage the inflationary shock currently knocking us all off our perches. At the weekend, it was reported that Ms Truss

Sam Ashworth-Hayes

What reason is there for young people like me to vote Tory?

With a sense of reluctance, I went into a voting booth this week and ticked the boxes corresponding to my local Labour candidates. My rationalisation was simple: I wasn’t voting for Labour, but against the Conservatives.  There is a tangible stench of decay surrounding the Tory party at present. At best, it is incapable of maintaining moral standards. Barely a month passes without some MP’s embroilment in a grubby scandal involving sex, money, or both. The party has no vision for the country, no agenda beyond targeting the young to pay for the old. And if you judge them on results, well, there’s even fewer reasons to vote Tory. The Conservatives

James Forsyth

Why the local election results should trouble the Tories

The overnight results in the local elections are bad, but not disastrous for the Tories. They do not presage a 1997 style wipe-out. And they do not suggest that the public is yearning for a Labour government with Keir Starmer as Prime Minister. In normal times, the Tories could regard them as fairly standard mid-term fare. But the worry for the Tories is that there is so much bad news to come between now and the next election.    The other Tory worry is that no party will go into a coalition with them The Bank of England’s forecast yesterday suggests that there’ll be very little economic growth between now and

Kate Andrews

Are we heading towards a recession?

The US Federal Reserve yesterday announced its biggest interest rate rise in 22 years. Today, the Bank of England follows suit, raising rates at the fastest pace for a quarter of a century. But the biggest question remains: how successful will these hikes be at tackling inflation? The Bank’s Monetary Policy Committee has voted six to three to raise interest rates from 0.75 to one per cent. This incremental 0.25 per cent rise was broadly expected by economists – though there had been speculation in recent weeks that the Committee might move faster, after March’s headline inflation rate hit seven per cent. Notably, Committee members in the minority were calling

Ross Clark

Bill Gates vs Elon Musk? I know who my money is on

Is Bill Gates shorting Tesla? He certainly didn’t deny it in an interview with the Today programme. The suggestion is that he has upset Elon Musk, who has complained that he couldn’t take Gates’s philanthropy on climate change issues seriously if he was betting against the share price of the world’s biggest electric car-maker. But Musk’s outburst rather evades the issue: is Tesla’s share price destined to fall? You could be the most ardent climate change campaigner, the biggest enthusiast for electric cars in the world – and still think that Tesla is overpriced. The trouble with Tesla’s market valuation is that not only does it assume that electric cars

William Nattrass

How Hungary torpedoed the EU’s sanctions crackdown on Russia

‘Hungary’s stance on oil and gas sanctions on Russia remains unchanged,’ Hungarian government spokesperson Zoltán Kovacs said on Monday. ‘We do not support them.’ Cue panic in Brussels as European Union ministers discussed a potential embargo on Russian oil imports, plans for which were presented to the European Parliament on Wednesday morning. Claims swirled that Hungary might be allowed to continue buying Russian oil for a year longer than other member states to stop it from vetoing the bloc’s new sanctions package, but Kovacs quickly torpedoed this idea too. Hungary does not ‘see any plans or guarantees on how a transition could be managed based on the current proposals, and

Kate Andrews

Has the Fed restored its credibility?

The Federal Reserve is playing catch-up. Today’s interest rate hike is only the second rate rise since 2018 – but it’s the first half-point rise in 22 years. As expected, the federal-funds rate – the interest rate banks use to lend to each other on a short-term basis – will rise from a target range of between 0.25 and 0.5 per cent, to a range between 0.75 and 1 per cent. After many months of insisting price hikes would be transitory, with inflation soaring to a 40-year high in the meantime, the Fed is finally acting to curb it. By historical standards, today’s hike keeps interest rates very low –

Robert Peston

Why is Boris Johnson suppressing the incomes of the poor?

As the Prime Minister pointed out this morning, looming recession and soaring inflation are not uniquely British problems – though right now the UK economy is slowing faster than many of our rich country competitors. In the US for example, the IMF’s former chief economist Ken Rogoff has warned just today that the Federal Reserve’s official interest rate may have to go as high as five per cent to suppress rampant inflation. Which is one of the reasons I was nonplussed when the PM told Susanna Reid on ITV’s Good Morning Britain that he’s reluctant to increase universal credit and benefits and protect poorer people from the ravages of inflation

Ross Clark

Why Meghan Markle’s Netflix show was cancelled

In their post-royal careers, Harry and Meghan have learned two lessons in quick succession: firstly, that membership of the royal family opens the door to media deals less well-connected celebrities could only dream about. Secondly, they have learned that even royal fame will not, ultimately, help one of the biggest media organisations in the world sell a product that the public finds unappealing. No doubt Meghan thinks mightily of the concept of Pearl, her proposed animated Netflix series in which a 12-year-old girl is inspired by great women in history. But it seems potential viewers are rather less enamoured. Netflix has cancelled the series before it was even made. Considering

The nanny state is making us poorer

As household budgets face their worst squeeze for decades, one wonders whether the public health establishment feels any remorse for their role in driving up the cost of living. The kinds of taxes – on food, alcohol, tobacco, and soft drinks – that nanny statists have dedicated entire careers toward delivering are proven to have taken a greater share of income from the poor than the rich. An average family that indulges in drinking and tobacco will now spend £891 in cigarette levies and £216 in alcohol duty every year. Advocates for sin taxes argue that their tactics are progressive if they improve the health of the poor more than the rich. Others

Ross Clark

Right-to-buy won’t fix Britain’s housing crisis

The biggest long-term threat to the Conservatives is neither partygate nor even the cost of living crisis – but declining rates of home ownership. As Mrs Thatcher understood, when people are able to afford their own home, they become more conservative in outlook. They put down roots in their local area and they gain a vested interest in capitalism – just look how Mrs Thatcher won and held on to aspirational areas such as the new towns. That the rate of home ownership plunged from 70.9 per cent to 62.6 per cent between 2003 and 2017 (it has since recovered slightly) goes quite a long way to explaining why Jeremy

After 25 years it’s time to finally break with New Labour economics

The state would be prioritised over everything else. Taxes would be constantly, if stealthily, raised. Spending would be reclassified as investment, and shifted off the balance sheet wherever possible. And macro stability would be out-sourced to the Bank of England, while the Treasury would take total control of domestic policy. A quarter of a century ago this weekend, as New Labour was swept into power in a landslide election victory, Gordon Brown, then a relatively fresh-faced Chancellor, completely overhauled economic policy. In a whirlwind week, he put in place the most far-reaching reforms in a generation. And yet, 25 years on, that consensus is still in place. Twelve years of

Fraser Nelson

Is stagflation coming for the UK?

This week, a US economy that had been expected to grow in the first quarter of the year was recorded as having shrunk 0.4 per cent – a stunning fall, raising awkward questions about what might come next. This morning, it emerged that the Eurozone grew by just 0.2 per cent over the same period, with inflation in both the US and Europe topping seven per cent. America is ahead of Britain when it comes to the global economic slowdown For weeks now, investors in America have been spooked by the ‘inverted yield curve’: a technical term, but one which carries certain implications. When this happens (i.e., short-term government bonds

Kate Andrews

Why is Rishi Sunak flirting with windfall taxes?

Rishi Sunak has had a few quiet weeks after an explosive one, in which the Chancellor had to deal with an avalanche of questions concerning his wife’s tax status and a partygate fine. But Sunak was back this week talking policy. And his most recent contribution is unexpected to say the least. In an interview with Mumsnet, the Chancellor indicated that he might start considering a windfall tax on oil and gas companies if they didn’t invest more profits back into their businesses to ‘support the economy’ and improve productivity. ‘If we don’t see that type of investment coming forward, if companies aren’t going to make investments in our energy

The Biden Bust is here

A wave of government spending would reboot the economy. Fairer taxes would pay for restored infrastructure. Skills would be improved, productivity raised, and new digital champions would emerge. When Joe Biden was elected, he promised the most radical programme of economic reform since Franklin Roosevelt’s New Deal in the 1930s, and, to his army of cheerleaders at least, the American economy was about to be completely transformed. But hold on. Only a year into his term, the reality is very different from the promises. In reality, the Biden Bust has arrived. Donald Trump may have been personally obnoxious, but he bequeathed an economy in perfectly good shape The US GDP figures