Money

Kate Andrews

‘Famine is part of Russia’s strategy’: Zelensky’s economic adviser on Putin’s tactics

Alexander Rodnyansky has a desk waiting for him back at Cambridge, where he’s currently on sabbatical from his role as a junior economics professor. But he won’t be returning for some time. He’s working from Kyiv, prioritising his other job: as economic adviser to Volodymyr Zelensky. Rodnyansky was in Ukraine when the war broke out and he could easily have returned to the UK. ‘That wasn’t really much of a thought,’ he says. ‘I’m sixth-generation Kyiv. I was just going to stay.’ He became a full-time presidential adviser two years ago, hired to help reform Ukraine’s financial institutions, including the privatisation of state-owned commercial banks. ‘About 55 per cent of

Ross Clark

The EU’s oil ban is a damp squib

When Putin’s tanks rolled into Ukraine on 24 February there was a conceit that this might be the first war which the West could fight – and win – by sanctions alone. The EU’s latest efforts to stop importing Russian oil show just what a folly this was. Donations of military equipment to Ukraine are certainly helping to keep Russian forces at bay, but economic sanctions? That is another story. Europe’s dependence on Russian oil and gas is the product of years of ill-conceived energy policy Sanctions may be helping to lower living standards among Russian citizens, but they are still a long, long way from cutting off the lifeblood

The energy windfall tax will harm net zero

There’s no pleasing some people. Back when the government still believed windfall taxes were a terrible idea, the Scottish National Party was insisting one be imposed to help tackle the cost of living. In March, the SNP’s Stephen Flynn asked in the Commons: ‘Is it right that those who have benefitted from the pandemic… are able to benefit while our constituents are struggling? Absolutely not.’ The previous month, Nicola Sturgeon tentatively voiced support, arguing oil and gas firms should ‘absolutely’ be asked to pay more to alleviate the crisis. How unexpected, then, to see the SNP’s work and pensions spokesperson Kirsty Blackman launch repeated attacks on the levy in the days

John Ferry

The irrational cruelty of the SNP’s nationalism

They can’t build a ferry, organise a census or keep the railways operating, but when it comes to organising a grievance campaign, nobody does it better than the SNP. This week saw perhaps the most impressive effort yet from team grievance as the SNP tried to turn the Chancellor’s announcement of a windfall tax on big oil companies into a Scotland-versus-the-rest-of-the-UK bun fight. Speaking on Sunday, SNP MP Kirsty Blackman complained:  It feels very unfair that Scotland is having to pay for the entirety of the UK. If Scotland was an independent country, the windfall tax would generate £1,800 for every household in Scotland. With most of the UK’s oil

Steerpike

Is the Financial Times ashamed of capitalism?

It seems no-one has a good word to say about capitalism these days. For now, even the Financial Times – that bible of our captains of industry – seems to have gone off the filthy rich. Once, the newspaper’s ‘How To Spend It’ supplement was an unashamed paean to conspicuous consumption; a veritable smorgasbord of plutocratic excess. The FT itself still describes it in near-orgastic terms, writing that the 28 year-old pull-out is ‘the benchmark for luxury lifestyle magazines’ with an ‘affluent readership’ of whom one in five ‘has or would consider using the service of a private jet’. But it seems such tributes to the tastes of the rich

Fraser Nelson

Rishi Sunak’s slippery slope

There are two ways to see Rishi Sunak’s rescue package. One is an obviously needed and politically unavoidable boost to the economy and a relief for the cost-of-living crisis. The other is worrying jump towards the tax and spend policies that he once promised to avoid – and a sobering note for those who expected anything different from him. James Forsyth is inclined to the former, Kate Andrews and I are inclined to the latter. We all discuss in today’s Coffee House Shots podcast. There are many ways a Tory government could have helped households this week. Fuel costs are soaring but about 25 per cent of all electricity bills are

Patrick O'Flynn

Did Jeremy Corbyn win the general election?

Almost five years ago to the day, Amber Rudd had her finest hour in politics. Standing in for the frit Theresa May at the BBC leaders’ debate on May 31, 2017 – even though her father had died only two days earlier – Ms Rudd rescued a Conservative election campaign that appeared to be collapsing. Fixing Jeremy Corbyn with a confident stare, she declared: ‘There isn’t a magic money tree that we can shake that suddenly provides for everything that people want.’ The phrase was such a hit that Mrs May repeated it a week or so later after she had finally emerged from the wreckage of her ‘nothing has

We’ll all pay the price for Rishi Sunak’s handouts

A £400 rebate on electricity bills. A cash handout to the poorest households. And a windfall tax on the energy companies that generate the power to keep the lights switched on to try and pay for it all. Chancellor Rishi Sunak was back to doing what he likes to do best today: handing out vast quantities of free money, while making the UK a less and less attractive place for businesses to operate. It was billed as a fix for the ‘cost of living’ crisis. Yet very soon it will become clear it was nothing of the sort. After all, you can’t tax your way out of inflation; taking the approach

Kate Andrews

Rishi Sunak is not helping his reputation as a tax hiker

It was only three months ago that Chancellor Rishi Sunak was announcing a £9 billion support package to help people with their energy bills – which totalled £350 worth of support for most households. At the time there were calls for the Chancellor to go further, but he explained that he could not shield the public from every price hike, or pretend adjustment didn’t need to take place. It would be ‘wrong and dishonest,’ he said. Those appeals have not worked out. Households are feeling poorer and poorer as prices continue to shoot up month-on-month. So Sunak has announced today a staggering £15 billion support package, changing and adding to

Andrew Bailey is floundering in the face of soaring inflation

Prices are rising at the fastest pace for 40 years. Real wages are falling rapidly. The cost of servicing the government’s vast debts is escalating, and companies are struggling to keep up with the rising price of raw materials. Still, not to worry. Fortunately, a quarter of a century ago Gordon Brown wisely decided to hand over management of inflation to a supremely competent group of expert technocrats, so that we could have stable prices and steady growth forever – or indeed an ‘end to boom’n’bust’ as Brown would have inevitably put it. Oh, but hold on. It turns out it is not quite going to plan. In fact, while

Robert Peston

The unspoken argument behind a windfall tax

The Financial Times story on Rishi Sunak looking at a possible windfall tax on energy firms captures how difficult such a tax is for any government, especially a Tory one. Because it begs questions why, when electricity suppliers suffered unsustainable losses in autumn and winter, when under the price cap they suffered huge and unsustainable losses – what you might call a reverse windfall – they were allowed to go bust. If you believe in capitalism and competition, you believe in swings and roundabouts: windfall profits in good times are the obverse of extreme losses in the bad. Kwasi Kwarteng repeated that mantra as failing electricity suppliers would not be

There’s never been a better time to ditch the net zero agenda

The cost of living crisis is confronting Westminster elites with the stark reality of some of the dubious policy choices they’ve recently made. Last week, the government was forced to postpone its ban on buy one get one free deals on ‘junk food’. The foolishness of outlawing cheap food – a policy Boris Johnson adopted after his spell in intensive care – has been laid bare now that inflation has risen to a 40-year high. Soaring energy bills ought to give proponents of eco-austerity similar pause for thought. Dozens of retail energy companies have gone bust in recent months. We are shipping fracked gas from the US while banning the

Gabriel Gavin

Life in an age of hyperinflation

Istanbul, Turkey On Saturday mornings, Istanbul’s markets and greengrocers are packed with housewives in search of a bargain. Anxious women compare cabbages while chefs haggle over bunches of parsley, passing across thick wads of ten Lira notes – equivalent to about £5 a decade ago, now worth just 50 pence. The rising cost of food has become a national obsession in Turkey. Menemen, a staple breakfast dish of scrambled eggs with tomato, onion and fried green peppers, has seen the cost of its basic ingredients shoot up by 132 per cent in a year. Some shops in the big cities have invested in digital price tags – those little grey electronic

Kate Andrews

Mervyn King: Needless money-printing fuelled inflation

Some £500 billion was printed by the Bank of England during the pandemic – a staggering sum that caused very little public debate. Those sceptical about so-called ‘quantitative easing’ argue that it causes inflation – and with today’s news that inflation rose 9 per cent on the year in April, is anyone linking the two? Step forward Mervyn King, former governor of the Bank of England, who was surprisingly critical when speaking to Andrew Marr on LBC last night. One of the major problems, Lord King said, was that the Bank went too hard and too fast with its money printing. ‘Governments stepped in and put in a lot of

Sunak, not Bailey, is to blame for inflation

Inflation has hit a 40-year high. The cost of household utilities rose by an average of £700 last month. We are now facing inflation of 9 per cent and the figure is still careering upwards. In response, politicians and ministers have attacked the Bank of England. Some commentators have even started to call for Governor Andrew Bailey to resign. The Governor himself and Chancellor Rishi Sunak say there is nothing that can be done about prices rising. They’re both wrong. First, let’s understand why it is unfair to attack the Bank of England. Under our system, the Bank is not independent, as some like to claim. Rather, it has what is called ‘operational independence’.

The protocol is hurting Northern Ireland

With every sausage war or fish fight over the past 18 months, the chances of survival for the Northern Ireland protocol have narrowed. But the fallout from the NI Assembly elections, which saw Sinn Féin become the largest single party, has made it increasingly likely that the UK will take unilateral action to override parts of the Brexit deal. The protocol has few supporters. Arguably its only redeeming feature was that it allowed Boris Johnson to break the deadlock and conclude the withdrawal agreement. Because a porous land border between the UK and the Republic would have threatened the single market – and a hard border between Northern Ireland and the Republic

Kate Andrews

Andrew Bailey’s inflation excuses have been exposed

This afternoon the Bank of England’s governor Andrew Bailey appeared, as he has done many times before, in front of the Treasury Select Committee to answer questions about its recent decision-making. Yet the tone of the Committee was radically different to other sessions. Its chair Mel Stride opened by asking Bailey if he and the Monetary Policy Committee – made up of nine members who vote to set interest rates – had been ‘asleep at the wheel’ as prices soared throughout the country. It was arguably one of the easier questions put to him during today’s session: from then on, Bailey and the MPC members who joined him were pit

Kate Andrews

Tinkering with the energy price cap won’t fix it

In principle, the UK’s energy price cap is supposed to provide a buffer for consumers who might otherwise see their energy bills go through the roof. But governments can’t control international energy prices: a lesson that has been learned the hard way over the past six months, as dozens of energy companies have gone bust, unable to raise prices for customers to reflect increasing wholesale costs. Meanwhile the cap has not stopped bills from skyrocketing: Ofgem’s last price cap went up by 54 per cent, taking the total cost for an average household to just under £2,000 per year. Still, if there were any silver lining to this distortive policy

Are sanctions on Russia failing?

Sanctions are the West’s key weapon in the fight against Putin, but there are signs that Russia’s economy and financial system is weathering the storm better than expected. The rouble has already bounced back and Russia has been able to continue to service its debts, with only minor hiccups. A closer look however reveals that sanctions are biting hard – and that Russia is losing the economic as well as military war. Take the rouble’s resurgence, which is not what it seems. The ability of Russia’s currency to bounce back reflects the fact that Russian imports have fallen by more than the country’s exports, as local consumers and businesses have cut spending. This means there

The nihilistic rise of ‘loss porn’

It’s been a terrible few weeks for that guy you know. Bitcoin dropped to a ten-month low (apparently thanks to something called ‘stablecoins’), while $1 trillion has been wiped off the largest tech companies on the stock markets. ‘Retail investors’ – non-professionals with little more than an internet connection – are struggling. You might expect many of them to put their heads in their hands and log off. But that would be to misunderstand the nihilism of online culture. Losing is the same as winning, only better. The thing to do is to post evidence of your catastrophic losses. It’s called ‘loss porn’ and if you look at the ‘WallStreetBets’ page on