Money

Ross Clark

Will the West shut Russia out of Swift?

You may never have heard of the Society for Worldwide Interbank Financial Telecommunications — or at least not by its full name. Even if you had you may have mistaken it for a fairly inconsequential trade body that holds rather dull conferences in hotel function rooms in places like Frankfurt.  Yet it finds itself at the centre of the West’s response against Vladimir Putin. Swift, as it is otherwise known, is the system by which banks communicate in order to undertake cross-border financial transactions. This morning the Ukrainian foreign minister pleaded with the West to cut off Russia from the system. Britain would like to do just that, as would some

James Forsyth

Boris Johnson needs even tougher sanctions to deter Putin

Boris Johnson has just outlined a series of further sanctions on Russia. They are considerably more substantial than the ones he announced earlier this week. They exclude Russian banks from the UK financial system, bar Russian firms from raising capital in London and will see the UK join the US’s technology sanctions on Russia. However, Russia will not be cut off from the Swift payments system — it is clear that the UK has, sadly, lost the argument on that for now. This does raise the question of what, if not the unprovoked invasion of a sovereign country, would be enough to lead to Russia being cut off from Swift. In answers

Lloyd Evans

Rishi Sunak is no Gordon Brown

How at home Rishi Sunak looks in the company of academics. The chancellor delivered the 34th Mais Lecture this afternoon at the Bayes Business School in east London. Standing at the lectern in his dapper blue suit, he had the air of a cerebral super-monk bred on figs and yogurt. He’s the first British chancellor to hold an MBA from Stanford and he seemed perfectly at ease in this warm, well-lit room full of brain-boxes with double-firsts in economics. He speaks their jargon fluently. Instead of a ‘job’ he talks about ‘an employment outcome ’. His term for a ‘career’ is ‘a fulfilling professional experience.’ And when he refers to

Ross Clark

The Ukraine invasion is good news for Wall Street

Don’t be fooled by the pictures that will shortly start to emerge of traders apparently tearing their hair out against of backdrop of red screens. A proper crisis is exactly what Wall Street traders want — to provoke yet another stimulus package, as well as the cancellation of interest rate rises. In the Alice in Wonderland world of bubblenomics, bad news is good, and good news is bad. If we have good economic figures, there is a danger that the Fed, the Bank of England and other central banks will take away the punch bowl. On the other hand, all we need is a sudden crisis that gives the impression,

Wolfgang Münchau

Europe is painfully reliant on Putin

Vladimir Putin declared war on Ukraine in the early hours of this morning, starting with a massive air attack from the north, south and east, targeting military and civilian infrastructure. This is the worst-case scenario. Putin’s speech on Monday set the ideological groundwork. This morning he spoke again, calling Ukraine ‘our historic lands’. He said he was launching what he called a ‘special military operation’ with the goal, not of occupying the country, but of ‘demilitarising and de-Nazifying’ Ukraine. And Putin spoke too to us here in the West: To anyone who would consider interfering from the outside: if you do, you will face consequences greater than any of you

Ross Clark

Andrew Bailey’s revealing salary slip-up

If Bank of England Governor Andrew Bailey was expecting to bat away some gentle questions on monetary policy before the Commons this morning, he hadn’t reckoned on Labour MP Angela Eagle. She was quietly frothing with rage at Bailey’s recent suggestion that workers need to exercise restraint when asking for a pay rise in order to tackle inflation.  Eagle began like the late Bamber Gascoigne with a series of quick-fire questions on the median salary of UK workers and care workers. Alas, salaries turned out not to be Bailey’s specialist subject — not even when Eagle asked him about his own. ‘It’s somewhere over £500,000,’ Bailey stumbled, before adding ‘I

How much did the Covid crisis cost?

The true cost of Covid cannot be quantified only in death rates or GDP figures. Though it could have been far worse, the pandemic nonetheless inflicted a deeper wound on our society than any productivity calculus can measure. But as legal domestic restrictions end, and the economic fallout from months of stringent controls is increasingly felt by households, it’s worth exploring how the nation’s balance sheet could have looked had this virus never appeared. It was former US Senator Everett McKinley Dirksen who observed, ‘a billion here, a billion there, and pretty soon you’re talking real money,’ but the extent of public sector spending over the course of this pandemic

Katja Hoyer

Cracks are already showing in the EU’s Russia response

‘The EU is united and acting fast,’ said Ursula von der Leyen, the president of the European Commission, as she condemned Russia’s invasion of Ukraine. A new package of sanctions, swiftly agreed upon by EU member states, appeared to show von der Leyen was right. Yet in reality, the measures were disappointing: a number of Russian officials had their assets frozen, but even Putin himself avoided punishment. Given the different attitudes and interests of EU members, from here on unity will be even more difficult to obtain. While the EU has vowed to ‘hurt Russia’, it seems unlikely it will agree upon how. Vladimir Putin’s recognition of the Russian-backed Ukrainian regions of Donetsk and Luhansk

Are the lights about to go out across Europe?

Today’s snap decision by German Chancellor Olaf Scholz to halt Nord Stream 2 — the new pipeline intended to export vast amounts of Russian gas into the EU — will make precisely no difference to European energy security, at least in the short to medium term. It could force a rethink of Berlin’s longer-term energy strategy, but the bigger question facing energy markets is whether Russia will curtail existing gas flows into Europe. Scholz on Tuesday instructed Germany’s Federal Ministry for Economic Affairs and Climate Action not to allow the Baltic Sea pipeline to start pumping gas ‘for now’. Halting the certification process puts the project on hold but doesn’t

Ross Clark

It’s too late to break Europe’s gas reliance on Russia

So, Nord Stream 2 will not be plugged into Germany’s gas grid. A little surprisingly, Chancellor Olaf Scholz has been first out of the blocks this morning in the western economic response to Putin’s recognition of breakaway states in eastern Ukraine. The block is not total: what Scholz says is that the certification process for the pipeline will be halted — leaving open the possibility that it might, after all, be connected if Putin starts to behave himself, or Germany becomes especially desperate for gas. Nevertheless, it is a significant move which will have an economic impact on Russia. But it is astonishing that the project was ever allowed to come

Kate Andrews

Germany’s canning of Nord Stream 2 will hit Putin hard

Vladimir Putin’s threats towards Ukraine have, in part, been an operation in stoking divisions throughout the West. As James Forsyth explains in the magazine’s latest cover piece, it was just weeks ago that Germany was not on the same page as the US and the UK about what actions from Putin might classify as an invasion – and how such actions might trigger western countries to respond. The obvious sticking point for Berlin has been Nord Stream 2: the now-completed gas pipeline running under the Baltics, built to transfer 110 billion cubic metres of gas supplies from Russia to Germany each year and bypass the current pipeline which runs through

Wolfgang Münchau

Sanctions won’t stop Putin

The Lithuanian prime minister, Ingrida Šimonyte, put it well yesterday: ‘the way we respond will define us for the generations to come’. The invasion of Ukraine started last night with Vladimir Putin’s order to send troops into eastern Ukraine. He had earlier recognised the breakaway provinces of Donetsk and Luhansk, which together constitute the Donbas region, as independent republics. The two self-proclaimed states declared their independence — something neither Kiev nor any other third country save Russia has yet recognised — following 2014 following the Maidan revolution. The US, UK and EU say they will announce fresh sanctions as early as today. What we know is that the technicalities have been

Sam Ashworth-Hayes

Britain is trapped in a Boomerocracy

‘If young Americans knew what was good for them’ the historian Niall Ferguson once remarked, ‘they would all be in the Tea party’. In his first Reith Lecture, Ferguson argued that austerity would be a boon for the young; public debt merely allowed ‘the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn.’ It is certainly true that successive generations in Britain have run up an almighty tab while assuming the next group along will be able to foot the bill. The problem Ferguson neglected to account for was which voters would end up delivering a pro-austerity government into

Macron’s energy intervention has seriously backfired

He intervened decisively. He showed the ability of the state to make a difference. And he demonstrated that greedy, self-interested corporations should not be allowed to exploit ordinary consumers. Only a few weeks ago, the French President Emmanuel Macron was being celebrated by left-leaning economists and pundits for forcing the French energy giant EDF to slash the cost of power. But hold on. Now, the government has had to bail-out the company from the inevitable financial hit. It turns out that the government can’t dictate the price of energy after all – and it just creates a bigger mess when it tries to. Even by the standards of French industrial

Lionel Shriver

The looming monetary apocalypse

OK, I finally watched Netflix’s Don’t Look Up. Surprisingly, I enjoyed it — especially before its effective subtitle for us thickos, THIS IS A METAPHOR FOR CLIMATE CHANGE, YOU F-ING MORONS. Otherwise, the film might have playfully dramatised the more general phenom of fiddling with celebrity bodices while Rome burns. The comet at which I’m looking up could arrive far more immediately than perilous global warming. Money is in trouble. I’m not only referring to a cost-of-living crisis. Money itself is in trouble. Let’s contemplate, to coin a phrase, a basket of deplorables. US inflation just hit 7.5 per cent, the highest in 40 years. UK inflation, now 5.5 per

Why ‘Ukraine carnage’ in the markets won’t last

Oil will shoot up to $130 a barrel. The prices of natural gas will double in a few hours, tipping a few more energy companies into bankruptcy. The tech stocks will crash, currency traders will panic, and the bond markets will crater. If Russian tanks do start to roll across the Ukrainian border this week then we can expect carnage in the financial markets. Indeed, they have already fallen sharply in anticipation of a possible war. And yet, the important point is surely this: it won’t last. True, the most serious armed conflict on European soil since the end of world war two is a serious matter. But geopolitical events

Kate Andrews

Who’s in charge of the NHS?

Who runs the NHS? With a £136 billion budget for NHS England and NHS Improvement eating up 17.5 per cent of tax revenue, there should be a clear answer to this. But ministers were left wondering when the time came to announce what the health service would achieve with its extra £12 billion from the tax rise. I write in this week’s magazine about the row over waiting lists and how ministers thought the extra cash would cut it to 5.5 million — only to be told it could possibly hit close to 11 million. But there was a row over another point too: the timeline for cancer care. It’s

It’s time for Rishi Sunak to become a low-tax Tory

This week marks two years since Rishi Sunak was thrust from relative obscurity into the political spotlight as Chancellor of the Exchequer. After less than a month in post, he delivered his first Budget. Weeks later, Britain was in lockdown. How has the ‘Covid Chancellor’ fared in the intervening period? When he was splashing taxpayer cash early on in the pandemic, he was cheered to the rafters. Now, he faces criticism both for holding the line against big spending colleagues, and for presiding over the highest tax burden in several decades. If Sunak were a speech, his opening paragraph would be full of promises. He’s a low-tax Thatcherite who believes

Ross Clark

How high could interest rates go?

The last time that US inflation hit 7.5 per cent, Ronald Reagan was a recently-elected president. And he, older readers might recall, partly owed his election to inflation. He memorably said during his campaign: ‘inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.’ But what of Britain? Bank of England chief economist Huw Pill gave a speech this morning in which he revealed that the Monetary Policy Committee (MPC) very nearly raised the bank’s base rate to 0.75 per cent this month rather than to 0.5 per cent — there was only one vote in it. Should this, along with the news from