Money

The publication of the OBR’s fiscal risks report helps us understand some of the pressures on fiscal policy arising from the pandemic, climate change and changes in the costs of debt. But it should not be treated as an excuse not to understand that fiscal policy’s main responsibility is to manage risk rather than being subject to it. Rules rather than discretion have been the dominant paradigm in macroeconomic policy since the failures of the 1970s. Such rules should be transparent and widely understood and thus allow people to behave in manner consistent with their attainment. They should also allow us over time to measure the effectiveness of policy. Most

The government will ‘Buy British’ whenever possible. A new law would force every public body to publish the percentage of supplies bought from domestic suppliers. And Gareth Southgate will be appointed as the country’s new management tsar, tasked with turning every worker into a winner. Okay, I admit I made that last one up. The rest, however, were among the blizzard of policy announcements from Labour’s shadow chancellor, Rachel Reeves, over the weekend. Less than three months into her new role, she, along with Sir Keir Starmer, has clearly decided to shift Labour economic policy towards tub-thumbing economic nationalism. But hold on. Is that really a good idea? Sure, it

The furlough scheme begins to wind down today, as employers will now pay 10 per cent of their staff’s salaries, while the government continues to stump up 70 per cent of their wages. Employees won’t notice a change to their income, which will still be 80 per cent of their monthly wage, with a cap of £2,500. The question, however, is to what extent employers feel the financial sting, and whether it leads them to scale back their workforce. The numbers on furlough have been coming down steadily since economic activity liberalised in April. According to official government estimates, May alone saw one million people come off the scheme, as

It’s no surprise that house prices have risen faster over the last year than they have in almost the last twenty. After all, everyone has realised what a difference a home can make: the extra space for a home office, a garden for fresh air or even just a quiet corner to escape the reality of lockdown. Not to mention a stamp duty holiday encouraging people to buy quickly. But the luxury of homeownership is slipping away for many young people.  While these increased house prices are a boon for those lucky enough to be on the housing ladder, it spells further disaster for those of us waiting impatiently on

The past 15 months have produced a bizarre economic paradox. In 2020, the economy shrank at the fastest rate recorded in modern times: 9.9 per cent. Yet house prices have not merely weathered the storm, they have risen at the fastest rate since the height of the property boom in the 2000s. According to Nationwide, the average value of a UK home has risen by 13.9 percent in the past 12 months. Halifax puts it a little more modestly at a 9.5 percent annual rise. Yet there is a pretty clear picture of a rising market driven by a lack of stock and a desperation from many people to move home

Are the world’s hardest workers about to get a well-earned break? That seems to be the hope of the Japanese government, which is trying to encourage companies to ease off a bit and allow their exhausted staff the luxury of a four-day working week. It is hoped this will lead to a healthier work-life balance — or at least give workers a chance to retrain. As an idea, it sounds great. Whether it will actually work is another matter entirely. In January, the ruling (always and forever) Liberal Democratic party drafted a proposal that firms should offer staff the option of a three-day weekend. The plan was then included in

Finally the pandemic fog is lifting and the outlines of post-Covid politics are starting to take shape. While the Government is perfectly capable of generating many more unfortunate headlines by mishandling the Covid exit wave – or indeed, in the case of Matt Hancock, ignoring the ‘hands, face, space’ rule – it is clear that one key relationship will largely determine its longer-term fortunes. It is that between off-the-cuff scruff Boris Johnson and his immaculately turned-out Chancellor, Rishi Sunak – the man in the ironed mask. The time is fast approaching when Sunak’s own reputation will be on the line and when simply deferring to the PM’s predilections will no longer

The government is to ban ‘junk food’ adverts before the 9 p.m. watershed as well as restricting online food ads. Boris Johnson seems to have realised that he is overweight and so now we must all be subjected to an ever-growing assortment of gastronomic restrictions.  The first of many problems, however, is that civil servants don’t actually have a definition for ‘junk food’. The category used instead is ‘high in fat, sugar and salt’ (HFSS), a designation that is ridiculously broad. So now certain foods that would normally fall into the category are exempt. Honey, olive oil, avocados and Marmite are among those reportedly saved. If this is a representative sample, it seems that fatty and sugary foods

There’s been a lot of hype around the green light given by the European Commission yesterday to Italy’s recovery plan. But let’s break it down: the final headline numbers are €68.9 billion in EU grants by the year 2026 and €123 billion in loans. If you take the grant component, and divide it over the six-year duration, you arrive at an average of 0.6-0.7 per cent of Italy’s 2019 GDP each year. It is front-loaded, and it’s by no means a modest sum. What’s harder to accept however, is folding in the loan component to arrive at some giant fake headline number. The whole point of this exercise is not

It is called managing expectations: priming the public for really bad news so that when modestly bad news arrives it comes across as good news. Today’s public finance figures is a case in point. We have become so used to ever-grimmer predictions of the size of the government’s deficit that the latest figures released this morning ended up being reported in the form ‘borrowing is much lower than expected’.  In May the government borrowed £24.3 billion which, we are told in a government press release, is a whacking £19.4 billion less than last May. Furthermore, total borrowing for the financial year 2020/21, came in at £299.2 billion — which, we