Money

Are we heading for a 1970s-style inflationary spiral? Not according to Catherine Mann, former chief economist at Citigroup, who argues that we are now less exposed to fluctuations in oil prices than we were then. She also makes the case that businesses are more reluctant to put up prices and that the link between inflation and wages is weaker than it was in the years of high inflation when wages often rose three or four times a year and prices in the shops were jacked up more frequently than now. Her opinion matters because she is the latest recruit to the Bank of England’s Monetary Policy Committee, which is charged

It is a curious thing to exclude a vast group of generally quite well-heeled voters from funding a policy innovation that they will benefit from more than any other group. One might almost call it blatant favouritism. But Boris Johnson’s plan to pay for a big increase in resources going into social care long-term and the NHS short-term amounts to just that. By opting for a National Insurance increase to fund his proposals, the PM is ensuring that nobody over the state pension age of 66 will have to put their hands in their pockets. Neither will the extra financial burden fall on so-called ‘unearned’ income such as dividends on

Boris Johnson pledged to ‘fix the crisis in social care’ over two years ago. Next week, the Prime Minister is set to announce his plan to do just that. In doing so, he is also expected to opt for a major break from his manifesto pledge not to raise key taxes. So what is Boris’s solution, and will it work? The Prime Minister remains wedded to the 2011 Dilnot reforms to answer today’s problems. This includes bringing in a cap on the cost one would be required to pay for their social care. At least a 1p tax hike on National Insurance is also expected, to raise around £6bn. This pot of

As Covid-19 swept through care homes in the spring of last year, the public watched on with horror and helplessness. About a third of all Covid deaths in England took place among residents of these homes. It was worse overseas. In Spain, care home residents accounted for 40 per cent of Covid deaths last year. In the Netherlands and Sweden, it was around 50 per cent. In Canada, almost 60 per cent. But this doesn’t provide much comfort. Britain may belong to a large club of countries that got their pandemic policy wrong — but the results, regardless, were deadly. The huge holes in Britain’s social care system have been

Andy Haldane’s departure from the Bank of England opened up one of the most influential roles in guiding UK monetary policy — and that role has now been filled. Huw Pill has been announced as the BoE’s new chief economist, taking up the post from next Monday. Some of the snap reaction is focusing on Pill’s similarities to those who came before him. Despite resources being poured into diversity teams to recruit a mix of applicants, it was Pill who was selected, a former Goldman Sachs economist and most recently a senior lecturer at Harvard Business School. Pill won’t take kindly to ideas about reneging the Bank of England’s independence

Car workers in Sunderland are doing just fine. Construction workers still have jobs. And the food is still getting to the supermarkets, even if there are some occasional disruptions to supply.  Not many of the dire warnings about the consequences of leaving the European Union have actually come to pass. There is, however, one group that looks likely to be hit, even if no one quite predicted it. The pensioners. It looks certain to cost them the ‘triple lock’ on their pensions: although since many of them voted for Brexit, they can hardly complain. The government is tying itself up in knots on how to wriggle out of the ‘triple lock’

Liberals have always set great store by laws and declarations. It was joked about Lord Loreburn, the liberal Lord Chancellor in the years before the First World War, that if told the Germans had landed he would immediately have taken steps to obtain an interim injunction from the Chancery Division requiring an immediate withdrawal. These days something similar seems to be happening as regards the Liberal Democrats’ approach to climate change. Last Thursday Ed Davey took aim at the City, which he has decided to add to the party’s growing list of climate change villains. In a curious interview with the Guardian he put forward a modest proposal to deal

The City has resigned itself to being locked out of the EU. The hauliers are adjusting to all the extra paperwork. Now it looks as if the lawyers will have to get used to no deal as well — and while that won’t do any serious long term damage to the profession’s booming global status, it now looks as if a lot of divorcing families will be collateral damage. Over the last month, it has become clear the EU plans to block the UK from joining the Lugano Convention, which helps settle in which jurisdiction disputes should be resolved. The reason is no great mystery to anyone. Brussels wants to make

Upheavals in welfare policy have historically followed major crises such as wars, civil unrest, recessions and pandemics – the Ministry of Health itself was established in 1919. The experience of the second world war led to the creation of the contemporary welfare state. If a course of action (a furlough scheme, say) is pursued in an emergency, we know it is possible. Keep the measure in place too long and it can swiftly become an accepted norm — and politically awkward to unwind. But those expecting a post-Covid reboot of the welfare system might be disappointed. Shadow work and pensions secretary Jonathan Reynolds talked a good talk on overhauling universal

Job vacancies at a record high, a shortage of 90,000 lorry drivers, farmers complaining about a lack of seasonal workers, care homes complaining about difficulties in recruiting staff — and 1.9 million people still on furlough at the end of June. It shouldn’t be difficult to put these figures together and work out what is going on — even if Lord Adonis, with his usual tunnel vision, has been busily tweeting blaming everything on Brexit. When the furlough scheme was introduced it was intended as a short-term measure to tide over businesses that had been forced to close as a result of Covid restrictions. So why is it still in place when

UK borrowing in 2020-21 hit a record level of almost £300 billion, representing 14.2 per cent of British GDP, reported the Office for National Statistics in June. In the face of the biggest spending challenge since the Second World War, the Treasury, backed by one of the world’s most established central banks, stepped up to supply all the funding needed to pay for furlough, business support and a highly successful vaccination programme. Now imagine a prime minister in receipt of those borrowing numbers announcing that the future path for the UK is clear: we must disband the Treasury and Debt Management Office; shut down our central bank; start again from scratch

On the face of it, the numbers are damning. The Scottish government has released the latest annual edition of Scotland’s public finances. It does not paint a pretty picture. Scotland’s notional deficit has more than doubled from £15.8 billion to £36.3 billion, taking the nation’s fiscal shortfall from 8.8 per cent of GDP to 22.4 per cent. This figure factors in a geographical share of North Sea oil revenue and compares to a UK deficit of 14.2 per cent. That is not only the largest deficit of the devolved era but more than double that seen in the wake of the global financial crisis in 2009/10. If anything, GERS puts

For a government to break a manifesto commitment is a serious matter which, quite rightly, is sure to rebound at the ballot box. But there is one commitment in the Conservatives’ 2019 manifesto which has simply got to go: the promise to maintain the ‘triple lock’ on pensions which sees the basic state pension increased each year by either inflation, average earnings or 2.5 per cent, whichever is the highest.  At the time the party made this promise it could not have foreseen the peculiar circumstances which would result in today’s remarkable ONS figures showing that average earnings are up over the past 12 months by 8.8 per cent. Unless