Money

The late Sir Ken Morrison — founder of the eponymous supermarket chain that’s the latest UK target for US private equity — had the blunt manner of the Yorkshire cattle farmer he became in reluctant retirement after he was ousted by his own board. Criticising his successors from the floor at one of his last AGM attendances, he roared: ‘I have 1,000 bullocks… but you’ve got a lot more bullshit than me.’ So I’m sorry he’s not around to accost the suits from the New York firm of Clayton, Dubilier & Rice (and their adviser, former Tesco chief Sir Terry Leahy) on the intentions behind the takeover bid that sent

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

Chesham and Amersham has fallen. The once uber-Tory Chilterns citadel has been snatched by the Lib Dems, with local campaigners citing planning reform and HS2 as the main drivers for their success. After the ginormous swing — from a 16,000 majority to an 8,000-vote deficit — fears are growing that the Tories’ planning reforms might become a victim to demographic subsidence. Many of the government’s backbenchers are keen to undermine the party’s house-building efforts. They fear Amersham-style retribution from similar voters, eager to punish them for devaluing their most-prized asset and adding congestion to their quaint country lanes. The Nimbyist revolt has been a major political force for yonks Isle of Wight

In the global market for government debt, worth an estimated $92 trillion (£66 trillion), it amounts to little more than a drop in the ocean. The European Union this week issued the first €20 billion (£17 billion) of bonds to pay for its Coronavirus Rescue Fund. The money itself doesn’t amount to very much one way or another. And yet, the Commission’s President Ursula von der Leyen was surely right when she described it as a ‘truly historic day’. Why? Because, the Commission is already using it to seize control of fiscal policy, just as it used vaccine procurement to take control of health policy. Its enthusiasts have already hailed the

The signs were there for all to see — pubs, restaurants, hairdressers and so on all pushing up their prices. Businesses have to make a profit while observing social distancing, dealing with soaring fuel prices and fast-accelerating wages. Yet the latest inflation figures seem to have caught many people by surprise. The Consumer Prices Index (CPI) is back above the Bank of England’s target at 2.1 per cent. Fears that Brexit would lead to a surge in food prices appear to be unfounded Drill down into the figures and you can see that, while the current level of CPI is not in itself a problem, inflationary pressures are building. Producer price inflation —

The latest employment figures, published this morning, confirm a remarkable aspect of the Covid pandemic: that it appears to have caused no more than a little bump in the jobs miracle of the past decade. That is in spite of the economy shrinking by nearly 10 per cent in 2020 — a performance that in the past would have led to millions out of work. In May the unemployment rate fell by 0.3 per cent to 4.7 per cent. By contrast, it reached over 8 per cent during and after the 2008 financial crash. But of course, the unemployment figures don’t tell the whole story — not when we have a

The UK economy continued to rebound in April, with this morning’s update from theOffice for National Statistics showing GDP grew 2.3 per cent — slightly better than the consensus prediction of 2.2 per cent. The reopening of non-essential shops and outdoor hospitality on 12 April contributed to the boost. GDP now sits 3.7 per cent below its pre-pandemic levels, the closest we’ve come to achieving full recovery. Forecasters are increasingly confident that we’ll be back to pre-pandemic levels in 2021, even possibly before Q4. Capital Economics says ‘early indicators suggest that GDP growth was strong in May as well,’ when more indoor activity opened and numbers on indoor and outdoor socialising relaxed further. Oxford

Companies are facing critical shortages of staff. Commodity prices keep spiking upwards. Central banks are printing money on an unprecedented scale, and governments are running deficits of a size that haven’t been seen in peacetime before. What could possibly go wrong?  Well, quite a bit, as it happens. And the departing chief economist of the Bank of England Andy Haldane is completely right to warn that the real risk we face over the next couple of years is not a prolonged slump, but a re-run of the spiralling prices of the 1970s.  To his credit, Haldane was seldom afraid of challenging orthodox views during his time at the Bank. Now

What are the chances of the G7’s agreement on a minimum rate of corporation tax actually coming into effect? While it was presented as a done deal last weekend, things are not going too well. Firstly, the G20 will have to agree — which is far from guaranteed given that smaller countries have less to gain from the proposal than the US. It is a tax designed to help countries with a large number of multinational companies who currently operate through subsidiaries in countries with lower corporation tax rates. While no G20 country currently has a rate below the agreed 15 per cent, (and the biggest loser, Ireland, with its 12.5 per cent

It says something for the persuasive powers of former international development secretary, Andrew Mitchell, that he mustered enough potential votes to inflict defeat on Boris Johnson’s government, if only his amendment had been permitted and a vote had been held. Mitchell’s consolation prize, awarded by the Speaker in recognition of the strength of feeling in the Commons, is an emergency debate on what would have been the substance of his amendment: to reinstate foreign aid at 0.7 per cent of GDP from next year, rather than the reduction to 0.5 per cent that was set in the Budget.  The rift this row has exposed among Conservative MPs could embarrass the Prime