Money

How to end the housing cartel

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

Ross Clark

How much longer can the Treasury rig the housing market?

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

The economic illiteracy of anti-capitalists

Back in October, World Bank chief economist Carmen Reinhart recommended that countries borrow heavily during the pandemic. ‘First, you worry about fighting the war,’ she said, ‘then you figure out how to pay for it’. As thousands of mask-free demonstrators took to the streets of London this weekend to campaign on issues ranging from Palestine to climate change, you have to wonder: are we still at war? And does anyone care about the economy anymore? It has been apparent for some time — though it may continue to confound psephologists — that issues such as identity, patriotism and culture are more important to the electorate than economic concerns. That the

Philip Patrick

Japan’s punishing workplace culture

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

Patrick O'Flynn

It’s time for Rishi Sunak to stand up to Boris Johnson

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

Boris’s junk food crusade is absurd

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

Kate Andrews

Boris must face the truth about the ‘triple lock’ pensions promise

The Tories have a pension problem – and it’s not strictly financial. Over the coming weeks, the cost of pension promises is likely to be in the spotlight. The pensions ‘triple lock’, which the Prime Minister reportedly refuses to scrap, means that the state pension is upgraded each year in line with average earnings, the Consumer Price Index or by 2.5 per cent – whichever is higher. This year, it’s likely that earnings will be the highest of these figures by a long way. Here we encounter a problem: the triple lock was not designed with a pandemic in mind. The crazy world of ‘Coronomics‘ has led to the biggest

The house mafia: the scandal of new builds

‘We don’t just have snags with this house — “snags” suggests issues that are minor,’ says Kelsey Aldritt of her new-build Persimmon house just outside Pembroke, Wales. ‘This house has had major problems from the moment we moved in.’ Kelsey is six months pregnant and the doctor has told her not to get stressed, but with a house like this, stress is unavoidable. ‘It really angers me that Persimmon gave us such a defective house,’ says Kelsey’s partner, Theo. ‘Nothing is built right — and I don’t want Kelsey upset, worrying about chasing Persimmon to do repairs, not at a time like this.’ The case of Kelsey and Theo is

Martin Vander Weyer

Why private equity sharks are shopping at Morrisons

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

Wolfgang Münchau

Can the EU save Italy?

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

How to protect your finances against inflation

The economist Friedrich von Hayek once likened the control of inflation to the act of trying to catch a tiger by its tail: an impossible task with savage consequences for our macro and personal finances. Judging by the most recent inflation statistics, the big cat is already out of the bag. So how can we stop rapidly rising prices mauling our hard-earned wealth? Consumer price inflation in the UK was 2.1 per cent in May, trebling since March and surpassing the Bank of England’s predictions. The U.S. equivalent, meanwhile, rose to a whopping 5 per cent last month reaching its highest level since August 2008. Some experts agree with the central banks’

Ross Clark

It’s time to take back control of the public finances

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

Boris’s Brexit battle isn’t over yet

On the eve of the five-year anniversary of the Brexit referendum, it’s hard to shake the feeling that Brexit was the dog that never barked. Project Fear portended half a million job losses – a hard measure to test given a year of lockdowns and furlough, but before Covid hit (and now) the unemployment rate is lower than it was five years’ ago. We were warned of a ‘punishment Budget,’ as though there is ever any other kind. The hysteria, the stalling of Parliamentary machinery, the well-documented family rifts – was it all for nothing? First, a few caveats. There are many problems that still need fixing – especially in

The Tories should ignore the Amersham by-election

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

The EU’s debt bondage expansion

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

Kate Andrews

The true cost of cheap money: an interview with Andy Haldane

Britain’s economy is growing at the fastest rate in 200 years. Job adverts are 29 per cent above their pre-pandemic levels and employers say they can’t reopen because they can’t find staff. Wages are rising at the fastest rate in ten years. But here’s the question: how much more support does the economy need from the Bank of England’s printing press? Should the BoE stick to its pledge to bring QE up to £895 billion or stop £50 billion short? Its members met to discuss this last month and decided (as they always do) to press ahead — by eight votes to one. The dissenting vote — the first time

Martin Vander Weyer

Foreign opportunists are turning Britain into a corporate car-boot sale

The snatching of a 12 per cent stake in BT by French entrepreneur Patrick Drahi, last seen here when he bagged Sotheby’s for $3.7 billion two years ago, could be a good thing if it injects dynamism into the telecoms giant’s late-running plans to install high-speed broadband across the UK. But it’s also part of a wave of fast–moving foreign money hunting undervalued UK assets — which is positive if it fuels capital investment for growth, negative if it makes nothing but fast bucks for private investors. The logic is simple. The private equity fraternity is laden with cash and global in outlook; what it sees in London is an

Is lockdown’s tech bubble about to burst?

Netflix is not signing up subscribers at the rate it once did. Disney+ has stalled. At Boohoo, growth is not as red hot as it was just a few months ago, while Deliveroo’s float on the London stock market was quickly dubbed ‘flopperoo’ by City wags. Zoom’s shares price has stopped, er, zooming, at least in the upward direction. A random collection of snippets of business news? Well, to some degree. But there is also a common theme to all these stories, and one that is significant for investors. We are about to witness a serious bout of what might be termed the post-pandemic blues. The companies that did brilliantly

Ross Clark

Is inflation about to bite?

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 —