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Covid transformed the role of the state. During the pandemic, the government did things it would never normally even contemplate. At the same time as it restricted civil liberties, it intervened in the economy to an extent never before seen in peacetime. Through the furlough scheme, close to £70 billion was spent on paying people’s wages. Other government economic interventions seem minor in comparison. What is a few hundred million here and there when the state has been spending billions so regularly? History suggests that when the state expands in a crisis, it doesn’t revert to its pre-crisis level once the emergency is over. The second world war led to

Compared with July, August’s GDP boost looks much healthier — but that’s not saying much. Originally thought to have stagnated at 0.1 per cent, the economy in July actually shrank by 0.1 per cent, according to the latest update from the Office for National Statistics. If inflationary pressures continue to surge, the Bank may have no choice but to act Still, August’s GDP increase of 0.4 per cent puts the economy back on the upwards trajectory, now estimated to sit 0.8 per cent below pre-pandemic levels. Despite so-called ‘freedom day’ arriving halfway through July, people continued to socially distance in order to avoid being mandated back into their homes. A

Now that the Chancellor’s furlough scheme has come to an end, are employers rushing to lay off those workers whose wages have been paid, at least in part, by the government?  The good news for Rishi Sunak – and the taxpayer, who footed the bill for this multi-billion pound scheme – is that the early evidence suggests they are not: in the three months leading up to August, the headline unemployment rate dipped again. It is now down to 4.5 per cent, having peaked just over five per cent last winter. The picture in the labour market isn’t necessarily all rosy Figures from the Office for National Statistics will still take several months

International cooperation is alive and well – at least when it comes to raising taxes. One hundred and thirty six countries have now signed up to a global minimum corporation tax of 15 per cent, proposed by G7 countries in June and pushed heavily by the UK Treasury. This is another step forward for what is thought to be the biggest overhaul to the international tax system in a century. The installation of a corporate tax floor is part of a comprehensive effort to reform how multinational companies are taxed: that is, to more precisely target where profits are being made (instead of where products are being created). ​​Firms with

How is the Prime Minister’s bid to turn Britain into a high-wage economy progressing? It couldn’t be going better just at the moment, to judge by a survey by IHS Markit for KPMG and the Recruitment and Employment Confederation. In September – data was collected between the 13 and 24 September – there was a sharp rise in hiring, while starting salaries were rising at their fastest pace in the 24 years in which the survey has been undertaken. The number of permanent as well as temporary appointments was high, although the latter fell back from a record high in August. The survey suggests that the jobs market turned in

The biggest story of the Tory conference wasn’t about a gaffe or a controversial statement. It was about something that wasn’t said, and the person who didn’t say it. Rishi Sunak’s silence on net zero is a big deal, as the next few weeks will prove. The Chancellor didn’t mention net zero in his conference speech. So what, you might ask? After all, it’s an environmental thing and he’s Chancellor, right? No. net zero is an economic story, and a big one. It’s about growth, investment, public spending, tax and jobs. According to Sunak’s Treasury: This will be a collective effort, requiring changes from households, businesses and government. It will

Until this morning, few people in Britain will have heard of the works of Wilfredo Pareto (1848-1923). Now, thanks to prime ministerial recommendation, his name is suddenly on everyone’s lips. Maybe he was even the inspiration for the name of Boris Johnson’s one-year-old son. Pareto, apparently, is the inspiration behind the whole idea of ‘levelling up’ But was it good idea to raise the memory of the Italian economist and political philosopher? Pareto, apparently, is the inspiration behind the whole idea of ‘levelling up’. The slogan, implied the PM, is derived from the concept of ‘Pareto Improvements’ — improvements, he said, which can raise the quality of one person’s existence

Rishi Sunak didn’t give too much away tonight when he spoke in the ‘ThinkTent’ at Conservative Party Conference. The Chancellor is known for being cautious with his words, and has been increasingly tight-lipped in the weeks leading up to his October Budget. But his presence at the fringe event was telling in itself. Sunak was only billed for one public fringe event this year, co-hosted by the Institute of Economic Affairs and Taxpayers’ Alliance. Their ‘ThinkTent’ boasts some of the most free-market, libertarian events you’ll find at conference: both organisations are strong advocates for a low-tax, smaller state. So, not necessarily an obvious place to find the Chancellor who has overseen record peacetime

There are two Tory conferences simultaneously taking place in Manchester, within the same conference hall and inside the same fringe events. One is attended by elated activists, who are revelling in the December 2019 victory they never got to celebrate at party conference last year. The other is attended by increasingly agitated grass root faithfuls, who are up in arms about their party hiking taxes: especially the National Insurance rise on workers and employers, set to kick in next year. Unsurprisingly, most ministers are tapping into the mood of the first group. They hail the success of the party on fringe panels and at drinks receptions. Yesterday evening, Michael Gove

Concorde obviously. The Iraq War perhaps? Or Scottish devolution? It is not hard to come up with a list of really terrible ideas that the British government has wasted money on over the last 50 years. Even so, and despite some tough competition, we now have a fresh contender. It looks as if the furlough scheme will top them all. The scheme ends today, with roughly a million people still collecting a slice of their wages from the Treasury. The total bill is set to come in at around £70 billion. To put that in context, for the same money we could have tripled spending on policing and just about

Economic liberals may feel vindicated by events of the past fortnight. It turns out energy price caps, limits on immigration, over reliance on wind power and IR35 – the taxman’s crackdown on contractors – are all bad ideas, just as they had forewarned. Those same free marketeers may experience a strong temptation to enjoy the schadenfreude. In 2017, some insisted that the only good argument for energy price caps was the Leninist principle of ‘the worse, the better,’ as the move would bring forward the day when the entire policy collapsed. But governments bought into the baseless narrative propagated at the time that energy companies were greedy, price gouging profiteers, and

Labour avidly disagrees with the Tories’ plan to fill budget gaps by hiking National Insurance. So what would they do differently? This was one of the many tasks Rachel Reeves had today as the shadow chancellor delivered her speech at Labour party conference. Reeves not only had to set out an alternative tax-and-spend policy but also take aim at the financial decisions made by Boris Johnson’s government. Did Reeves succeed? No doubt her job was made much easier over the weekend as an energy crisis, which the government should have seen coming, continued to splash across the front pages, exacerbated by fuel shortages at the pumps brought on by a lack of

There is about to be a two-phase onslaught on the living standards of those on low-to-middling incomes. On 1 October the energy price cap, for dual fuel, rises from £1,150 to £1,277. This is a rise of 11 per cent, at a time when furlough is ending and just a few days before the £1,000 a year uplift to Universal Credit is removed (which presumably Boris Johnson will not be swanking about in his big speech to Tory conference). That’s the first hit to living standards. There’ll then be a gradual further erosion of living standards with rising food inflation (of around five per cent, as per what Tesco’s chairman John

A perfect storm is battering the UK’s energy sector. Due to a mix of high demand, maintenance issues at some gas sites, and lower solar and wind output, wholesale gas prices are up 250 per cent since January, and a handful of energy firms have folded. Some economists are suggesting the huge rise in gas prices could be an indicator of nascent inflation, and senior Tories have warned that a looming ‘cost of living crisis’ could erupt into the biggest political issue of the decade. Ofgem has announced that it has appointed British Gas to take on 350,000 customers from People’s Energy, one of two smaller suppliers which collapsed last

For years it seemed as though China’s massively inflated property bubble would just keep on expanding, seemingly defying the laws of economics, as well as regular warnings of the dire consequences for the economy should it burst. Now that moment may have been reached, as the country’s biggest developer teeters on the brink of bankruptcy. Evergrande is the biggest debtor in China – and in the world. It owes an estimated US$300 billion to Chinese banks, suppliers and foreign investors, and is struggling to meet interest payments. Some $US84 million of bond interest is due this Thursday, but the company has run out of money. Stock markets across the world are falling as the implications become more clear. By one estimate Evergrande has taken deposits for

Private members’ bills don’t normally make for exciting reading. They give MPs and peers a chance to let off steam if they have a bee in their bonnet, and more importantly to lay down fairly cheap political markers. Most sink without trace, since the government through its control of the Commons legislative timetable has an effective veto. But some are worth a second look. One such is Lord Hendy’s Status of Workers Bill, which got its second reading in the Lords last Friday. Currently, businesses love the idea of designating as much of their payroll as possible as self-employed independent contractors rather than employees. And not surprisingly: it saves them