Money

When Rishi Sunak turned on the spending taps last March, a triumphant Jeremy Corbyn said he had been proved ‘right’. History would be written by the losers. In the 16 months since, government spending on the pandemic has swelled to an eye-watering £372 billion. Wages have been nationalised, along with the railways. Individuals have radically altered their behaviour to shield a state institution. Many now hold the view that coronavirus demonstrates government can borrow and spend a large amount of money quickly and wisely — and that it can therefore continue to do so. But two new reports from the Commons Public Accounts Committee decisively debunk that myth. The picture

The UK is growing at the fastest pace in 80 years. The United States, fuelled by President Biden’s stimulus programme, is expanding at a breath-taking pace, while Sweden is growing at a rapid rate. Most of the global economy is bouncing back from the Covid recession at remarkable speed. There is, however, one exception. Australia. What has long been one of the most successful economies in the world is heading back not just into lockdown but into recession as well — and giving the world a sharp lesson in the cost of ‘zero Covid’. Over the last year, Australia, along with New Zealand, has been heaped with praise for the

Do we need an officially-sanctioned, government-backed crypto-currency underwritten by sterling — a ‘Britcoin’ — as Rishi Sunak is said to be advocating? At first sight it is hard to see the attraction. Surely, there are two principle reasons why people feel attracted to Bitcoin and other cryptocurrencies. Firstly, if you are a drug dealer, you might hope that it is a way of keeping your stash of wealth beyond the reach of law enforcers. This hasn’t quite proved true, but you can understand why cryptocurrencies have their fans in the criminal world. Secondly, there is the hope of making a quick, speculative profit. The wildly gyrating values of Bitcoin and

For such a radical change to our monetary system, the lack of understanding of quantitative easing (QE) and its impacts is worrying. That is one of the conclusions drawn from this month’s House of Lords economic affairs committee report, ‘Quantitative easing: a dangerous addiction?’ QE involves central banks creating money and using it to buy financial assets (usually government bonds). It is known as an ‘unconventional’ monetary tool, as opposed to the conventional monetary policy of raising and lowering interest rates. But as this new report highlights, the practice has very much become a conventional part of monetary policy. The financial crisis in 2007-08 kicked off rounds of QE in

When Gordon Brown raised National Insurance in 2002 to put more money into the health service, it was seen as a huge political gamble. The Tories — including one Boris Johnson — denounced the move in furious terms. In a sign of how far to the left the country has moved, the Tories are planning to do something very similar to cover the cost of a social care cap and dealing with the NHS backlog. If the Tories do this, it will put Labour in a tricky position. How do they respond when a Tory government raises taxes to put more money into the NHS? If the Tories do this,

Should we be pleased that net government borrowing for June came in below expectations, at £22.8 billion – £5.5 billion less than June 2020? Should we see it as a sign that the economy is recovering a little faster than had been hoped? That is the spin being put on the public borrowing figures released this morning. An alternative, and less rosy, view might come from examining two figures in particular. Firstly, while borrowing is down compared with June 2020, public spending is actually up. Over the month the government spent £84.1 billion of our money, £2.5 billion more than in the same month a year earlier. Balancing the budget

If a government does not wish to break a manifesto promise it should punt fewer such ‘promises’ into its manifesto. The modern mania for throwing everything possible into a manifesto – the better to proof it against interference from the House of Lords – renders manifestoes nothing more than a job lot of largely spurious pledges. The vision thing is notable for its absence and the vision thing is more important – and more revealing – than a grocery list of promises. Still, if you must break a promise it is no bad thing to start with a large and stupid one. The Conservative commitment not to raise any of

This month’s announcement of a new economic advisory council formed by the Scottish government came with the usual flow of superlatives. The 17-member group will publish a strategy paper later this year to help deliver the ‘transformational change Scotland needs’, according to economy secretary Kate Forbes. We are promised ‘bold ideas’ that will bring ‘new, good and green jobs’. We have been here before. This group replaces a previous Council of Economic Advisers set up by Alex Salmond in 2007. It too had a remit to galvanise the Scottish economy. It provided 14 years of strategic advice (seven of those under Nicola Sturgeon’s leadership) to the SNP administration with no

The European Commission’s Fit-for-55 emission plan, with its extended emission trading scheme and the new carbon border tax, will be fighting an uphill battle. The carbon border tax scheme — the first of its kind in the world — could become Europe’s opening bid to get moving internationally beyond mere discussions. If there is an international agreement in the end, it would have served a purpose. If not, it may only end up creating new battle lines between trading partners. There may be broad consensus on the goal of reducing carbon emissions, but questions remain: who is to shoulder the bill? Europe’s carbon-intensive industries fear a technocratic monster The carbon

What is the point of the National Food Strategy? When Henry Dimbleby was hired as Britain’s ‘food tsar’ several years ago, the idea was to develop some blue sky thinking and to have someone look at the issue with a fresh pair of eyes, but when he produced his first report last year, it contained the same generic, flat-pack, bone-headed, nanny-state recommendations that every other voice of the establishment had been calling for. So predictable were his conclusions that the government had already committed itself to implementing most of them by the time it was published and he resorted to moaning about Percy Pigs to give himself an angle. The

Inflation is on the rise again. For the third consecutive month, the Consumer Prices index outpaced the forecasters’ consensus, landing at 2.5 per cent in June, up from 2.1 per cent in May.  It’s not just that inflation is overshooting expectations that should trouble us, but that its pace of growth is so fast: at the start of the year, the headline rate was still close to the ground, coming in at 0.7 per cent in January and March, and 0.4 per cent February.  It is becoming harder for the Bank of England to stick to its prediction that inflation will peak around three per cent Now, it’s ahead of the

Could Italy’s triumph on Sunday result not just in a trophy for the azzuri, but a baby boom for a nation with one of Europe’s lowest fertility rates? The anecdotal evidence would support this theory. Nine months after Iceland beat England in a Euro 2016 match, it experienced an unprecedented increase in births. This was the first time the nation had ever qualified for a major European tournament, and close to 10 per cent of its 300,000 population watched the game in person. Spain’s birth rate also shot up 16 per cent nine months after Barcelona won the 2009 Champions League. Yet a new paper from Luca Fumarco and Francesco

So is this what the new era of global co-operation looks like? The EU has agreed to delay the introduction of its proposed digital levy until the autumn to allow negotiations for a global minimum corporation tax. Biden had demanded that the digital tax be dropped, seeing it as a direct attack on US tech giants. In other words, the EU appears keen to compromise in the face of US pressure — something that it would have been less likely to do under Donald Trump. The move makes it more likely that a global minimum corporation tax of 15 per cent will now become reality. Is that a cause to

Two billion? Five billion? Perhaps ten billion to make it a nice round number? For colluding on diesel emissions you might think the European Union would hand out a pretty stiff fine to the big German auto-manufacturers. After all, it has hit American tech giants with huge penalties for far lesser transgressions.  Yet in the end, its response was predictable: the EU has largely let them off the hook. The reason? It turns out that protecting German auto manufacturers is what the Commission really cares about – and nothing else matters. According to Margrethe Vestager, the EU’s anti-trust chief, German manufacturers ‘possessed the technology to reduce harmful emissions beyond what was legally required under EU