Money

James Kirkup

Jeremy Hunt’s fantasy Budget

As Rachel Reeves prepares what is potentially the most difficult Budget in a generation, a question occurs: what if the Conservatives had, somehow, won the election? Historians hate counterfactuals, considering them unhelpful parlour-games. Personally, I enjoy a good ‘what if’ – not least because they can help put current political events in context. In that spirit, I’m pleased to present here the October 2024 Budget speech that Chancellor Jeremy Hunt might give in a parallel universe where the Conservatives remained in office after the election. As well a Budget address, this is also my resignation speech ‘Madam Deputy Speaker, it gives me no great pleasure to present this Budget statement

Ross Clark

Brits seem curiously untroubled by Labour’s Budget – at least for now

If the public is worried about what lies in store in Rachel Reeves’ first Budget, there are few signs of it yet in their shopping habits. The latest retail sales figures, released by the Office for National Statistics this morning, show that sales volumes were up by 0.3 per cent in September. Over the three months to September – a more reliable figure as it is based on a lot more data – sales were up a very strong 1.9 per cent. It seems that the long covid winter in the retail world may finally be coming to an end: though sales volumes in September were still 0.2 per cent down

Let’s see if ‘Patriotic Millionaires’ really want more tax

Dubai, Italy or perhaps the Bahamas? Many multi-millionaires are discussing where they should flee to as the Rachel Reeves prepares to raid their bank accounts in the ‘Horror Budget’ scheduled for the end of this month. But not, as it turns out, Patriotic Millionaires, the group that campaigns tirelessly for higher taxes on the rich. Its members want Reeves to take more of their money. The papers are dominated by reports of wealthy entrepreneurs, and the few remaining non-doms, securing a bolt hole somewhere where Reeves will not be able to reach them, but Patriotic Millionaires has a very different message. A report out today, written by IPPR (a think

Kate Andrews

Will falling inflation save Rachel Reeves’s Budget?

Inflation slowed to 1.7 per cent in the twelve months to September, taking the inflation rate to its lowest levels since spring 2021. While markets and forecasters had expected the inflation rate to drop below the Bank of England’s 2 per cent target at some point this year (market consensus for September was 1.9 per cent), the bigger-than-expected fall has come as a surprise, as core inflation also slowed to 3.2 per cent in the 12 months to September – down from 3.6 per cent in August. The largest contributions to the slowdown came from falling transport costs, while overall services fell to 4.9 per cent on the year, down

Does Kamala Harris think black men can’t be trusted with crypto?

There have been plenty of accusations made against crypto currencies such as Bitcoin over the years. It is too flimsy, you can’t buy anything with it, and it is wildly volatile. All fair enough. But is it racist? That appears to be the view of Kamala Harris, the Democratic nominee for US president. The US vice president has unveiled a set of policies designed to help black men, an important group of voters who have been showing worrying signs of drifting towards her rival Donald Trump. It included pledges to improve healthcare, education, and to legalise marijuana, presumably on the grounds they think that black guys smoke a lot of

Kate Andrews

Will Labour keep its promise not to hike National Insurance?

Despite getting off to a rocky start – including nearly losing £1 billion worth of investment – Labour’s much-anticipated Investment Summit seems to be delivering exactly what ministers had hoped for. The good news, including a combined investment of £6.3 billion from four US technology firms to expand data-centre infrastructure in Britain – is rolling in. The biggest question for plenty of businesses at today’s Summit will be about tax Business is struck, perhaps awestruck, by Labour’s commitment to slash red tape. During a panel event with the Prime Minister and ex-Google CEO Eric Schmidt, the tech guru expressed how ‘shocked’ he was to learn that Labour was now ‘strongly

Britain could pay a heavy price if it fails to crackdown on Chinese EVs

The European Union has joined the United States and Canada in slapping tariffs on Chinese Electric Vehicles (EVs). It’s a rare moment of transatlantic unity – but where does it leave Britain? For now, the UK remains the awkward man in the room. It is the only G7 country not to have imposed tariffs on Chinese EVs (or, in the case of Japan, which already has arduous non-tariff barriers to deter foreign automotive companies from entering its markets.)  The European Commission has made it plain that they see Chinese EVs as an economic threat Many will rightly question the silence from Whitehall. The UK’s omission from a coordinated attempt to stem China’s

Kate Andrews

Labour must tread carefully to avoid killing off Britain’s growth

Happy Friday: the economy is growing. After two consecutive months of no growth, GDP picked up in August, rising by 0.2 per cent. Production and construction output finally turned around, growing 0.5 per cent and 0.4 per cent respectively, after contracting in July by 0.7 per cent and 0.4 per cent. Services output grew by 0.1 per cent, with the biggest contributions in the three months to August coming from professional, scientific and technical activities and from information and communication sectors.  Despite growth forecasts being revised upwards throughout the year, the news today is welcome relief for those who started to fear that growth in the UK had flatlined. Still,

Rachel Reeves’ Budget is falling apart

It could be 30 per cent. Or 35 per cent? Or perhaps 39 per cent? Heck, who knows, if Rachel Reeves wants to keep the accountants on their toes, perhaps 39.657 per cent. The Treasury is, according to the latest leaks to the Guardian, looking at an increase in Capital Gains Tax as it scrabbles around for tax rises to fund the Chancellor’s spending plans, while not putting up the amount ordinary people are paying. The trouble is, whatever number she picks it is not going to work – and Rachel Reeves is fast gaining a reputation as a shambolic Chancellor. The list of failed tax rises from the new government

Kate Andrews

The ‘Green Budget’ could leave Rachel Reeves red-faced

The Institute for Fiscal Studies has published its yearly Green Budget, weeks ahead of Chancellor Rachel Reeves’s first fiscal event. It’s grim reading, for both the government and the public. For Labour to make good on its promise to avoid ‘austerity’, taxes are going to need to go up significantly: by £25 billion, the IFS reports, and that’s just to ‘keep spending rising with national income.’ That’s before the government tackles its pledges to invest. And that doesn’t rule out that ‘further tax rises or spending cuts could be required before the end of the parliament’. Despite speculation that Reeves is changing the fiscal rules to enable her Treasury to borrow

What’s the problem with zero-hour contracts?

Deputy Prime Minister Angela Rayner is set to unveil her workers’ rights bill this week – and ‘exploitative’ zero-hour contracts are in the firing line. But has Labour actually stopped to ask workers what they think? They might be surprised by what they hear: a survey of over 1,000 young people has found that an overwhelming majority (75 per cent) of those in precarious work were satisfied with their working conditions while only 24 per cent were not. It sounds counter-intuitive; happy with no job security, low status work, shifts cancelled at short notice? Satisfied with lower wages and significantly higher turnover rates? And yet young people do seem keen on these roles:

Kate Andrews

Is Labour about to go on a borrowing spree?

At Prime Minister’s Questions this afternoon, Rishi Sunak took a technical turn. Why is Rachel Reeves considering changing the fiscal rules, he asked the Prime Minister, when just last year she said doing so would be ‘tantamount to fiddling the figures.’ No clear answer followed.  The wisdom during the general election was that borrowing more money – to finance Labour or Tory spending promises – was simply not an option. No one dared to propose anything resembling Liz Truss’s mini-budget saga, which saw her attempt to borrow £100 billion to limit energy price rises for consumers.  Instead, the parties said they would make good on their spending promises by going

Are bankers still welcome in Paris?

In the wake of the UK’s departure from the European Union, French president Emmanuel Macron made a big effort to woo London’s bankers and hedge fund managers across the Channel. Macron wanted to use Brexit as an opportunity to turn Paris into the key hub for European finance. Trust me, he told Britain’s bankers: I’m one of you and will look after you. Those who did make the move may now be regretting their decision. France’s credibility as a welcoming place for top earners is on the line France’s prime minister Michel Barnier is pushing through a tough budget after discovering a ‘black hole’ in the finances that might even

Ross Clark

Ordering water firms to cut bills is a mistake

Water companies have sweated the assets they were handed upon privatisation in the late 1980s. They have failed to invest properly, and have regarded fines for sewage spills as a business cost, to be balanced against the price of investment, rather than as a deterrent. They have, as Ofwat chief executive David Black told the Today programme this morning, blamed the weather rather than their own failures. Sewage spills more than doubled last year All this is true. Even so, is what the water industry really needs at the moment an order to return £158 million to customers through lower bills in 2025/26? That is what Ofwat has just ordered the

Kate Andrews

Is Labour’s first Budget coming unstuck?

During the general election campaign, Labour played a cautious game on tax: the party was careful not to share its bigger plans for getting more revenue into the Treasury until after the election was over. A few major tax hikes were ruled out – income tax, National Insurance and VAT – but it was quickly realised this meant all other taxes were fair game. Only a handful of relatively small tax hikes were announced in the lead-up to polling day, including putting VAT on private school fees and ending non-dom status.  Reeves must take the OBR’s calculations as gospel The softly-softly strategy seemed to work, at least for getting through

When will Germany’s economy bounce back?

Germany was once the powerhouse of Europe; for decades, its economy has helped drive the continent’s growth. No longer. Berlin’s economy ministry plans to downgrade its growth forecast for this year. The German government now expects the economy to shrink by 0.2 per cent in 2024 – down from a previous estimate of 0.3 per cent growth, Sueddeutsche Zeitung reports. Is this the medicine the German economy needs to get it back on to its feet? Germany appears to be on the brink of a second year in a row in which its economy is going in the wrong direction. German output contracted 0.3 per cent last year and the

Andrew Bailey should be wary of helping Labour

Business confidence has plummeted back to the levels last seen in the wake of Liz Truss’s unfortunate mini-budget. Hiring has slowed down as employers worry about all the new rights Labour is about to award their staff. Consumer confidence has fallen, as people worry about the tax rises that will be imposed in the ‘Horror Budget’ set for the end of the month. And the economy, which was growing at a decent clip when the Conservatives left office, has now stalled, with zero growth in the latest quarter. The new Chancellor Rachel Reeves was facing a spluttering economy. But, hey, never mind. It turns out that the Bank of England

Isabel Hardman

Jeremy Hunt tells the Tory party some uncomfortable truths

Jeremy Hunt is one of the few Tories willing to take the fight to Labour while the Conservative leadership contest drones on. The shadow chancellor gave an on-stage interview at party conference in Birmingham this morning where he continued to attack Chancellor Rachel Reeves’ ‘£22 billion black hole’ narrative. Hunt suggested that not even Labour MPs and members believed that claim, which was why they were having such a big row over the winter fuel payment. ‘We were trounced at the election,’ Hunt said Hunt also warned that Labour was in danger of making decisions based on its own ‘propaganda’, telling Daniel Finkelstein: ‘My worry is that Labour believes its

Ross Clark

Can anything stop Germany’s decline?

Brexit is, we’re told, a disaster that shaved a hefty slice off UK economic growth. But there does seem to be a very large proverbial elephant standing in the way of this thesis. Our EU neighbours don’t seem to have been doing any better than an admittedly sluggish – if now recovering – Britain. While the UK economy grew by 0.7 per cent in the first quarter of this year followed by 0.5 per cent in the second quarter, the French economy managed only 0.3 per cent and 0.2 per cent. It is Germany that continues to surprise most on the downside. The economy shrank again in the second quarter,

The secret behind Putin’s booming war economy

Russia’s spending on its war in Ukraine continues to grow. Somehow, despite tightening sanctions and increased global isolation, two-and-a-half-years in to the conflict, it appears Moscow can continue to splash the cash on its army – for now. Spending on president Vladimir Putin’s military is set to increase by more than a quarter to 13.3 trillion roubles (£107 billion) next year, according to a draft of the Russian state budget for 2025 revealed this week. This colossal sum – which is nearly double the 6.4 trillion roubles (£52 billion) spent last year – is roughly twice the size of the amount spent by Britain on its own defence. Russia’s government