Economy

It’s vital we act now to fix the ticking time bomb under our economy

The UK economy is not in good shape. We invest a lower proportion of our GDP every year than almost anyone else, which is the main reason why our productivity is almost static. We have deindustrialised to a point where we do not have nearly enough to sell abroad to pay for our imports. We have a chronic balance of payments problem financed by selling assets and borrowing from abroad. As a result, both as individuals and as a nation we are getting deeper and deeper into debt. What growth we have is driven by consumption, financed by asset inflation rather than by exports and investment. On almost every measure,

Unemployment is at its lowest since 1975. Can someone tell the Tories?

British government may not be strong and stable but the economy is still the most formidable job creating machine in Europe. And while it’s certainly true that much of the rise in employment is down to immigration, British unemployment is also down – figures today show the lowest level since 1975. My old friend Simon Nixon writes in the Times today about Britain becoming the new basket case of Europe, and has been making similar noises since the Brexit vote. He may well he right, but so far this basket is carrying more jobs than at any time in history. Don’t expect the Tories to make this point: they’ve been out

‘Can Britain’s digital economy be a global leader?’

Recently, The Spectator held a roundtable discussion on the digital economy, featuring Matt Hancock, minister for digital and culture, Garrett Ilg, President EMEA, Adobe; Pete Cummings (Adobe), Vicky Ford MEP, George Freeman MP, Richard Fuller MP, Chris Green MP, Isabel Hardman (The Spectator), Charlotte Holloway (Tech UK), Stephen Metcalf MP, Valerie Mocker (Nesta), and Charlie Pickles (Reform). This is what resulted. Britain is one of the most digitally engaged countries in the world. We don’t have a Google, we don’t have Silicon Valley, but our industry is highly innovative in using technology to transform its operations. As consumers, too, we are strong participants in the digital economy. Eighty per cent

Food inflation means bigger bills for shoppers

Ah, butter. Salted, unsalted, English, French, garlic, spreadable, straight from the fridge – just thinking about the many forms of butter make me salivate. Then there’s what to pair it with – crumpets, teacakes, toast, jacket potatoes. The list goes on and on. So it comes as a blow to learn that butter is selling at record prices. Forget those low fat and faddy diets, butter is now a ‘big trend globally’. That’s according to Michael Oakes, a dairy farmer and spokesman for the National Farmers’ Union. He told Radio 5 live this morning that one major driver is the decision by McDonalds to use butter in it products again, eschewing

We’d all like to see Fred on the hook but RBS investors will be wiser to settle

‘Fred Goodwin off the hook again,’ declared the Scottish Daily Record. That neatly summed up one strand of sentiment behind the RBS Shareholder Action Group’s battle for compensation for losses incurred in the bank’s £12 billion rights issue in 2008 — preceding its £45 billion taxpayer bailout, in which any remaining shareholder value was largely wiped out. Investors who believe they were misled by RBS’s directors and the rights-issue prospectus have been campaigning for their money back ever since. Most have already accepted a rather modest settlement, but some 9,000 have persevered with a case against the bank itself, Goodwin, former chairman Sir Tom McKillop and two other former directors,

Inflation at highest level since 2013

There’s bad news for households this morning following the news that inflation has soared to its highest level since September 2013. According to the Office for National Statistics (ONS), inflation is now at 2.7 per cent, up from 2.3 per cent in March. This is some way above the Bank of England’s stated 2 per cent goal. A number of factors contributed to the rise, but the main driver was higher air fares. This was largely because the timing of Easter pushed up the price of flights. In addition, tax changes in the Budget added to inflation as did rising costs of energy and clothing. Meanwhile, the retail price index (RPI)

The economy isn’t all roses, but that’s no reason not to vote for Mrs May

As the election campaign goes into full swing, we hear surprisingly little about the state of the UK economy — because the Tories can’t (and probably don’t need to) promise that they can make it any better in the medium term than it is now, while almost no one takes seriously what Labour has to say about it. The truth is, against the odds and for the time being, that it’s ticking along nicely enough not to be a top concern for most voters. Are we right to be so complacent? After a slowdown in growth to just 0.3 per cent in January to March, most analysts expect a pick-up

Britain’s borrowing binge – not Brexit – should be the big worry for the Bank of England

So, the Office of National Statistics has confirmed that the economy grew by 0.7 per cent in the last quarter of 2016, and by 1.8 per cent over the course of the year. Can we now please stop worrying about a post-Brexit recession and worry instead about an unsustainable consumer boom fed by interest rates which remain at panic levels. The bad news this morning is that the UK saving ratio – which is an estimate of the percentage of their income which households are saving – has fallen sharply from 5.3 per cent to 3.3 per cent. That takes it lower than it was a decade ago, just before

Are we doing enough to secure Britain’s digital future?

The UK’s digital economy represents nearly one third of the UK economy, and if nurtured properly, it could transform government, society and culture. But are we doing enough to secure Britain’s digital future – and if not, what more can be done? This was the topic discussed by politicians and financial and technology experts at a recent Spectator dinner, hosted by Mastercard. One of the main topics of conversation was around British start-ups and the investment opportunities available in the UK. Jeremy Silver, CEO of the Digital Catapult, has built and sold two technology businesses in the past fifteen years – selling both of them to American tech companies. That’s

Tory MP does Labour’s bidding on the economy

It’s not been a great few days for Daniel Kawczynski. First the Tory MP had to cancel a controversial Commons reception featuring Putin’s Kremlin spin doctor Maria Zakharova. Now he is struggling to stay on-message when it comes to his party’s position on the economy. Over the weekend Kawczynski took to social media to warn of the danger a Labour government presents to the economy. His proof? A graph that charted what happened to national debt under Labour’s ‘massive borrowing’: Alas, there was a snag. The graph actually shows that it’s his own party that are behind a big increase in national debt. Mysteriously, the tweet has now disappeared.

What the papers say: Britain’s booming economy and ‘whinging’ Whitehall

The front page of the Times makes happy reading for the Government this morning with its news that Britain’s economy grew at a faster rate than any other leading economy in the world last year. But while politicians are keen to act as cheerleaders on occasions like this, they are somewhat more reluctant to mention another ‘metric of success: immigration’. So says the Guardian in its editorial in which it argues that foreign workers wanting to come to Britain is a sign of just how healthy our economy is. Theresa May faces a challenge, the paper says, in addressing the worries of workers who want immigration to be controlled, while not

A post-Brexit slump? Here’s the good news about Britain’s economy you didn’t hear

The rearguard Remain campaign is now living in a parallel universe. In the past 24 hours we have heard endless whining about Sir Ivan Rogers’ departure and how it will mean disaster for our trading relationship with the EU. We’ve had more claims that inflation is going to surge. The poor Christmas results put out by Next have been taken as a sign of a post-Brexit economic slump when they are really just part of a change in the patterns of retailing, with online sales growing at the expense of those in shops. Meanwhile, come yet more genuine good news on the economy. Yesterday, the Markit/CIPS Purchasing Managers’ Index (PMI)

A Brexit bust? No, the real danger lies in the debt-fuelled boom

At the Westfield shopping centre in east London, the queues started at 2 a.m. on Christmas night. In Wrexham, people started lining up at three, getting ready for a six o’clock start. In Edinburgh, hardy shoppers braved flurries of morning snow to make sure they were first in line for Boxing Day bargains. Whatever else is happening at the close of this year, British shoppers are as indefatigable as ever in their determination to keep spending. Surely it wasn’t meant to be like this? In the wake of the vote to leave the EU back in June, mainstream economists were unanimous in their view that we would be in a recession

The real Brexit risk

At the Westfield shopping centre in east London, the queues started at 2 a.m. on Christmas night. In Wrexham, people started lining up at three, getting ready for a six o’clock start. In Edinburgh, hardy shoppers braved flurries of morning snow to make sure they were first in line for Boxing Day bargains. Whatever else is happening at the close of this year, British shoppers are as indefatigable as ever in their determination to keep spending. Surely it wasn’t meant to be like this? In the wake of the vote to leave the EU back in June, mainstream economists were unanimous in their view that we would be in a recession

Brexit’s breaking points

Trying to write the first draft of history on the EU referendum and the leader-ship mess that followed had both its dramatic and its comic elements. My phone never stopped ringing with Eurosceptics keen to tell me why their contribution to a meeting that had previously escaped my notice was the decisive factor in securing victory. But when a vote is so close — 52 per cent to 48 per cent — then it would not have taken much to push the result the other way. Donald Trump’s victory adds some credence to the idea that Brexit was pre–ordained, part of a wave of history. But the campaign turned on

Just managing

From the moment she arrived in 10 Downing Street, Theresa May has been commendably clear about her economic priorities for Britain. She wants the country to be a beacon of free trade, at a time when protectionism is on the rise the world over. She is annoyed at the way in which quantitative easing has manipulated asset prices, making property unaffordable. And while David Cameron was very successful in raising the incomes of those at the bottom, she is concerned that those in the middle have not fared as well. She wants a ‘country that works for everyone’ — that is to say, one where effort is always rewarded. This

Philip Hammond delivers a politically placid autumn statement

Philip Hammond started his autumn statement to the House of Commons by saying his style would be rather different to George Osborne’s. Yet the Chancellor still had a rabbit to pull out of his hat at the end — albeit one designed to show he wasn’t a political meddler like previous holders of his job by saying there would no longer be two economic statements involving changes to fiscal policy ‘for the sake of it’ — and even continued Osborne’s practice of announcing money to restore a historic building. While his statement still had a clear political message about helping the ‘Jams’, telling the Commons that ‘the announcements I have

Like Uber, but for hippies

On the same day I put my spare room on Airbnb I also had my first cabshare experience, courtesy of Uber. When I mentioned this to a young friend of mine, he patted me on the back and said, ‘Welcome to the sharing economy!’ The sharing economy is one of those buzz terms that everyone uses these days — but what exactly is it? Apparently, it refers to a whole range of online goods and services that instead of buying and owning, we can borrow, rent or have access to — sometimes free, usually for a price. Likewise, we can be the ones providing these goods or services, and make

What does Philip Hammond have planned for the autumn statement?

The City and Westminster are waiting to see what Philip Hammond does in the autumn statement next month. I write in The Sun this morning, that they are looking to see what the new Chancellor’s strategy is for guiding the economy through the uncertainty that will exist until we know what the Brexit deal is. In a private meeting with Tory MPs this week, Hammond gave some indications as to what he plans to do on November 23rd. He was clear that it won’t be a give-away statement. He warned that the deficit remains ‘eye wateringly large’, that the debt to GDP ratio is getting close to the level at

GDP data shows strong growth in UK economy after Brexit vote. Who’d have thunk it?

After the Brexit vote, the Financial Times summed up the general mood in the City by running a weekly doomometer, which was expected to chart the impending economic collapse in real time. But after a brief wobble, the economy got back to normal fairly quickly. Soon, the weekly data started to rather contradict the mood of panic – which baffled the various experts, many of whom had by then forecast an immediate recession. Pieces of good economic news were dismissed as deceptive snapshots. And when Q2 GDP came in looking very strong – 0.6 per cent (it was revised up to 0.7 per cent today) – that was dismissed as containing