Economy

At His Majesty’s Treasury, it’s all looking a bit like Year Zero in revolutionary Cambodia. Kwasi Kwarteng’s first act was to sack the respected but ‘orthodox’ permanent secretary Sir Tom Scholar. Now the FT reports the Chancellor ordering underlings to focus ‘entirely on growth’, presumably at the expense of financial discipline. I’m picturing a locked basement of fearful officials labouring under Kwarteng’s lash to translate his forthcoming ‘fiscal event’ – tax cuts on top of massive spending to cap energy bills and unlimited borrowing to pay for it – into the sort of Whitehall language that might make it sound reasonable. Meanwhile, businesses large and small remain completely in the

Look at the chart for interest rate expectations in isolation, and you might come to the conclusion that Rishi Sunak is right about Liz Truss’s fiscal policies. In June, markets were expecting rates to peak at around 3.5 per cent next year; now they are expecting them to reach close to 4.5 per cent. Moreover, as Truss’s victory came to be seen as inevitable, the FTSE 100 plunged from 7,550 on 19 August to 7,230 this morning – a fall of 4.2 per cent. The pound has fallen from $1.22 on 10 August to $1.15 now. Markets could be forgiven some apprehension But hang on a minute. Markets have been

We’ll find out shortly whether official statistics agree with economists surveyed by Bloomberg who say UK GDP probably shrank by 0.2 per cent in the second quarter. But at an uncomfortable moment when we know things can only get worse, looking backwards doesn’t help and nor does holding out hope for a miraculous ‘emergency budget’ in September. As for forecasting beyond that, it’s almost too scary to contemplate. Better to shun economists and politicians and focus instead on facts that tell us what’s happening now – such as data from Barclaycard – and things we can do keep our own budgets in balance. Spending on ‘essential items’ was up by

‘What’s worse, they’re paying the profits to shareholders,’ said a grey-haired woman ahead of me in the Co-op queue. ‘Bloody shareholders,’ her friend of similar age and class spat back. I guessed they were talking about Centrica, parent of British Gas, which at a time when domestic energy bills are rising 23 times faster than wages (as Frances O’Grady of the TUC puts it) has announced half-year operating profits of £1.3 billion, up from £262 million last year – and the restoration of a penny-per-share interim dividend after a three-year gap. Both ladies looked likely to be beneficiaries of pensions nourished by dividends from the likes of Centrica, Shell and

The Tory leadership race is becoming a test of patience. Today Rishi Sunak has laid out his plan to slash tax: not in a matter of days or weeks, as Liz Truss has pledged to do, but by the end of the next parliament. He’s promised to reduce the base rate of income tax by 20 per cent, by taking 1p off income tax in 2024 (as already pledged) and an additional 3p over the next parliament. As Fraser Nelson notes on Coffee House, the timing of this announcement is working against him: it’s easily characterised as a u-turn on tax cuts, when in truth the former Chancellor is far

There’s an almighty debate ongoing in the US about what exactly a ‘recession’ is. Treasury secretary Janet Yellen said the US economy is not shrinking, saying it is in a state of ‘transition’, not recession. But in a clip from 2000 being circulated on Twitter that is comically apt, Bill Clinton said ‘a recession is two quarters in a row of negative growth’. Regardless of who’s right, the US is currently in Bill Clinton’s definition of a recession. Figures show that the economy shrank by 0.2 per cent in the second quarter of this year, following a 1.6 per cent fall in the first quarter. Over the year, the US economy is now 0.9

‘Black swan’ theory, developed by the writer Nassim Nicholas Taleb, refers to unexpected events that have extreme consequences but are rationalised afterwards by pundits who say ‘That was always going to happen.’ Covid was a big one; Putin’s war on Ukraine another. It’s in the nature of global events that there’s always a dark-feathered disruptor lurking somewhere, waiting to make its presence felt. Right now, it just might be hidden in reports of protestors in Zhengzhou, capital of China’s Henan province, demanding their money back from four local banks that suspended withdrawals in April. Runs on small banks are not unknown in China; nor is embezzlement by corrupt managers. The

Here I go again, in my occasional role as your intrepid transport correspondent. Last week I reported on airport chaos, last month on the opening of the Elizabeth line. Now here I am boldly defying the rail strike on a Grand Central train from York to King’s Cross. To be honest, on a perfect sunny morning, it feels less stressful than my regular journeys on this crowded and often disrupted line. The RMT pickets at the station entrance were less aggressive than the pigeons on the platform trying to steal a bite of my bacon roll. Grand Central – ultimately owned by German taxpayers, though I don’t suppose that explains

I sincerely hope you’re not reading this on a holiday flight that’s sitting on the tarmac with no indication as to when it might take off – or a sad train home after your flight was suddenly cancelled. Brace for three-hour delays at security, we’re told; don’t even try checking bags in, and at worst, as happened to Tui passengers at Manchester who thought they were going to Kos, watch out for a text after you’ve boarded telling you you’re going nowhere at all. How and why? When the pandemic set in, airlines and airports – thinking, not unreasonably, that their industry was doomed – made mass redundancies rather than

It’s 8.16 on Tuesday morning and I’m actually writing this on a moving Elizabeth line train. Moving in the sense that we’ve just zipped from Paddington to Liverpool Street in 13 minutes – which if nothing else will be a boon for City commuters from west of London. Moving also in the sense that I’ve been writing about the project formerly known as Crossrail, first in optimism but later in frustration and rage, since its then chairman Terry Morgan gave me a personal tour of the Bond Street diggings back in June 2013. Now that the central section is open at last – even with its Bond Street station still

In principle, the UK’s energy price cap is supposed to provide a buffer for consumers who might otherwise see their energy bills go through the roof. But governments can’t control international energy prices: a lesson that has been learned the hard way over the past six months, as dozens of energy companies have gone bust, unable to raise prices for customers to reflect increasing wholesale costs. Meanwhile the cap has not stopped bills from skyrocketing: Ofgem’s last price cap went up by 54 per cent, taking the total cost for an average household to just under £2,000 per year. Still, if there were any silver lining to this distortive policy