Economy

The political story for the moment is the cost of living crisis. But by the end of the year could we be talking about a recession instead? We shouldn’t read too much into one year’s economic growth figures, especially given how often they are revised upwards or downwards. But February’s figures, published this morning, have caught many people unawares. They show that the economy just about ratcheted upwards in February, growing by 0.1 per cent. That’s compared with healthy growth of 0.8 per cent in January, as the country emerged from the Omicron scare. Notably, in two areas the economy contracted: construction fell by 0.1 per cent and production by

Should you happen to spot me these days lurking outside a Calvin Klein boutique, notebook in hand, I assure you I have a serious purpose. I’m applying the method of the former US Federal Reserve chairman Alan Greenspan, who relished statistical minutiae and believed that sales of men’s underpants – an item so out of sight that a chap could readily choose not to replace worn-out ones when he senses an economic pinch ahead – offer a reliable indicator of impending downturns. That’s precisely the sort of trend we need to watch right now, when the Office for Budget Responsibility tells us to expect UK growth at 3.8 per cent

Since the spring statement last week, Rishi Sunak has been dealing with complaints from all sides: the right have been arguing he should have been bolder with tax cuts, the left insists more support is needed to help people with the rising costs.  With the Office for Budget Responsibility projecting the biggest fall in living standards since records began, rumours of U-turns and further announcements started bubbling over the weekend. The media, the opposition, and even some Tory MPs have been asking Treasury representatives over and over again: is that all? In a keynote address hosted by the Institute of Economic Affairs this morning, chief secretary to the Treasury Simon

P & O once stood for ‘Peninsular and Oriental’, with pleasant connotations of sailings to Cadiz and Constantinople – but after the furious reaction to P&O Ferries’ sacking of 800 UK workers, to be replaced by cheaper overseas agency staff, you might think it stands for ‘Putin and his Oligarchs’. With the mad Russian warmonger filling every headline, now is not a good time to turn yourself into a high-profile hate figure. With the pandemic barely over, now’s also not a good moment to be caught brutalising your workforce. But the man behind this sacking decision did all that in spades. He is Sultan Ahmed bin Sulayem, chairman of Dubai-based

I’ve had the opportunity recently to take part in wage-rise discussions for several small entities in which I’m involved. The conversation has been much the same everywhere. ‘How about we offer them 3 per cent?’ ‘But that’s less than current inflation and they didn’t have a rise when they were on furlough last year.’ ‘So how about 5 per cent?’ ‘Safer to say 7, but they’d still be worse off than before the pandemic. And they’ll get 10 per cent or better if they move anywhere else.’ All of which was perfectly confirmed by official figures this week: annual pay settlements running at 3.7 per cent but (because so many

‘The main job of a government is to ensure that the economics don’t go wrong.’ So argued an economist friend of mine to me many years back. And I must admit that my first response was uncommonly cynical. ‘Well, you would say that, wouldn’t you?’ I replied. ‘You’re a political economist.’ It is to be expected. In the same way a military-defence type might say that the most vital job of government is to be able to defend these islands and project military force. Or Lulu Lytle might explain that the most important thing in government is to get the interiors right. But as the years have gone by, I

Nearly two years after the UK experienced its biggest economic collapse in 300 years, the economy has returned to pre-pandemic levels. GDP is estimated by the ONS to have grown by 0.9 per cent in November, almost twice what had been expected – making it 0.7 per cent larger than it was in February 2020. The US and Sweden managed to pass pre-pandemic levels last spring. China took just a few months. But Britain, whose economy fell further than almost any developed country in 2020, is catching up. Britain, whose economy fell further than almost any developed country in 2020, is catching up The below chart shows how UK growth

Despite the political misery for Boris Johnson as he ends the year, he has a big hope: that salaries will boom in 2022. At Conservative party conference in October, he told fellow Tories what to expect. Yes, the country has gone through a phase of economic chaos — and as a result some supermarket shelves have been empty and truck drivers have been hard to find — but this was actually good news, he claimed, because it marked the start of a new, high-pay economic model. ‘We are not going back to the same old broken model with low wages, low growth, low skills and low productivity,’ he boasted. Change

We don’t yet know whether the Omicron variant will drastically accelerate the spread of coronavirus, or whether it will circumvent parts of the immune system. Nor can we be sure that the ‘light’ coronavirus restrictions announced at the weekend will be enough to combat the new strain. We can be certain, however, that these measures will come with an economic cost that politicians are, at least publicly, understating. Face masks are once again compulsory in shops and on public transport in England, and UK arrivals will need to take PCR tests within two days of landing, isolating until they get their result. But the major economic threat stems from the

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

So, is the post-Covid inflation panic over? That is how it looked last month, when the government’s preferred inflation index, CPIH, fell to 2.1 per cent from 2.4 per cent a month earlier. We will have the latest news on Wednesday morning, but for the moment it appears that consumer prices inflation hasn’t taken off like we feared. It is a similar story in the US, where inflation fell back from 5.6 per cent in July to 5.3 per cent in August. The fact that house prices have risen so strongly throughout the deepest recession in modern times ought to be a warning sign Yet there are good reasons to suspect that the summer

The arrival of ‘freedom day’ on 19 July enabled people to return to concerts, festivals, and ditch social distancing, but these rediscovered freedoms did not revive the economy. The ONS said this morning that growth was just 0.1 per cent in July, far lower than the consensus forecast. It was particularly disappointing given the growth seen in the locked-down months of June (one per cent) and May (0.6 per cent). The Pingdemic – and concerns about the Delta variant – cancelled out any animal spirits around reopening. August’s GDP boost is going to need to be much stronger for the more bullish forecasts to pan out Nightclubs reopened and the entertainment

Job vacancies at a record high, a shortage of 90,000 lorry drivers, farmers complaining about a lack of seasonal workers, care homes complaining about difficulties in recruiting staff — and 1.9 million people still on furlough at the end of June. It shouldn’t be difficult to put these figures together and work out what is going on — even if Lord Adonis, with his usual tunnel vision, has been busily tweeting blaming everything on Brexit. When the furlough scheme was introduced it was intended as a short-term measure to tide over businesses that had been forced to close as a result of Covid restrictions. So why is it still in place when

The UK economy is rebounding at the fastest rate in Europe, and faster even than the United States: that is the general tone of reporting of today’s GDP figures, which show that the UK economy expanded by 4.8 per cent in the second quarter of 2021. That is compared with 0.9 per cent in France, 1.5 per cent in Germany and 1.6 per cent in the US. But hang on, dig a little deeper and there is something a little odd going on with the figures. Compare nominal and real changes in GDP during the second quarter and it produces the following: UK, nominal growth in second quarter: +3.6 per cent;