Kate Andrews

The Bank of England has held interest rates at 5.25 per cent for the third consecutive time. This was the expected outcome of the Monetary Policy Committee’s latest vote, but it wasn’t unanimous. There were six MPC votes to hold rates but three to raise it to 5.5 per cent. No one voted to cut. This speaks to the biggest challenge the Bank faces right now: how to balance getting the inflation rate back to target without tipping the economy into recession. But markets expect the next movement to be downwards – so much so that mortgage rates are already falling in anticipation. The MPC today urges markets not to get ahead of themselves and says that inflation risks are ‘skewed to the upside’. This is why it continues to lean in a slightly hawkish direction.

Has the UK economy come to a standstill? This morning we learn that the economy contracted by 0.3 per cent in October, far worse than the zero per cent change to GDP that was expected by economists. Furthermore, the Office for National Statistics (ONS) reveals there was no overall growth in the three months to October. These figures are even more disappointing after the economy grew by 0.2 per cent in September, as they are the first indication that growth could flatline in the final quarter of the year. Health and social activities did increase – rising by 0.4 per cent, as there were fewer strikes in October than September and fewer appointments rescheduled –  but services output, production output and the construction sector all took a hit (contracting 0.2 per cent, 0.

Keir Starmer wants to set expectations early. Speaking at the Resolution Foundation’s economy conference later today, the opposition leader used his speech to emphasise just how little scope he’d have at the start of any Labour government to splash the cash. His party will not ‘turn on the spending taps’, he told an audience of economists and policy analysts. Anyone expecting them to do so is ‘going to be disappointed.’ The speech seemed to deliberately echo the infamous ‘I’m afraid there is no money’ note left for the incoming Tory government by a Labour minister.  Starmer responded to the spending trap laid out in the Autumn Statement last month: where Chancellor Jeremy Hunt used almost all his fiscal headroom to cut taxes rather than boost public sector spending.

Jeremy Hunt’s March Budget was an exercise in Big State Toryism. It lacked meaningful tax cuts, was full of new spending promises, and was estimated by the Office for Budget Responsibility (OBR) to take the ratio of public spending to GDP to ‘43.4 per cent, its highest sustained level since the 1970s’. But today’s Autumn Statement, the Chancellor told the Commons today, was going to be different. Framing the fiscal update as an ‘Autumn Statement for Growth’, Hunt began his announcement by insisting that  ‘our choice is not big government, high spending and high tax because we know that leads to less growth, not more. Instead we reduce debt, cut taxes and reward work’.  What followed was a series of concrete tax cuts for both businesses and workers.