Kate Andrews

The economic lesson of the week is that headlines are often deceiving. Yesterday’s GDP update for the month of April showed a 0.3 percent contraction – but that was largely due to the rollback of state-funded programmes designed to tackle Covid-19. Now today’s employment updates show the headline employment rate up – to 75.6 per cent – and the headline unemployment rate largely unchanged for the three months leading up to April. But is the labour market as 'tight' as these numbers suggest? In the short-term, Britain’s workforce seems stable. While prices spiral and growth remains largely stagnant, there are no immediate signs of rising unemployment. And the chunk of the population not working - the economically inactive - softened to 21.3pc, down 0.

Today’s economic growth figures serve as a reminder that it’s important to be specific about what’s actually being measured. Headline GDP numbers show a contraction of 0.3 per cent in April: worse than what was expected (the forecast consensus was a fall of roughly 0.1 per cent), suggesting a fall in economic activity and output, pushing the UK further towards recession territory. This is another example of why the technical definition of a recession may not help us much in the coming months either. But break down the headline number and another narrative emerges. A large driver of negative growth was the ‘significant reduction in NHS Test and Trace’ and vaccine rollout efforts, as demand for these services has greatly diminished.

As part of his revival (and survival) strategy, Boris Johnson is trying his hardest to convince the public and fellow MPs that he can get the cost of living crisis under control. But did today’s speech help him make that case? His wide-ranging speech in Lancashire covered a vast array of economic, policy and trade topics, which he struggled to pull into a cohesive theme. ‘We do not grow many olives in the UK,’ he pointed out. ‘Why do we have tariffs on bananas?’ Both excellent points when it comes to liberalising trade, but not obviously at the top of people’s priority lists when it comes to tackling energy bills in the next few months. ‘We do not grow many olives in the UK,’ he pointed out. ‘Why do we have tariffs on bananas?

After an uncomfortably close confidence vote for the Prime Minister on Monday, Boris Johnson’s premiership still hobbles along. But for how much longer? It seems the PM’s latest strategy is to find favour with his party again by promising bread-and-butter Tory policies: mainly tax cuts. Speaking to Tory MPs just hours before this week’s confidence vote, Johnson was making all the right noises: to boost the economy post-pandemic, he said, it was time to ‘drive supply side reform on Conservative principles and to cut taxes and to drive investment in the UK.’ Since the vote, Johnson has continued to harp on about cutting taxes, reportedly telling the Cabinet that cuts were coming down the track.

Alexander Rodnyansky has a desk waiting for him back at Cambridge, where he’s currently on sabbatical from his role as a junior economics professor. But he won’t be returning for some time. He’s working from Kyiv, prioritising his other job: as economic adviser to Volodymyr Zelensky. Rodnyansky was in Ukraine when the war broke out and he could easily have returned to the UK. ‘That wasn’t really much of a thought,’ he says. ‘I’m sixth-generation Kyiv. I was just going to stay.’ He became a full-time presidential adviser two years ago, hired to help reform Ukraine’s financial institutions, including the privatisation of state-owned commercial banks. ‘About 55 per cent of our banks are government-owned,’ he says.

For the first time ever, the number of UK job vacancies – now almost 1.3 million – has overtaken the unemployment count. Normally, this would lead to people in work feeling much better off, and lead to pay hikes and bonuses as employers compete to recruit and retain employees. But in fact, regular pay in real terms (that is, after inflation and before bonuses) is down 1.2 per cent – fuelling the cost-of-living crisis that is now the central fact of British politics. What’s going on? In short, today’s ONS labour market overview is yet another example of how inflation can ruin otherwise good news. Total salaries are up 7 per cent and unemployment fell to 3.7 per cent in Q1 (a record low not seen since the mid 1970s).

This afternoon the Bank of England's governor Andrew Bailey appeared, as he has done many times before, in front of the Treasury Select Committee to answer questions about its recent decision-making. Yet the tone of the Committee was radically different to other sessions. Its chair Mel Stride opened by asking Bailey if he and the Monetary Policy Committee – made up of nine members who vote to set interest rates – had been ‘asleep at the wheel’ as prices soared throughout the country. It was arguably one of the easier questions put to him during today’s session: from then on, Bailey and the MPC members who joined him were pit against each other.