Michael Simmons

With Donald Trump signalling that he does not want a long war in Iran, markets have started to settle down. Traders are no longer betting on interest rate hikes, the FTSE is in the green and a barrel of oil is hovering around $90. Nevertheless, the pressure on the Chancellor to set out further financial support to tackle the cost of living is on. The average five-year fixed mortgage passed 5 per cent today for the first time since November, prices at the pumps have jumped at their fastest pace in four years, and Morgan Stanley is the latest bank to warn that inflation could hit 5 per cent later this year.  On petrol and diesel, Rachel Reeves is angry with service stations.

A few weeks ago I thought a March interest rates cut was ‘near certain’. Inflation was coming down and Bank of England rate-setters’ concerns about wage growth were being replaced by fears that higher rates were contributing to rising unemployment. In my defence, markets agreed: they priced the chances of a cut at over 80 per cent. But since then, the world – and markets – have changed. The graph below shows something called the ‘overnight index swaps’ curve. Without getting too deep into the mechanics, it can be understood as a proxy for where traders think interest rates are heading. As you can see, the line had been steadily dropping before Donald Trump’s action in Iran sent it shooting back up – implying that a March rate cut has become much less likely.

The Epstein files lift the curtain on how power is exercised and influence traded by our financial elite. It is not a cheering sight. Business and economic gurus like the former US Treasury Secretary Larry Summers asking for dating advice from a convicted paedophile does not build confidence in the masters of the universe. Distasteful as these details are, the most telling insights into the predatory behaviour of the private-jet classes relate to how they exploit all of us, not just the vulnerable young women who catch their eye. Institutional logic does not explain Reeves’s love-in with the banks. They seem to have made a Faustian pact Peter Mandelson may blush at some of the personal details laid bare in his emails to Jeffrey Epstein.

With Sir Keir Starmer’s premiership in perpetual peril, it seems instructive to pay closer attention to his potential successors. On that, there have been two noteworthy interventions this week. The first from Ed Miliband who told the Today programme: ‘I tell you what angers Keir most about this country, it’s class. It’s the class divide.’ Not to be outdone, Andy Burnham then told a Resolution Foundation think-tank event that the focus of British politics needed to switch to lower earners. They present a Britain where capital exploits cheap labour, resulting in profound and widespread poverty. But that’s not the Britain we’re in Both men seem to want to focus on a country that does not exist.