Ross Clark

We can thank Rachel Reeves for one thing: setting up a real-world experiment to show the Laffer curve in action. April’s figures for the public finances, like yesterday’s figures for inflation, are truly dreadful. April should have been a bumper month for tax receipts, being the month that the rise in Employers’ National Insurance Contributions (NICs) came into effect. Instead, borrowing surged to £20.2 billion in a single month. It took borrowing for the year 2024/25 to £148.3 billion, a smidgeon less that the Office for National Statistics (ONS) estimated last month but £11 billion higher than the Office for Budget Responsibility (OBR) had forecast. Government receipts in April did advance by a fairly modest £5.6 billion compared with April 2024.

Rachel Reeves is perhaps not a great fan of Donald Trump, but she should be grateful to him nonetheless, and Ed Miliband even more so. The trade war sparked by Trump’s ‘Liberation Day’ tariffs is about to lower energy prices for UK consumers. According to a forecast by consultants Cornwall Insight, Ofgem’s price cap will fall in July by 7 per cent – to a level at which the average home with a dual gas and electricity bill will be paying £1,720 a year. It will reverse the uplift in the price cap in April and moderate the rise in the Consumer Prices Index (CPI), giving Reeves a bit of breathing room and – temporarily – diverting attention from the fact that Britain has the highest energy prices of any member of the International Energy Agency.

The bleak future of the UK’s public finances can be summed up in a few statistics. For the financial year just ended, the Office for National Statistics’ provisional estimate for the government’s deficit – the gap between income and expenditure – is £151.9 billion. The Office for Budget Responsibility’s estimate is that spending on welfare (including the state pension) will rise from £313 billion in 2024/25 to £377 billion in 2029/30 in today’s money – an increase of £64 billion. The government, meanwhile, has proposed changes to the welfare system, reducing Personal Independence Payments (PIPs) which it hopes will save £4.8 billion a year.

If the government was deliberately trying to encourage union militancy, it could not be making a better job of it. It is reported that junior doctors – or 'resident doctors' as we are now supposed to call them for fear of implying that they might be less qualified than consultants who have been doing their jobs for 40 years – could be in line for a pay rise of five per cent this year. This would be on top of the 22 per cent they were awarded last year. Meanwhile, nurses, who had a pay rise of 5.5 per cent last year, appear to be on course for a rise of no more than 2.8 per cent. Inflation, to put these figures into context, is currently running at 2.6 per cent. Can the government risk continuing to award much greater pay rises to junior doctors than to nurses?

You can say it for Wes Streeting: he doesn’t hang about. Reacting to the heavy loss of council seats in last week’s elections, he is proffering £102 million of money for extra GPs’ appointments – hopefully to end what has been termed the “8am scramble”: a kind of Hunger Games which NHS patients have to go through in order to be seen. The Health Secretary has been pointed in trying to attribute this funding boost to the unpopular rise in employers’ national insurance contributions The Health Secretary has been pointed in trying to attribute this funding boost to the very unpopular rise in employers’ national insurance contributions in last autumn’s Budget.

Here’s a pub quiz question: which European country has no net zero target? I don’t mean which country is not bothering too much about conforming with its net zero target, because that is most of them, but which one doesn’t even have such a target in the first place? The surprising answer is Norway, which has a target of reducing its carbon emissions by 90 to 95 per cent on 1990 levels by 2050 but has made no commitment so far to go all the way.

With Treasury Secretary Scott Bessent announcing that a trade deal between the US and India could be imminent, it once again raises the possibility that Trump’s intended outcome is not the imposition of high, permanent tariffs – but that the measures announced on “Liberation Day” were really just shock therapy aimed at the ultimate liberalization of trade. It is significant that India was one of the countries which were originally put down for some of the higher tariffs: 26 percent was going to be the blanket rate on imports from India. South Korea, another country with which trade deal negotiations seem to be in an advanced state, was going to be subject to 25 percent tariffs.