Ross Clark

Jeremy Hunt has supposedly just closed a black hole in the government’s finances. But is another black hole opening up before his eyes?   One of the more popular announcements in the autumn statement on 17 November was a rise in the windfall tax applied to oil and gas companies from 25 per cent to 35 per cent. It was popular because it didn’t affect ordinary people directly and because it feeds into the narrative of greedy oil companies making fat profits while households struggle with their energy bill.      By 2028, how much, if any, profits are being made by oil companies is anyone’s guess The 35 per cent windfall tax comes on top of corporation tax, which oil and gas companies already pay at a higher rate than other businesses.

The OECD has marked Britain down as the only G7 country (and the only major country bar Russia) expected to suffer a shrinking economy next year. But how accurate are its predictions? A year ago, it predicted that inflation in the UK would peak at 4.9 per cent in the first half of this year before falling back to 2 per cent by the end of next year. The economy was going to grow by 4.7 per cent this year followed by a further 2.1 per cent in 2023. The government would bite off any hand that offered that now. It can be excused for failing to predict the Russian invasion of Ukraine. But this is hardly the first time economic forecasting by the OECD and everyone else has proved somewhat wide of the mark.

A year ago Boris Johnson lost his place in his speech to the CBI annual conference. He started blathering on about Peppa Pig World, after having treated young Wilfred to a day out there the day before. It was excruciating, but at least it was fun. It is hard to say the same about Rishi Sunak’s address to the CBI this morning.  The CBI ought to be a natural habitat for Sunak, yet he didn’t seem entirely comfortable. His voice seemed a tone higher than normal, so his usual enthusiasm sounded something more like a desperate appeal. He wanted us to know that innovation is a good thing which improves productivity and creates wealth. But doesn’t everyone think that (except perhaps the Green party)?

Britain appears to be enjoying a surge of entrepreneurialism, with more than 200,000 start-ups registered at Companies House between April and June this year alone. However, while many of these are genuine cases of people taking the plunge and embarking on their dream of opening a tea shop, launching a webinar app or whatever, an awful lot are not going to be contributing any cherries to our national pie – and some might well be pilfering a few. Among those unlikely to be contributing are the 36 companies registered last year to a single address in Bristol – not a business park but a small semi-detached house. Or the 95 registered, apparently by Romanian nationals, at 65 different houses in the same Herefordshire street since January last year.

We have now been primed for so many tax rises that Thursday’s autumn statement will inevitably come as some form of relief. Whatever Jeremy Hunt announces is sure to be milder than the possibilities fed to us over the past few weeks. But there is one suggested tax rise which is far too mild, and far too reasonable. Local authorities, it has been floated, may be allowed to put up their council tax bills by up to 5 per cent without having to put it to the public in a referendum (a referendum which, needless to say, would swallow up a good slice of any extra revenue gained). If the government wants to continue to fund social care from council tax it should look at introducing extra council tax bands Five per cent would amount to a sharp rise in council tax compared with recent years.

Like Liz Truss, Sam Bankman-Fried will be the stuff of pub quizzes: who lost his entire $16 billion fortune in days? A quick trawl of the internet suggest his only real challenger in losing so much money so quickly was Masayoshi Son, the founder of Softbank, who was estimated to have made a paper loss of $70 billion in the dotcom crash. But he wasn’t completely wiped out, and retained considerable wealth as Softbank rose again. Bankman-Fried, on the other hand, is believed now to be worth pretty much zero following last week’s collapse of the crypto exchange he founded, FTX. At its peak, Bankman-Fried’s stake is estimated to have been worth $26 billion, and it was still worth many billions in the days before its sudden collapse. All this by the age of 30.

Is the inflationary spike past its peak? That is the obvious reaction to the news that US inflation fell to 7.7 per cent in October, down from 8.2 per cent in September and significantly lower than the 8.0 per cent that markets had been expecting. Clearly, inflation remains high, but US inflation is now lower than at any stage since January. A further couple of months of falls would seem to indicate that, for now, inflation has been tamed. It ought to come as no surprise. The US Federal Reserve has been fighting inflation aggressively all year with interest rates. It is some way ahead of the curve being followed by the Bank of England and the European Central Bank. Moreover, a slowing economy ought to bring down prices as consumers draw in their horns.

We can be grateful for small mercies. 4 November 2022 will go down as the day when a presenter on the Today programme finally challenged a dodgy statistic trying to blame economic collapse on Brexit. The statistic in question was put forward by former Bank of England governor Mark Carney in an interview with the Financial Times last month in which he said: 'Put it this way, in 2016 the British economy was 90 per cent the size of Germany’s. Now it is less than 70 per cent.'     Was Carney’s ultra-loose monetary policy not part of the cause of today's inflationary environment? Mishal Husain, to her credit, put this to Carney this morning, pointing out that economists had challenged this figure.