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Matthew Lynn

Rachel Reeves will regret promising growth, growth, growth

Growth will be turbo-charged, animal spirits will be unleashed, and foreign investment will flood back into Britain. Shadow chancellor Rachel Reeves is promising a Thatcher-style revival of the British economy if Labour wins power. But there’s a problem with the pitch that she will deliver in her keynote Mais lecture on the economy today: a Labour government isn’t going to deliver this promised growth. Reeves is setting herself up for failure.  Labour’s proposals are painfully thin With at most only a few months left before she takes charge of the Treasury, as she inevitably will, Reeves is making it clear that she expects the UK to return to the 2.5

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Ross Clark

Hinkley C and the rising cost of net zero

Should we be bothered that Hinckley C nuclear power station has run even further over budget (the latest estimate is £35 billion, nearly twice that quoted when the project was given the go-ahead in 2016) and that its completion date has been put back yet further, to 2031? After all, the whole point of offering French energy giant EDF a guaranteed ‘strike price’ at the then juicy rate of £92.50 per megawatt-hour (at 2013 prices, rising with inflation) was supposed to be to transfer financial risk to EDF and its financial backers. ‘It is important to say that British consumers won’t pay a penny, with the increased costs met entirely

Kate Andrews

Sunak says the economy is doing better. Is he right?

Is Britain’s economy ‘turning a corner’? Rishi Sunak thinks so, but convincing his fellow MPs and the public is going to be difficult. At the ‘SME Connect’ conference in Warwickshire this morning, the Prime Minister spoke about the ‘tough couple of years’ the country has been through, insisting the UK economy is now heading ‘in the right direction.’ Perhaps there is more to come in the way of tax cuts On several metrics, Sunak is right. January’s growth figures, coming in at 0.2 per cent, suggest the UK is likely to consign its technical recession to the end of last year. Forecasters expect April will return the inflation rate back to the

How Ozempic fattened up Denmark’s economy

It’s official: weight-loss wonder drug Wegovy (also marketed as Ozempic) makes US celebrities shrink but makes the Danish economy grow. This week, the most amusing Oscars clickbait featured not the typical best- and worst-dressed actors, but instead celebrities who have experienced recent miraculous weight loss. The Daily Mail helpfully split this award category between those confirmed to have taken Wegovy, and others who have merely inexplicably and rapidly shrunk. Their collective weight loss is Denmark’s economic gain: this week, Denmark’s statistics agency confirmed the Danish economy grew 1.8 per cent in 2023 – but without the contribution of Wegovy’s owner, Novo Nordisk, it would instead have shrunk 0.1 per cent. Free market

Martin Vander Weyer

The British Isa is doomed to fail

Is Jeremy Hunt’s ‘British Isa’ worth having? The new £5,000 tax-free allowance for UK equity investment comes on top of the existing annual £20,000 Isa limit, so on the general principle that it makes sense to maximise tax-efficient savings, the answer might be yes. But will it achieve the Chancellor’s aim of allowing patriotic savers to buy into the growth of ‘the most promising UK businesses’ while supporting them with capital to expand? To that, I’m afraid, the answer from the professionals has been a resounding no. UK stock-market performance has been so limp in recent years that UK-only share-buyers would have reaped barely a third of the returns earned

Martin Vander Weyer

A toast to the Wine Society

Ask any group of consumers to name the UK’s most enduringly successful mutual enterprise and they will probably point to the Co-op or the Nationwide building society. But there’s a cognoscenti who will come up with a different answer: a business that operates from giant sheds beside a railway track at Stevenage. It is the Wine Society, now celebrating its 150th year. Back in 1874, a quantity of Portuguese wine lay in the cellars of the Royal Albert Hall in Kensington, shipped there for an International Exhibition but overlooked and unsold. After the Portuguese shippers complained, a series of tasting lunches was organised – by Major General Henry Scott, one

Kate Andrews

Britain’s recession looks like it’s over

Is the UK already out of recession? It’s a question that won’t be confirmed for months, but this morning’s update from the Office for National Statistics offers a positive hint that Britain’s economic contraction will be confined to 2023. According to the ONS, the economy grew by 0.2 per cent in January – thanks largely to improved services output, which rose by 0.2 per cent, and a bounceback in wholesale and retail trade. Construction output also turned a corner, growing by 1.1 per cent after three consecutive months of contractions. Is this the spectacular economic turnaround that Britain has been waiting for? GDP still fell 0.1 per cent in the

Michael Simmons

Has the jobs market cooled enough to cut interest rates?

Is the Bank of England about to cut interest rates? Today’s labour market statistics might just give them the room to do so. The latest data, released by the Office for National Statistics (ONS) this morning, shows that the number of payrolled employees is up, the unemployment rate is up, vacancies are down and pay growth is slowing. But is it enough? Job vacancies fell for the 20th consecutive time between December and February – and by twice as in last month’s release. Vacancies were down to 908,000 on the quarter, a decrease of 43,000 – though they remain far higher than pre-lockdown levels. More data released yesterday by the

Will Erdogan ever get to grips with Turkey’s sky-high inflation?

Inflation and the cost-of-living crisis dominates the agenda in Turkey, ahead of local elections at the end of March. Year-on-year inflation reached 67 per cent in February, according to the Turkish Statistical Institute, breaking a 15-month record and puncturing hopes that high interest rates would put a lid on rapidly increasing prices. For years, president Recep Tayyip Erdogan was a bitter opponent of high interest rates. ‘Interest rates are the reasons, inflation is the result,’ he roared regularly at political rallies, defying traditional economists. He cites Islamic traditions whereby high interest rates amount to usury, to justify his unorthodox monetary policies. Erdogan was a bitter opponent of high interest rates

Kate Andrews

Could Jeremy Hunt actually abolish National Insurance?

Could Jeremy Hunt really abolish employee National Insurance (NI)? His additional 2p cut announced in yesterday’s Budget seems to be the start of what the Tories might offer up in their election manifesto. Hunt has now suggested the end goal would be to merge income tax with employee NI, helping to simplify the tax code. The point was further made by Rishi Sunak at the Centre for Policy Studies’ 50th anniversary dinner last night: that it should be the Conservative party’s ‘plan, long term, to end that unfairness’ of taxing income twice. But is this in any way possible? To abolish employee NI comes with a price tag of roughly

Martin Vander Weyer

Here comes the next mis-selling scandal

St James’s Place is a posh London cul-de-sac that will forever be associated with the late Jacob Rothschild, who based his financial empire there and restored the stately Spencer House across the road. One of his enterprises, J. Rothschild Assurance, was renamed St James’s Place Capital in 1997 and ended up majority owned by Lloyds Banking Group – until Lloyds sold it to stockmarket investors in 2013. Combining fund management, financial advice and life insurance, SJP (as it’s known) joined the FTSE 100 a year later. Though its headquarters are now in Cirencester, the poshness of its name and origin helped polish SJP’s upmarket cachet. But not any more: faced

Michael Simmons

Britain’s worklessness disaster

Whilst Jeremy Hunt’s cut to National Insurance may grab the headlines, the real story of today’s Budget was hidden in the official forecasts accompanying it. These forecasts point to a disaster for Britain’s labour force. The UK already had one of the worst post-lockdown workforce recoveries in the world, with a record 2.8 million people off work due to long-term sickness. But today the OBR said things are only going to get worse. Spending on welfare now makes up the second biggest portion of your tax bill –  narrowly pipped to the post by our NHS The OBR gave the Chancellor credit for expanding childcare provision, attempting to reform welfare

More people should have second jobs

Long gone are the days when you had a job for life. But, for young folks especially, it seems we don’t just do one job in a week. The strivers are scrambling for second jobs. Though it is hard to ascertain exact numbers through official statistics, some surveys suggest more than two-thirds of British Gen Zs are now supplementing their income with side hustles.  Some of this is out of necessity, thanks to stagnant wages and rising living costs. But it is also being driven by attitude changes, and a desire to choose more purpose and freedom in the working week. Twenty- and thirty-somethings want to be Generation DIY, helping to drive a significant

Patrick O'Flynn

Hunt’s Budget is doomed

Anyone expecting Jeremy Hunt to unleash the animal spirits of wealth creators in his Budget today cannot have been paying much attention to the Treasury’s pre-briefing. Two per cent off National Insurance is likely to be as good as it gets, we are told. Perhaps a white rabbit will be pulled from a hat during the speech itself but more likely the animal in question will be a sloth. Such a creature – steady and dependable but resolutely undynamic – would be emblematic of the condition of what pundits used to term ‘UK plc’. For Britain under Hunt does not have an economy so much as a ‘meh-conomy’. While talk

Isabel Hardman

Will Jeremy Hunt play it safe today?

This Budget is probably Jeremy Hunt’s last fiscal event before the election, and the Chancellor will want to at least set a fair wind for the Conservatives to head into polling day. That means giving voters a sense that sticking with the Tories is the safer option, offering them giveaways on tax and the sense that more tax cuts might be to come – as well as avoiding the sort of post-Budget rows that can define a government in all the wrong ways. Hunt is expected to cut National Insurance by a further two percentage points, on top of the 2 point cut he made in the autumn. This is

It’s time to take a chainsaw to the British civil service

Slashing Whitehall waste is a pledge that brings to mind Augustine’s prayer for the Lord to make him virtuous – but not yet. It is something repeatedly promised by governments, but rarely delivered. Here we are again, days out from the final Budget before voters go to the polls in a general election, and Jeremy Hunt is announcing a crackdown on bureaucracy in the public sector. He intends to reduce the civil service headcount by 66,000, returning it to pre-pandemic levels. Do we need a Department for Culture, Media and Sport? Voters are likely to feel cynical. Britain’s public sector is riddled with entitlement and waste at levels described by the Chancellor as

Ross Clark

The farce of Drax’s wood pellets

When is the government going to stop pretending that chopping down trees in North American forests and shipping them across the Atlantic to burn them in UK power stations is a zero-carbon form of energy? The environmental-friendliness of Drax power station in North Yorkshire has been called into question yet again this week after BBC Panaroma investigation reported that some of the woodchips being burned there have allegedly been sourced from established ‘old growth’ forests in Canada rather than recent plantations. Drax has not commented on those specific allegations, but the investigation has thrown the issue back into the spotlight. How and where the wood is sourced has a dramatic