Economy

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Michael Simmons Michael Simmons

Britain is being pulled under by debt

Britain is slowly drowning in debt. Figures just released by the Office for National Statistics (ONS) show that in the financial year to July the state had to borrow £60 billion to tread water. That’s £6.7 billion more than by July last year and the third highest borrowing total for this period of the year since records began 32 years ago. Statisticians also managed to find almost another billion pounds in debt payments that now need to be added to the previous month’s figures.  When the Bank cut interest rates, something alarming happened in the borrowing markets There was better news, though, when looking at the month of July alone, with

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Ross Clark Ross Clark

No, Ed Miliband: zonal pricing won’t cut energy bills

Is Ed Miliband going to announce a move towards a zonal electricity market, where wholesale prices would vary between regions of Britain? It would appear to be on cards following the Energy and Climate Secretary’s interview on the Today programme in which he said he was considering the idea. Miliband’s apparent support for the plan follows intense lobbying by Greg Jackson, CEO of Octopus Energy as well as support from the National Energy System Operator (NESO), the new government-owned company which oversees the grid. However, zonal pricing is bitterly opposed by others in the energy industry, including Chris O’Shea, the generously-moustached CEO of Centrica, and Dale Vince, CEO of Electrocity

Tuesday

Matthew Lynn

Does no one care about Britain’s soaring gilts?

The Chancellor Rachel Reeves is threatening a round of tax rises. RMT is on strike over the bank holiday. And something or other is going on with Masterchef. As the summer unfolds, British domestic politics is worrying about all its familiar issues. In the background, however, something far more serious is happening. The country is going quietly broke, and hardly anyone cares.  Very soon the Chancellor will be raising our taxes to pay the interest on our outstanding debt On the bond markets, the yield on the UK’s 30-year gilt rose yesterday to 5.6 per cent, overtaking the equivalent US yield for the first time in a generation, and approaching

Matthew Lynn

Trump may regret investing in Intel microchips

When President Trump unveils a massive investment in the microchip manufacturer Intel on behalf of the American people it will no doubt be accompanied by all the usual hyperbole. No doubt we will hear all about how it will be the ‘deal of the century’, delivered personally by the ‘investor in chief’. But hold on. Sure, we can understand why the President wants to help one of the US’s most strategic companies. But the blunt truth is that Intel is well past its peak – and it will prove to be a terrible deal.  It will be one of the largest industrial investments the White House has ever made. According

Ross Clark Ross Clark

Labour’s grants won’t save the electric car market

Keir Starmer’s government continues to show off its remarkable ability to please absolutely no one. Reintroducing grants for electric cars (EVs) always was an outrage. Why is a government which rails against privilege when it comes to public schools, second homes, etc., splashing out taxpayers’ money to subsidise the second cars of relatively well-off motorists? Most people I know with electric cars also have a petrol or diesel car for longer journeys. Moreover, if you are going to chuck a bung worth thousands of pounds at people who buy a car a little less polluting than a petrol or diesel car, what about people who don’t buy a car at

Maxwell Marlow

The abolition of stamp duty can’t come soon enough

A rare kernel of hopefully good news has been circulating the Treasury. No, we haven’t yet paid off the £2.7 trillion debt, and the state pension is still on path to imploding in a decade’s time. Instead, Britain’s most destructive and ambition-killing tax is for the chop and is to be replaced with a much more sensible system. Property prices have risen by 259 per cent since 1997, with wages only rising by a lowly 68 per cent Stamp Duty Land Tax has its origins in Regency England, and as the name suggests, it originally was levied on stamped documents in order to fund Britain’s war against Napoleon. In 1815, the stamp duty

Monday

Nicholas Farrell

Is Italy really doing better than Britain?

Dante’s Beach, Ravenna News that Italians now enjoy a higher standard of living than the British made me think: my God, life must be truly awful in Britain. Yes, the Italians do have much to feel good about in terms of the quality of their lives thanks to the beauty of their country, the splendour of their history, culture and cuisine, and their impressive defence of the traditional family and way of life from the threats to them of the modern world. When I’m drinking, I buy a superb local Sangiovese for €2.60 a litre dispensed into plastic mineral water bottles from a huge cask in a wine shop in

Matthew Lynn

How long before Rachel Reeves introduces a ‘FTSE tax’?

As figures out today show the salaries at the top of business soaring, there are plenty of good reasons for the chief executives of the FTSE 100 to be paid a lot more – at least if you look at it dispassionately. These companies are catching up with global salaries. They need to attract talent from around the world. And they need to stop businesses from moving to New York. The trouble is, we also have a Labour government that is searching for more tax revenue and backbenchers and party activists determined that the ‘rich’ should pay more. Against that backdrop, paying yourself a couple of million more does not

Friday

Matthew Lynn

Mounjaro won’t be the last drug company to bow to Trump

If you need to lose a few pounds after enjoying the French or Italian food a little too much on your summer holiday, there might soon be a problem. The cost of one of the new weight loss drugs that has become so popular in recent months is about to get a lot more expensive. The American drugs giant Eli Lilly doubling the price of Mounjaro in the UK. The price of one diet pill does not make a great deal of difference. The trouble is, the decision was prompted by President Trump’s determination to make the cost of medicines a lot fairer between the United States and the rest

Alexander Kolyandr

Can Putin extract an economic victory from Trump?

The Alaska summit taking place today isn’t just about war – economics looms equally large. Vladimir Putin, with his forces pressing forward in Ukraine, faces neither military urgency nor economic desperation to halt the fighting. For him, this has never been a territorial grab but an existential struggle against Western hegemony. His challenge is to decouple the war from bilateral cooperation with America: the former proceeds too favourably to abandon, while the latter promises diplomatic triumph and relief from mounting economic pressures. Putin’s delegation tells the story. Finance Minister Anton Siluanov and Kirill Dmitriev, Putin’s special envoy for international investment, signal that sanctions and economic cooperation will be discussed. Putin

Michael Simmons Michael Simmons

GDP growth proves the Bank of England’s mistakes

Yesterday’s stronger-than-expected GDP growth raises questions for the Bank of England. Second quarter growth came in at 0.3 per cent (0.2 per cent per Brit) propped up by a strong 0.7 per cent in June alone. The rest of the national accounts however, paint a worrying picture when it comes to inflation. The GDP deflator – which is a measure of the overall level of prices in the whole economy – came in at 4.1 per cent year-on-year growth. That’s down slightly from the last reading but still more than double the Bank’s 2 per cent target. Nominal domestic demand was growing too, at more than 5 per cent –

Thursday

Michael Simmons Michael Simmons

Rachel Reeves must pull Britain from its doom loop

Britain’s is growing, albeit sluggishly. Figures just released by the Office for National Statistics (ONS) show the economy grew by just 0.3 per cent in the second quarter of the year – a sharp slowdown from the first three months, when growth was 0.7 per cent. ‘The economy was weak across April and May,’ the ONS said, blaming consumers and businesses racing to beat tariffs and stamp duty by bringing activity forward. There was, however, a stronger recovery in June, with the economy expanding by 0.4 per cent. Between April and June as a whole, services drove most of the growth, with particular strength in computer programming, healthcare and vehicle

Martin Vander Weyer Martin Vander Weyer

This is the least business-savvy government in half a century

In this season of scant corporate news – a Ryanair rant against the French here, a new BP oilfield there – it’s hard to know what business leaders are thinking about the cold months to come. Until, that is, you read a survey conducted last month for the Institute of Directors. Given that I’m writing from France this month, I’d call it an absolute croissant-dropper. The nub is that 639 UK businesses, large and small, report ‘optimism in prospects for the UK economy’ at -72, lower even than their darkest pandemic sentiment at -69 in April 2020. Export hopes and investment intentions are down, wage expectations are sharply up and,

Wednesday

Lucy Dunn

Scotland has one of the largest deficits in the Western world

It’s that time of year again: GERS day – when Scotland’s annual fiscal health is laid bare – has come back around and the figures paint a pretty bleak picture for the Scottish government. There is a £26.5 billion black hole in public finances (don’t fall off your chair, Rachel Reeves) while the country’s deficit has grown by more than £5 billion. With a Scottish parliament election just around the corner – and the party of government on track to lose seats – it’s more bad news for First Minister John Swinney’s SNP. Today’s GERS stats raise questions about the SNP’s full fiscal autonomy idea Swinney’s administration appears to have

Tuesday

Ross Clark Ross Clark

Rachel Reeves’s assault on the British economy continues

There really is no hiding place for Rachel Reeves in this morning’s employment figures. The Office of National Statistics (ONS) release shows that 164,000 payrolled positions have been lost in the 12 months to July, Labour’s first year in office. Those figures are still provisional, but the figures for the 12 months to June show pretty much the same picture, with the number of payrolled positions falling by 149,000. In May alone, 26,000 jobs were lost. The unemployment rate rose to 4.7 per cent. For those who are in work, the figures show a healthy rise in real earnings of 0.9 per cent. The Bank of England said last week

Monday

Ross Clark Ross Clark

Kemi is wrong about council tax

From Lord Kinnock’s demand for a wealth tax and VAT on private health fees to Gordon Brown pressing for gambling taxes, it is plain that Labour has run out of ideas other than dreaming up new ways to part us from our money. Even so, Kemi Badenoch is ill-advised to go on an all-out attack on council tax reform, as she did in a Mail on Sunday column yesterday. You don’t have to be a socialist or even a Labour supporter to see that council tax is horribly regressive According to the Conservative leader, Rachel Reeves is plotting to do as Labour have done in Wales: to set up an

Matthew Lynn

Is Britain’s wind power gamble about to backfire?

Over the last few years, we heard a lot about how the giant turbines that dominate hillsides and coastlines across Britain and Europe would power a new era of prosperity. They will generate an endless supply of cheap, environmentally friendly energy. They will create hundreds of thousands of ‘well-paid green jobs’. And the countries that embraced it would become the technological leaders of the 21st century. Indeed, the former prime minister Boris Johnson promised to turn the UK into the ‘Saudi Arabia of wind’. And yet, the outlook for the wind power industry currently looks far from secure. Today, Orsted, the Danish giant of the industry, has been forced into

Friday

Ross Clark Ross Clark

Reeves is to blame for the next cost of living crisis

Will yesterday’s cut in interest rates bring relief to the government in its economic problems, offering a breather to people who feel that their living standards are declining? That is unlikely for two reasons. Firstly, people buying homes with mortgages – the most obvious beneficiaries of a cut in interest rates – are more likely nowadays to be on fixed rates. Few will benefit from an immediate cut to the Bank of England base rate; in fact, there are still many homebuyers who are coming off five-year fixed rates they took out at the height of Covid, when interest rates were still at near-zero. They will experience a shock, regardless of