Economy

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

Rachel Reeves may have killed off growth with her raid on employers’ National Insurance contributions, but today comes a reminder that she is nevertheless the relatively mild face of the Starmer government. We can at least be thankful that Angela Rayner is not Chancellor. Labour’s deputy leader has written a memo to Reeves suggesting a number of taxes she would like to see increased, and which she believes – somewhat hopefully – would obviate the need for spending cuts at the next Budget. There are cabinet ministers who are even more hostile to the idea of low taxes than Reeves herself is She wants inheritance tax relief on Alternative Investment

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. The electoral winners will be the

Shrewd parents extol upon their children the importance of stashing away some cash. Unfortunately, they rarely offer much guidance on what to actually do with that money. As a result, much of it gets squirrelled away in pink, ceramic pigs where inflation eats it up. Many adults make the same mistake as these young savers. The more savvy ones opt to invest, perhaps in an Individual Savings Account (or ISAs), which are tax free savings accounts that let you save up to £20,000 every year, usually in the form of cash or stocks and shares. But it’s widely reported that the Treasury is considering a radical shake up of the

This week has seen much talk – again – of the ‘Treasury View’, and how that rarely defined set of values might be influencing this government’s approach to migration. First, let’s kill off some conspiracy theories that exist about the Treasury View. In general terms the Treasury View stands for cautious conservatism (with a small C) surrounding the payback from public spending, a belief in free trade, and in free markets. The Treasury View also extols the virtue of a steady currency, low and stable inflation, and soundly managed public finances. Former Treasury Permanent Secretary, Lord Nick Macpherson, in a speech in 2014, placed these amongst ten propositions for what