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Can Republicans be trusted with the US economy?

When it comes to the economy, Americans typically trust the Republicans. They’re the party traditionally aligned with big capital; and their policies – low taxes and minimal government interference – sound sweet in a believer’s ear. Donald Trump, leading the GOP for the third election in a row, is a famous businessman; and the party’s previous nominee, back in 2012, was Mitt Romney – the co-founder of one of the largest private equity firms in the world. The Republicans, you might think, are a safe pair of hands. However, despite the Republicans prioritising the economy, it’s the Democrats who have the far superior record. Of the eleven recessions since World

Spotlight

Featured economics news and data.

Steerpike

Revealed: Reeves’s tax rises expose Labour’s misleading manifesto claims

Casting his mind back to the election, Mr S recalls a heated debate about which party would raise taxes most. In the final televised debate before the national poll, Sir Keir Starmer was quick to accuse then-PM Rishi Sunak of ‘repeating a lie’ – that Labour were going to raise taxes by £2,000 per person. And, to be fair, he had a point: on Sunak’s own maths the Tories would have raised taxes by, er, £3,000 per person. Awkward… Mr S’s friends at The Spectator’s DataHub have crunched all the manifestos put out at the time to see just who really would be responsible for the greatest tax hikes – with

Ross Clark

Why this Budget could be worse than you fear

It is tempting to think of this Budget as a triumph in expectation management. Rachel Reeves’s minions have briefed us on so many potential tax rises that surely the actual speech, when finally delivered, can’t be as bad as feared. Having been conditioned to expect the worst, we will all end up feeling pathetically grateful to Reeves for having spared us. But having run through a few figures I am not so sure. Rather, I fear we may be in for whatever is the opposite of a rabbit out of the hat – a toad out of the hat, perhaps. Over the past few days we have been told to

Kate Andrews

Yet another NHS Budget boost – but where’s the reform?

We won’t have to speculate about the details of the Labour’s first Budget much longer. But one tradition as old as time has been confirmed by the Treasury: the National Health Service is getting more cash. ‘Our NHS is the lifeblood of Britain,’ the Chancellor Rachel Reeves has said ahead of unveiling her full Budget tomorrow. ‘That’s why I am putting an end to the neglect and underinvestment it has seen for over a decade now.’ This is set to include £1.57 billion of capital spending to expand surgical hubs and provide more equipment. An additional £1.8 billion worth of funding will also be announced to help Labour make good on its

Please, Rachel Reeves, define ‘austerity’

What is a working person? This is the question Keir Starmer and other members of his Cabinet struggled to answer over the past week or so. Labour’s flip-flopping is in many ways emblematic of the clash between political rhetoric and fiscal reality. And there is another term that is probably much harder to define, one that has dominated the conversation about the public finances over the last 14 years. That word is austerity. It has been a convenient catch-all for critics of the coalition’s attempt at fiscal retrenchment, and arguably subsequent Conservative fiscal policy. But with Labour about to announce its first Budget in 14 years under somewhat gloomy circumstances,

Labour will regret its war on bus passengers

Aside from debates as to what actually constitutes a ‘working person’, the Labour government does ostensibly seem clear as to whom it wants to shield in the forthcoming Budget: the less well-off and those who continue to struggle financially. It is therefore perverse that it should remove a benefit that has been a blessing to precisely that demographic: the £2 cap on bus fares. The government looks set to be making another long-term error This measure, an initiative of the last Tory government, was introduced last January and implemented in England outside areas that already have devolved powers over transport. It’s been an invaluable aid for those who use the

Matthew Lynn

Volkswagen’s woes are no surprise

Where did it all go wrong for Volkswagen? The German carmaker is said to be planning to shut several factories and lay off thousands of staff. Workers who do keep their jobs could see their pay cut by as much as ten per cent, according to VW’s top employee representative, Daniela Cavallo. If the revelations are correct, the three factories will be the first to be shuttered in the company’s 87-year history. It is hard to overestimate the scale of the shock that the claims about VW, a company that has always been emblematic of the country’s post-war economic miracle, has delivered to the German economy today. Yet Germany –

Kate Andrews

Will the OBR’s £22bn ‘black hole’ review vindicate the Tories?

Are the details of the alleged £22 billion fiscal black hole about to be revealed? In addition to providing assessments and forecasts for the UK economy alongside the Chancellor’s Budget on Wednesday, the Office for Budget Responsibility is also set to publish its ‘review’ into Rachel Reeves’ claim that the Tories covered up a multi-billion pound black hole in the public finances – one that she was only able to unearth after she entered the Treasury. Since Reeves first made the accusation in July, there has been lots of speculation about how the figure was compiled – and exactly where the money went. The Treasury has not released a breakdown

Russia is creeping towards stagflation

The Central Bank of Russia raised its benchmark rate to a twenty-year high of 21 per cent on Friday – and has indicated that it could go even higher. Even Vladimir Putin, a notorious serial boaster, won’t be caught bragging about this tell-tale sign of a not-so-healthy economy. The writing is on the wall: Russia is getting closer to stagflation – a no-growth, high-inflation economy.  An interest rate this high is unprecedented. In February 2003, still fresh in his job, Putin launched reforms to kick-start the Russian economy after the 1998 financial meltdown; the central bank brought its refinancing rate to 20 per cent and has kept it below that level ever

Ross Clark

Does Rachel Reeves have to hike taxes?

Could Rachel Reeves’s ‘black hole’ be filled not through tax rises or even spending cuts but rather through getting an extra two million people into work? That is the claim this morning made by the Jobs Foundation, a think tank set up by Matthew Elliott, now Lord Elliott, who formerly ran the Taxpayers’ Alliance. Raising the employment rate from 75 per cent to 80 per cent of the working age population, it claims, would raise an extra £20 billion in tax. That is not quite the £35 billion to £40 billion worth of tax rises which we have been briefed to expect in Wednesday’s Budget, but never mind – all

Kate Andrews

Not even ‘working people’ will be protected from tax hikes

Does Labour regret its decision to redefine the meaning of a ‘working person’? The original understanding of the term seemed to be working just fine, until ministers decided to make it the metric for who would and would not be subject to tax rises. Now the party finds itself in the strangest of situations: having to talk down British entrepreneurs and employers, all for the sake of muddling through a painful Budget next week. It was just a few weeks ago that Labour was hosting its highly anticipated investment summit, trying to attract new business, and funding, to the UK. When former Google CEO Eric Schmidt told the Prime Minister

Ross Clark

The real problem with Rachel Reeves’s Budget fiddle 

Remember Gordon Brown’s ‘golden rule’ – that over the course of the economic cycle the only net borrowing he would allow was to fund investment? As for current spending, he told us, he would pay down debt in the good times so that he could borrow in the bad. It sounded reassuring, until Brown started to fiddle with the figures in every conceivable way. He shunted debt off the public balance sheet via private finance initiatives.  Is anyone confident that Reeves really will invest her extra £20 billion a year in such a way that it will earn the taxpayer a return? He kept stretching out his idea of the

Taxing the gambling industry just won’t work

Ahead of the Budget on 30 October, Rachel Reeves is being bombarded by lobbyists urging her to loot their enemies. The New Economics Foundation wants a ‘jet-setter tax’ on frequent fliers of €100 per flight. Action on Smoking and Health wants a levy on tobacco companies. Greenpeace reckons it can raise at least £26 billion a year by levying a wealth tax on the ‘super-rich’. An assortment of think tanks and pressure groups linked to the Labour donor Derek Webb think they can squeeze another £3 billion out of the gambling industry by doubling gaming and betting duties. Meanwhile in Scotland, the neo-temperance lobby are demanding a ‘levy’ on alcohol retailers who, they claim, are getting rich off

Ross Clark

Will the Chancellor widen the public-private pension gap?

Could Rachel Reeves really be so brazen as to lumber private sector employers with having to pay national insurance contributions (NICs) on their employees’ pension contributions – but to spare public sector employers the same burden? That is what is being reported this morning. It has been suggested that, in next week’s Budget, the Chancellor will announce the end of an exemption for private sector employers, which currently ensures employers don’t pay NICs on pension contributions. At the same time, Reeves is proposing to instantly compensate public sector bodies so they are effectively spared from have to bear the burden. This would be crass for two reasons. Firstly it would

Martin Vander Weyer

Wahed’s alarming Tube adverts

As the interminable Budget wait goes on, so does the trawl through the Chancellor’s bin bags. I refer to the old tabloid method of digging in celebrities’ dustbins for evidence of depravity or scandal; in Rachel Reeves’s case, that would mean piecing together shredded Treasury analyses on all the various tax wheezes floated since July. One curry-smeared paper no doubt addresses the pros and cons of an inheritance raid on ‘aristocrats and landowners’; beneath the Red Bull cans and pizza crusts, might there be another headed ‘Clawbacks on Enterprise Investment Scheme’? Not that there have been substantive rumours, mind you. But that’s rather the point: having had so many draft

Matthew Lynn

Has Rachel Reeves lost control of spending?

Some thought Rachel Reeves’s experience at the Bank of England meant she ‘knew how to run the economy’. She would keep an iron grip on budgets and demand value for money. The reliability of her management of the Treasury would unlock a wave of support from global finance. Ahead of the election, Reeves, along with fanboys such as the former Bank of England Governor Mark Carney, boasted endlessly about her financial and economic expertise. But only four months into her time in No. 11, there are already alarming signs she has lost control of spending.  The public sector borrowing figures published today were far worse than expected. The government borrowed

Ross Clark

The UK’s debts are horrifyingly large

There is a big danger in today’s government borrowing figures for September being a little less bad than was expected by many observers. It will lead to claims that the Chancellor has enjoyed a ‘windfall’ prior to next week’s Budget, therefore lessening the need for spending cuts. No, there is no windfall. Until recent years, the idea that the government would have to borrow £16.6 billion in a single month would have been received with horror. True, September is not generally a great month for government finances, and the level of borrowing in the year to September – at £79.6 billion – is only around half the size of the

James Kirkup

Jeremy Hunt’s fantasy Budget

As Rachel Reeves prepares what is potentially the most difficult Budget in a generation, a question occurs: what if the Conservatives had, somehow, won the election? Historians hate counterfactuals, considering them unhelpful parlour-games. Personally, I enjoy a good ‘what if’ – not least because they can help put current political events in context. In that spirit, I’m pleased to present here the October 2024 Budget speech that Chancellor Jeremy Hunt might give in a parallel universe where the Conservatives remained in office after the election. As well a Budget address, this is also my resignation speech ‘Madam Deputy Speaker, it gives me no great pleasure to present this Budget statement

Kate Andrews

Here come the stealth taxes!

When Rachel Reeves’s ambition was to find £22 billion, it was already clear that she would need to find more revenue than what was expected to come from the relatively small take hikes the party announced it would pull pre-election. When that number was upgraded to £40 billion, there was no denying that a big tax hike was coming, the kind that tends to come from the major revenue raisers: income tax, National Insurance, or VAT. Despite being a stealth tax, will it go unnoticed? Of course Labour ruled out hikes to these three taxes with its tax ‘triple lock’ in the election manifesto. So the party has had to

Ross Clark

Brits seem curiously untroubled by Labour’s Budget – at least for now

If the public is worried about what lies in store in Rachel Reeves’ first Budget, there are few signs of it yet in their shopping habits. The latest retail sales figures, released by the Office for National Statistics this morning, show that sales volumes were up by 0.3 per cent in September. Over the three months to September – a more reliable figure as it is based on a lot more data – sales were up a very strong 1.9 per cent. It seems that the long covid winter in the retail world may finally be coming to an end: though sales volumes in September were still 0.2 per cent down

Matthew Lynn

Let’s see if ‘Patriotic Millionaires’ really want more tax

Dubai, Italy or perhaps the Bahamas? Many multi-millionaires are discussing where they should flee to as the Rachel Reeves prepares to raid their bank accounts in the ‘Horror Budget’ scheduled for the end of this month. But not, as it turns out, Patriotic Millionaires, the group that campaigns tirelessly for higher taxes on the rich. Its members want Reeves to take more of their money. The papers are dominated by reports of wealthy entrepreneurs, and the few remaining non-doms, securing a bolt hole somewhere where Reeves will not be able to reach them, but Patriotic Millionaires has a very different message. A report out today, written by IPPR (a think

Ross Clark

Reeves’s Budget is looking increasingly messy

The tragedy of the coming Budget is that it could have been a great reforming Budget. Instead, it now looks like being an extremely messy one, with the Chancellor buffeted by political winds into coming up with tax changes which are bizarre, punitive and which end up pleasing no-one. The latest symptom of this is the suggestion, reported in the Times today, that Rachel Reeves may increase capital gains tax on shares but not on property. Why should you pay more tax when you sell your shares than when you sell an investment property? Reeves was right the first time, when she hinted that she was going to equalise capital