Economy

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James Heale James Heale

Ed Davey pitches himself as the anti-Farage

The Liberal Democrat party conference in Bournemouth has concluded with a speech from leader Sir Ed Davey. While the current crop of Liberal Democrats are the most successful third-party in 100 years, they have faced questions about why they aren’t cutting through more while Reform is. It’s something Davey is aware of and – hoping to exploit how divisive the leader of Reform is – he sought to pitch himself as the anti-Farage. Will it work? Plus, more bad news for the Chancellor. Labour had pledged to aim for the highest growth in the G7. New figures from the OECD did upgrade their global growth forecast, including for Britain, but

Spotlight

Featured economics news and data.

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

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

Thursday

Kate Andrews Kate Andrews

Has the Bank of England forgotten what its job is?

15 min listen

Some excitement on Threadneedle Street today after the Bank of England cut interest rates to 4 per cent. The Bank’s Monetary Policy Committee (MPC) has just voted five to four – after a revote – for what is the third cut this year. This takes interest rates back down to levels not seen since the beginning of 2023. Concerns about an increasingly slack labour market seem to have driven the MPC’s decision. This sounds like good news – and Starmer will welcome it as such – but the Bank’s apparent comfort with loosening policy in this context is baffling says Michael Simmons. Its own forecasts show inflation climbing back to

Michael Simmons Michael Simmons

Has the Bank of England forgotten what its job is?

The Bank of England has cut interest rates to 4 per cent. Threadneedle Street’s Monetary Policy Committee (MPC) has just voted five to four, after a revote, for what is the third cut this year. This takes interest rates back down to levels not seen since the beginning of 2023. Concerns about an increasingly slack labour market seem to have driven the MPC’s decision. A second vote was required – the first since 1998 – because initially four members of the committee voted for a 0.25 per cent cut but one member voted for a larger cut of 0.5 per cent. Markets expect the rate to be cut once more to 3.75 per

Matthew Lynn

Reeves can’t continue to ignore the entrepreneurs fleeing Britain

Major listed companies have already switched from London to New York. The non-doms are all fleeing for Milan and Dubai. And now it turns out that company directors are quitting Britain in record numbers. The exodus of entrepreneurs is accelerating all the time. And yet, so far the Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer have remained completely silent on the issue. Surely, sooner or later they will have to say something? An analysis by the Financial Times this week found that almost 3,700 company directors have left Britain over the last few months, almost double the number before the Budget. Given the time lags involved in filing

Ross Clark Ross Clark

Higher gambling taxes won’t solve child poverty

As the man who first gave Britain a £150 billion deficit, I don’t think Gordon Brown is the best person to advise the current government on its fiscal policy. But even so the gaping hole in his call for higher gambling duties does raise the eyebrows. Brown seems to think that higher gambling taxes are capable of lifting half a million children out of poverty. Writing in the Guardian, he claims that raising online gaming taxes from 25 per cent to 50 per cent will raise an extra £1.6 billion, jacking up general betting duty from 15 per cent to 25 per cent will raise an extra £450 million and

Martin Vander Weyer Martin Vander Weyer

Was the car finance judgment fair?

I must modestly doubt that the Supreme Court justices took account of my 12 July column in their ruling on the issue of hidden car finance commissions. But the effect, limiting compensation claims to the more egregious cases of overcharging, is to do exactly what I hoped: namely to head off ‘a tsunami of claims that could cripple lenders and provoke a mini banking crisis’. Chancellor Rachel Reeves evidently hoped so too; given that up to 90 per cent of new UK car sales are financed by loans offered through car dealerships, a collapse of that market would have put another ding in an already battered economy. The total claims

Wednesday

Michael Simmons Michael Simmons

Has Rachel Reeves created a £50 billion fiscal black hole?

The Chancellor’s black hole is getting bigger and tax rises are coming. That’s the judgement of the National Institute of Economic and Social Research (NIESR) whose model of the UK economy has forecast she must find £50 billion of revenue or cuts if she’s to return to the £9.9 billion of fiscal headroom she left herself in the spring.   Some now believe the gap is so large Reeves may have to break Labour’s manifesto pledge not to increase income tax, VAT or employee national insurance Reeves’s self-imposed and ‘ironclad’ fiscal rules require her to abolish the deficit by the end of the Office for Budget Responsibility’s (OBR) five-year forecast. NIESER’s