Economy

The Spring Statement was supposed to be a fiscal non-event, but instead, it is shaping up to be a mini-Budget. We have been primed, however, to expect only spending cuts – not tax rises (and presumably not tax cuts either). So what can we expect? So far, Liz Kendall has announced changes to welfare benefits that are supposed to save £5 billion a year by 2029–30, the last – partial – financial year of this parliament. In addition, it has been mooted that reforms to government administration – perhaps meaning up to 50,000 job losses in the civil service – will save £2 billion by the same year. Why the

It was hardly the message Chancellor Rachel Reeves would have been looking for a day before a Spring Statement which could well make or break her political career. The Governor of the Bank of England, Andrew Bailey, delivered a speech yesterday warning that growth was going to prove very hard over the next five years. The Governor is completely right to emphasise how hard it will be to expand the economy. But he should be making the case for far more radical reforms. If he won’t, no one else will. Bailey is staying within the ‘managed decline’ consensus To paraphrase PG Wodehouse on Scotsmen, ‘the difference between the Governor and

Chancellor Rachel Reeves is seeking to trim £2 billion from the government’s £13 billion administration budget, with up to 50,000 jobs being cut in her Spring Statement. The Prime Minister Keir Starmer said the government was ‘looking across the board’ for savings. But do Reeves and Starmer really have the courage, and the political capital, to carry out such a purge? On paper, Labour’s task looks straightforward enough. Civil service numbers over the past 15 years have performed a bungee jump. Between 2010 and 2016, the coalition, followed by David Cameron’s majority Conservative government, succeeded in trimming civil service numbers from 492,000 to 384,000. Then they began to climb again,

Five years ago this weekend, the nation was plunged into what was expected to be a three-week lockdown. Weeks turned into months and years, lives were upended, and society was reshaped. But with the Covid inquiry rumbling on and the threat of a new pandemic ever present, it is worth reflecting on what happened.  That’s what we did for today’s special episode of Spectator TV. We wanted to look back on the conversations our contributors were having at the time, so this morning’s show starts with an episode from during the pandemic, hosted by Cindy Yu. She interviews two University of Oxford bioethics professors, Julian Savulescu and Dominic Wilkinson, about why – at

Pursuing net zero is the ‘opportunity of the century’ which will create tens of thousands of well-paid green jobs and slash our energy bills. That is this Labour government’s official line, at least, as it was the last Tory government’s. Now we know, thanks to a leaked study, that is not quite how the Department for Business and Trade sees it. Rather, it seems, net zero threatens the recession of the century. The Macroeconomic Impacts of the Net Zero Transition, prepared by the Economic and Strategic Analysis team at the Department for Business and Trade in November 2023, warns that net zero targets could provoke an economic shock on the scale

The Bank of England has held interest rates at 4.5 per cent. The Monetary Policy Committee (MPC) voted eight to one to hold the base rate at its current level after reducing it by 0.25 percentage points six weeks ago. Markets and pundits had expected the decision, despite figures last week revealing the economy had contracted slightly in January. The Bank shares the government’s alarm at the lack of growth, warning in its report last month that ‘GDP growth has been weaker than expected, and indicators of business and consumer confidence have declined’. However, its fears that inflation may creep back up again – which the Bank predicts will peak

There are three thankless posts in a modern Labour government. There’s the Chancellor, who has to announce the tightening of belts and the hiking of taxes; the Home Secretary, who must busy themselves cracking down, banging up and throwing away the key; and the Work and Pensions Secretary, who is charged with Scroogeing every last penny out of the benefits system. These are the ministers Labour’s grassroots and its graduate liberal voters love to hate, but they likely do more to keep Labour in power than their more popular colleagues. Labour liberals have an outsized influence in policy debates, overrepresented as they are in the BBC, the NGOs and academia,

The welfare state is grotesquely unfair. There are people who receive thousands of pounds from the taxpayer with little government oversight, even when they have no genuine need for the cash. They spend it on things like cars, flat screen TVs and other luxury ephemera. And there is a sense of entitlement among these scroungers, a feeling that they are somehow owed the fruits of other people’s labour. These people are of course pensioners. ‘But, but, but,’ I hear them gargle through Wine Society crémant, ‘I’ve paid into the system all my life, I’ve earnt my pension!’ No you haven’t. You very unwisely handed over your taxes to successive governments

In more bad news for Rachel Reeves as the Chancellor prepares for next week’s Spring Statement, the OECD has downgraded Britain’s growth prospects. The organisation forecast the UK’s economy to grow 1.4 per cent this year and then just 1.2 per cent next year – compared with the 1.7 per cent and 1. 3 per cent that they’d previously estimated. In fairness, the whole world is seeing slower growth, according to the OECD’s estimates. America’s growth forecasts were also downgraded to 2.2 per cent this year, followed by 1.6 per cent in 2026 compared with the 2.4 per cent and 3.1 per cent that had originally been forecast. The report’s

There are, as Rachel Reeves keeps telling us, some tough choices to be made. Whether she is personally tough enough to make them is another matter. It seems as if the government is already retreating on proposed plans to freeze Personal Independence Payments (PIP) in the Spring statement in ten days’ time. A putative backbench rebellion has grown in size to a level at which even a government with a majority of 160 cannot be sure of success. There were also rumoured threats of ministerial resignations. It shouldn’t really come as a surprise. Many Labour MPs have it in their heads that they were elected to protect the poor and