Economy

The inflation rate rose to 2.2 per cent in July, slightly up from the Bank of England’s target of 2 per cent, where the rate sat in May and June. It’s the first rate uptick this year – and though widely expected, it will be used to explain why the Bank’s continued hawkish stance, despite starting its rate-cutting process earlier this month. The slight speed up in the inflation rate is largely attributed to the overall cost of household services, where the ‘prices of gas and electricity fell by less than they did last year’. This was somewhat offset by the ‘largest downward contribution’ which was attributed to falling costs for

Today’s labour market figures ought to bring good news: they show that growth on earnings has moderated to 5.4 per cent, the lowest level in two years. That should ease fears of inflation – it is growth in pay which has most concerned the Bank of England in recent months – and pave the way for further cuts in interest rates. The trouble is, though, that the Chancellor, Rachel Reeves, has undermined this by granting pay rises of 5.5 per cent to several million public sector workers – threatening to reignite wage growth again. The public sector has become an inflationary engine chugging away in one corner of the economy

Is America about to enter a recession and take the world with it? Yesterday the pound was on track for its longest losing streak in a year as markets once again began to fear a US recession. The week started with what looked like the bursting of a tech bubble. Japan’s Nikkei dropped by 12 per cent in a day – its largest fall since Black Monday nearly four decades ago. But by Tuesday morning, stocks had recovered 10 per cent and markets looked to be steadying while the jittery hands of investors began to hold firm. Are we out of the woods? Not quite. A leading Wall Street Bank

The markets are tumbling. Investors are bailing out. And there are already fears that the plunge in equities is a sign that a recession is just around the corner in America. With a presidential election only a few months away, the Federal Reserve will come under intense pressure to bail out the market with a cut in interest rates as it has done so often over the last quarter of a century. So will central banks in the UK and the Euro-zone. This time around, though, it would be madness to cut rates: it will just make the asset bubble much worse.  The FTSE-100 has fallen sharply again this morning,

Liz Truss continues to do a lot of heavy lifting for the Labour party. The former prime minister’s mini-Budget featured more in the election – as a Labour talking point – than any piece of policy implemented by Rishi Sunak. Chancellor Rachel Reeves is determined to present the next round of spending cuts and tax hikes as an extension of Tory policy, rather than the start of Labour policy. The narrative that, under Truss, the Tories ‘crashed the economy’ is part of what’s being used to justify all the ‘tough decisions’ Labour has coming up in its first Budget at the end of October. The perceived wisdom of what the

The Chancellor has kicked off her investment tour under rather difficult circumstances. While Rachel Reeves spends the next three days in the United States and Canada trying to drum up investment for Britain, the world of finance remains with eyes glued to the turbulence of the stock market, having to admit to itself that it’s not sure what comes next. After experiencing its worst crash yesterday since Black Monday in 1987, Japan’s stock market has all but recovered, rising by 10 per cent today – its biggest single-day gains in history. Nearly all markets in Asia are on the up. But while the FTSE 100 looked set for a rebound,

For a while it looked as if Keir Starmer and Rachel Reeves were going to be lucky: they had walked into an economic recovery. The anaemic growth and market turmoil of the past few years – which Labour liked to blame entirely on ‘Tory chaos’ and absolutely nothing to do with the pandemic or energy crisis which followed the invasion of Ukraine – were going to be replaced by a period of stability and prosperity. Some governments are fortunate in their timing: Tony Blair walked into a decade of non-inflationary growth thanks to globalisation and the emergence of China as a major economy. But Starmer, it now looks, will not

Today’s stock market plunge is interesting for two main reasons. First, for those of us who have never traded on the Japanese stock exchange, comes the revelation that the colours used to denote changes in stock prices are the inverse of those used on western markets: red means a share has gone up, green means it has gone down. The same, apparently, is true in China. Fortunately, for the sake of foreign drivers neither country inverts the colour of its traffic lights, although ‘go’ in Japan is denoted by something closer to blue than green… Second, UK markets seem to have been dragged down in sympathy with others even though

As Kate Andrews argues here, the Bank of England were never going to cut interest rates during an election campaign for fear of being accused of favouring one side or the other. That ruled out a rate cut in June, while in July there was no meeting of the Monetary Policy Committee. But are those five members who voted for a quarter-point cut today really confident that they have not opened themselves to charges of bias, by cutting rates at the earliest opportunity after the election of a Labour government? For months, the MPC was telling us that it was too early for a rate cut – in spite of rapidly falling inflation

Angela Rayner has announced that the government will aim to build 370,000 new homes, up from the 300,000 a year implied in the party’s manifesto. But if the deputy prime minister really thinks that all she needs to do to achieve that target is to take on Nimbys – as Rayner and chancellor Rachel Reeves have suggested in recent weeks – she needs to take a trip to a slice of the ‘grey belt’ in Essex. There, a 206 acre farm at Harold’s Farm near Epping is to be turned over to rewilding. Why is the cost of encouraging rewilding being lumped on new housing? Some locals have announced themselves

The news that McDonald’s sales have fallen by 1 per cent around the world between April and June might not seem, on the face of it, to be vastly significant. After all, surely there will always be a market for cheap and cheerful hamburgers, chicken nuggets and chips that even Michelin-starred chefs rave about? Apparently not. Ever since the pandemic, when there was a considerable rise in prices, the lustre has gone off the golden arches, and profits have declined by 12 per cent. There have been calls for ‘value added’ innovations, such as the current ‘buy three items for £3’ deal, but, as one McDonald’s executive helpfully put it,

There is one over-arching question hanging over Rachel Reeves’s speech today, in which she claimed that a £21.9 billion hole has opened up in the current political spending for this financial year: why, if there is such a large ‘black hole’ in the public finances, is there suddenly money available for £9.4 billion worth of above-inflation pay rises for public sector workers? Preposterously, those pay rises – which Reeves has chosen to make and which were not committed to by the previous government – are included as one of the unfunded spending items (indeed the single biggest spending item) which has contributed to the ‘black hole’. Reeves justifies this leap of