Economy

A curious attack from Labour in the Commons this afternoon: shadow work and pensions secretary Liz Kendall used her slot at the regular departmental questions to ask how a policy that the government doesn’t yet have would work. She referred to the statements made by the Chancellor and the Prime Minister about their ambition over the long term to scrap National Insurance as a ‘double taxation’, pointing out: Labour obviously thinks that talk of abolishing national insurance is a way into the pensioner vote ‘Your NICs record helps determine your entitlement to the state pension. So if that’s scrapped, how will people know what pension they will get?’  Work and

It’s official: weight-loss wonder drug Wegovy (also marketed as Ozempic) makes US celebrities shrink but makes the Danish economy grow. This week, the most amusing Oscars clickbait featured not the typical best- and worst-dressed actors, but instead celebrities who have experienced recent miraculous weight loss. The Daily Mail helpfully split this award category between those confirmed to have taken Wegovy, and others who have merely inexplicably and rapidly shrunk. Their collective weight loss is Denmark’s economic gain: this week, Denmark’s statistics agency confirmed the Danish economy grew 1.8 per cent in 2023 – but without the contribution of Wegovy’s owner, Novo Nordisk, it would instead have shrunk 0.1 per cent. Free market

Is Jeremy Hunt’s ‘British Isa’ worth having? The new £5,000 tax-free allowance for UK equity investment comes on top of the existing annual £20,000 Isa limit, so on the general principle that it makes sense to maximise tax-efficient savings, the answer might be yes. But will it achieve the Chancellor’s aim of allowing patriotic savers to buy into the growth of ‘the most promising UK businesses’ while supporting them with capital to expand? To that, I’m afraid, the answer from the professionals has been a resounding no. UK stock-market performance has been so limp in recent years that UK-only share-buyers would have reaped barely a third of the returns earned

Is the UK already out of recession? It’s a question that won’t be confirmed for months, but this morning’s update from the Office for National Statistics offers a positive hint that Britain’s economic contraction will be confined to 2023. According to the ONS, the economy grew by 0.2 per cent in January – thanks largely to improved services output, which rose by 0.2 per cent, and a bounceback in wholesale and retail trade. Construction output also turned a corner, growing by 1.1 per cent after three consecutive months of contractions. Is this the spectacular economic turnaround that Britain has been waiting for? GDP still fell 0.1 per cent in the

Is the Bank of England about to cut interest rates? Today’s labour market statistics might just give them the room to do so. The latest data, released by the Office for National Statistics (ONS) this morning, shows that the number of payrolled employees is up, the unemployment rate is up, vacancies are down and pay growth is slowing. But is it enough? Job vacancies fell for the 20th consecutive time between December and February – and by twice as in last month’s release. Vacancies were down to 908,000 on the quarter, a decrease of 43,000 – though they remain far higher than pre-lockdown levels. More data released yesterday by the

Inflation and the cost-of-living crisis dominates the agenda in Turkey, ahead of local elections at the end of March. Year-on-year inflation reached 67 per cent in February, according to the Turkish Statistical Institute, breaking a 15-month record and puncturing hopes that high interest rates would put a lid on rapidly increasing prices. For years, president Recep Tayyip Erdogan was a bitter opponent of high interest rates. ‘Interest rates are the reasons, inflation is the result,’ he roared regularly at political rallies, defying traditional economists. He cites Islamic traditions whereby high interest rates amount to usury, to justify his unorthodox monetary policies. Erdogan was a bitter opponent of high interest rates

Could Jeremy Hunt really abolish employee National Insurance (NI)? His additional 2p cut announced in yesterday’s Budget seems to be the start of what the Tories might offer up in their election manifesto. Hunt has now suggested the end goal would be to merge income tax with employee NI, helping to simplify the tax code. The point was further made by Rishi Sunak at the Centre for Policy Studies’ 50th anniversary dinner last night: that it should be the Conservative party’s ‘plan, long term, to end that unfairness’ of taxing income twice. But is this in any way possible? To abolish employee NI comes with a price tag of roughly

Whilst Jeremy Hunt’s cut to National Insurance may grab the headlines, the real story of today’s Budget was hidden in the official forecasts accompanying it. These forecasts point to a disaster for Britain’s labour force. The UK already had one of the worst post-lockdown workforce recoveries in the world, with a record 2.8 million people off work due to long-term sickness. But today the OBR said things are only going to get worse. Spending on welfare now makes up the second biggest portion of your tax bill –  narrowly pipped to the post by our NHS The OBR gave the Chancellor credit for expanding childcare provision, attempting to reform welfare

Slashing Whitehall waste is a pledge that brings to mind Augustine’s prayer for the Lord to make him virtuous – but not yet. It is something repeatedly promised by governments, but rarely delivered. Here we are again, days out from the final Budget before voters go to the polls in a general election, and Jeremy Hunt is announcing a crackdown on bureaucracy in the public sector. He intends to reduce the civil service headcount by 66,000, returning it to pre-pandemic levels. Do we need a Department for Culture, Media and Sport? Voters are likely to feel cynical. Britain’s public sector is riddled with entitlement and waste at levels described by the Chancellor as

When is the government going to stop pretending that chopping down trees in North American forests and shipping them across the Atlantic to burn them in UK power stations is a zero-carbon form of energy? The environmental-friendliness of Drax power station in North Yorkshire has been called into question yet again this week after BBC Panaroma investigation reported that some of the woodchips being burned there have allegedly been sourced from established ‘old growth’ forests in Canada rather than recent plantations. Drax has not commented on those specific allegations, but the investigation has thrown the issue back into the spotlight. How and where the wood is sourced has a dramatic

In a week’s time, Jeremy Hunt will stand up at the despatch box and unveil the Spring Budget. This event has long been seen by Tory MPs as a key marker ahead of the general election. It is the last big set piece event in the calendar between now and the short campaign. Ministers, too, have raised expectations about what could be in it – with Rishi Sunak telling The Spectator in December to expect a ‘gear shift’ in taxation. However, the problem for Sunak and Hunt is that they are likely to disappoint. Despite the government recouping record revenues in January, the public finances are not as healthy as