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Ross Clark

Borrowing is spiralling out of control

There really is no good news for Rachel Reeves as she prepares her second Budget. This morning’s borrowing figures are not just bad; they hint at a sense of hopelessness, that Britain is sliding inexorably towards a very deep fiscal crisis. This is yet another fiscal black hole for Reeves to fill, along with another about to be created by the OBR In August, the government had to borrow £18 billion, £3.5 billion more than in August 2024. This is in spite of £40 billion worth of tax rises (or rather tax rises which were hoped to raise an extra £40 billion) in last year’s Budget. Government receipts are indeed up

Spotlight

Featured economics news and data.

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

Rachel Reeves has crushed confidence in Britain

It doesn’t look like the Chancellor will hit her target for turning the UK into the fastest-growing economy in the G7. Nor has ‘stability’ unlocked a wave of foreign investment. Instead, it has plunged. As for Rachel Reeves’s fiscal rules, they have been missed almost every month since they were announced. Now there is more bad news for the Chancellor. Business confidence has collapsed to an all-time low. It is not hard to work out why the mood is so bad Leaving the EU’s single market was tough for Britain; so was the financial crash of 2008 and 2009. The pandemic, too, was never going to make business owners feel

Ross Clark

Trump hasn’t won the trade war

Maybe Trump doesn’t always chicken out after all. Rapid trade deals with the UK, Japan, the EU and others in recent weeks may have given the impression that the trade war was essentially over. Today, though, comes Trump’s Ardennes offensive, with immediate tariffs of 35 per cent announced for Canada. Other countries have been given a week to prepare for steep increases: India will be subject to 25 per cent tariffs, Taiwan 20 per cent and Switzerland – far from neutral in this particular conflict – 39 per cent. Those who insist Trump has a very clever strategy and is winning tend also to be people who, in any other

In defence of private equity

Spectator readers will not need me to tell them the meaning of the Latin ‘cura terrae’. Taking care of the Earth was one of central arguments of last week’s front-page feature against private equity. But Cura Terrae also happens to be the name of a business based in Sheffield. This business is an environmental services provider dedicated to helping preserve the world and the natural resources that we all love and cherish. One of its particular strengths is its water services division, where its team of specialists monitor water flow and quality across the UK. By doing so, they help to protect our rivers from the kind of water pollution

Martin Vander Weyer

Is Len McCluskey a Manchurian candidate for the Tory party?

At Stansted on Monday, a currency kiosk offered me €270 for £300. ‘Wrong way round,’ I said, having swiftly figured €300 for £270 would represent an exchange rate of 1.11, close enough to the current market level of 1.14. ‘Nah, mate, airport rate, innit?’ This week’s first lesson is never buy euros at the airport; but the second lesson is that wherever you buy them – especially if you have, say, a Mediterranean superyacht charter in prospect – you’re in for a painfully expensive summer. Back in March you could have had €1.20 for your pound. Since then sentiment towards sterling has been soured by expectations of bad economic news

Michael Simmons

Trump’s tariffs are taming China

Stockholm This week, the fate of the global economy could have been decided over a Mongolian barbecue in a Stockholm tourist trap. On Tuesday, just 50 yards from Sweden’s seat of government, Rosenbad – where the US Treasury Secretary Scott Bessent and the Chinese Vice Premier He Lifeng had been wrangling over trade negotiations – the Chinese delegation suddenly exited the talks and headed for lunch near the Mongolian buffet place, where they had eaten the day before. Its windows were covered up and a sign announced it would be closed for three days for a ‘private event’. The Americans stayed behind, making do with salad. China, still the factory

Ross Clark

Has the IMF changed its tune on Brexit?

Given the perilous condition of Britain’s public finances, perhaps we ought to start taking the IMF and its World Economic Outlook a little more seriously. It is not impossible to foresee Rachel Reeves or her successor having to repeat what one of her Labour predecessors, Denis Healey, had to do in 1976: and beg the IMF for an emergency loan. What the IMF thinks of the prospects for the UK economy will be key to what sort of deal she might be able to secure. The IMF has, at least, ceased to make out that Britain is doomed to suffer a self-inflicted, Brexit-generated recession all of its own. On the

Michael Simmons

The US-China trade war is not over yet

Stockholm, Sweden The United States and China have concluded two days of trade negotiations in Stockholm without reaching an agreement to extend the truce in their ongoing trade war. Shortly after the talks ended, US Treasury Secretary Scott Bessent, who led the American delegation, told reporters that any decision to extend the current 12 August deadline – at which point tariffs would revert to 34 per cent – rests solely with President Trump. A meeting between Trump and President Xi Jinping was not on the agenda. The Chinese delegation said both sides had agreed to ‘push’ for such an extension. Bessent, along with Trump’s trade adviser Jamieson Greer, told me

Germany isn’t happy about the EU-US trade deal

The US-EU trade deal has been given a lukewarm reception in Europe. Although the agreement between US president Donald Trump and the president of the European Commission Ursula von der Leyen is merely a framework, rather than a full-trade deal, there are already major concerns on the continent, especially in Germany – a country famously reliant on exports. German chancellor Friedrich Merz did not seem too pleased with the deal, negotiated by his party colleague von der Leyen. ‘I’m not satisfied with the result in the sense that (it was said) this is good as it is,’ Merz stated. ‘Which, in plain terms, means the German economy will suffer significant

Britain needs to embrace crypto with its own Genius Act

In proposing to sell the government’s £5 billion hoard of Bitcoin – accumulated from confiscating the proceeds of crime – Rachel Reeves has earned some keen supporters. But the Chancellor should resist the temptation. It wouldn’t be an error quite on the scale of Gordon Brown’s sale of half of Britain’s gold reserves in 1999 – that occurred right at the bottom of a bear market in gold, while Bitcoin in recent weeks has been trading at record highs. Nevertheless, Reeves would be missing out on the opportunity to build a Strategic Crypto Reserve which could turn out to be many times more valuable in the future. By backing cryptocurrencies rather than disposing

William Moore

Soul suckers of private equity, Douglas Murray on Epstein & are literary sequels ‘lazy’?

44 min listen

First up: how private equity is ruining Britain Gus Carter writes in the magazine this week about how foreign private equity (PE) is hollowing out Britain – PE now owns everything from a Pret a Manger to a Dorset village, and even the number of children’s homes owned by PE has doubled in the last five years. This ‘gives capitalism a bad name’, he writes. Perhaps the most symbolic example is in the water industry, with water firms now squeezed for money and saddled with debt. British water firms now have a debt-to-equity ratio of 70%, compared to just 4% in 1991. Britain’s desperation for foreign money has, quite literally,

Martin Vander Weyer

A new water regime must still reward private investors

The weekend’s torrential Yorkshire rain amid a hosepipe ban offered a handy metaphor for the chaos that has befallen the privatised UK water industry. Sir Jon Cunliffe’s Independent Water Commission report – aiming for a ‘fundamental reset’ to restore public confidence, clean our waterways and ensure future supply – is welcome for the clarity of its central conclusion: that unfit-for-purpose Ofwat and a jumble of other regulators should be replaced by a single body with more teeth and comprehensive oversight of the sector. So far, so good. Cunliffe – a veteran of the Treasury, the Bank of England and Brussels – can also be applauded for his bureaucratic cunning in

Michael Simmons

Britain is broke

Britain is continuing to chuck billions onto our mounting pile of debt. Figures just released by the Office for National Statistics (ONS) show that last month the state had to borrow just under £21 billion. That was £6.6 billion more than in June last year and the second-highest June borrowing total since records began 32 years ago. The ONS confirmed the surge in borrowing was a continuation of the fiscal doom loop this country now finds itself in. ‘The rising costs of providing public services and a jump in the debt interest we have to pay on inflation-linked gilts outweighed increased revenue brought in from tax hikes. Interest due on our debt

A bitcoin windfall won’t save the Chancellor

This weekend, the Sunday Telegraph reported that Rachel Reeves is eyeing a ‘£5 billion bitcoin sale’ to ease the pressure on the public finances. Some commentators have grasped the wrong end of the stick here – these sales could not be used to fill a ‘black hole’ under the current fiscal rules. Others have argued that it would be foolish to dump cryptoassets that may still increase significantly in value. Unfavourable comparisons are inevitably being drawn with Gordon Brown’s sale of gold reserves starting in 1999. But that may be wide of the mark too. So, what to make of all this? Unlike true ‘safe havens’, the price of bitcoin tends to

Can Rachel Reeves be trusted not to bring in a wealth tax?

The government is briefing that Rachel Reeves is ruling out a wealth tax, and won’t surrender to pressure from the left on the Labour backbenches to raid the assets of the rich. It will only accelerate the exodus of the wealthy from the UK, they say. It won’t raise any serious money. And just about every other country that has tried it has had to abandon it. That may reassure a few millionaires anxiously scanning property websites in Dubai and the Caribbean. But there is just one catch: the Chancellor has broken every other promise she has made so far – so why not this one as well?  Reeves will

Michael Simmons

Why Reeves should sell her bitcoin hoards

Deep fried prawn balls, chicken chow mein, crispy shredded beef and a Ponzi scheme could be about to win the Chancellor a decent chunk of her headroom back. If Reeves does press ‘sell’, she will be accused of ‘pulling a Gordon Brown’ As Rachel Reeves starts sketching out her autumn Budget, most of the focus has been on the tax hikes she’ll need if she’s serious about sticking to the ‘ironclad’ fiscal rules she recommitted to just last week. Economists reckon the wafer-thin £9.9 billion margin she left herself at the Spring Statement has already been wiped out and that she’s now staring down a black hole of over £20

Why Putin thinks Trump’s Russia tariffs are a bluff

Moscow’s response to the latest ultimatum issued by Donald Trump last week has been to deploy that most Russian of diplomatic weapons: contemptuous laughter. The US president’s threat to impose draconian sanctions unless Putin ends his invasion of Ukraine within fifty days has been met with the kind of theatrical disdain that would make Chekhov proud. Foreign Minister Sergey Lavrov, never one to miss an opportunity for diplomatic sarcasm, openly sneered at Trump’s intervention on Tuesday. ‘We want to understand what exactly is behind this statement. Fifty days. It used to be 24 hours, and then it became 100 days. Russia has gone through all this and now wants to understand what the

Make the government use KPIs

How do we mend the UK’s broken economy? Fixing UK PLC has outwitted our political leaders, but that’s not surprising. We love the status quo, have an ingrained risk aversion, and our politicians too quickly resort to pickpocketing the electorate with more taxes, and saddling us with debt. What we need are some KPIs, or key performance indicators, to get back on track. KPIs are time-bound goals with clear numerical targets, and critically the person who is responsible for their delivery is identified and on the hook. To enhance transparency, our government’s KPIs should be overlaid with a traffic light system, to squeeze the managerial pips – green for success, amber

Ian Williams

Is China cooking the books on its economy?

A Western financial analyst based in Shanghai once described China’s economic statistics to me as ‘one of greatest works of contemporary Chinese fiction’. Not even the Communist party’s (CCP) own officials believed them. A cottage industry of esoteric techniques developed to try and measure what was really going on, ranging from diesel and electricity demand to the fluctuating levels of the country’s chronic air pollution, car sales, traffic congestion, job postings and construction – even the sale of underwear or pickled vegetables. One enterprising analyst regularly sent spies to Shanghai port to count the ships and throughput of trucks. Questioning the official figures has become increasingly dangerous in the China

Labour will regret bringing in electric car subsidies

This week the British government introduced subsidies for electric vehicles (EVs). But as they have failed to first adopt sensible trade defence measures, this risks Chinese EVs flooding the UK, bringing job losses and data security risks in their wake. Rather than following the example of the US and the European Union, which have adopted tariffs against Chinese EVs to protect automotive jobs, the UK will roll out subsidies for EVs. Each vehicle that qualifies as having a low enough level of carbon emissions in its production will be granted a subsidy of either £1,500 or £3,750. Ministers have so far refused to publish a list of manufacturers who will be eligible,

Michael Simmons

Rachel Reeves’s tax raid is to blame for rising unemployment

Unemployment has hit 4.7 per cent – its highest level for four years after the Chancellor’s taxes on business caused jobs to slump. The figures, published this morning by the Office for National Statistics (ONS), also show payroll jobs down by 178,000 in the 12 months to June and by 41,000 between May and June. The line that Rachel Reeves’ decision – namely her £25 billion employer national insurance tax raid – is hampering the job market is becoming a strong one. Andrew Griffith, shadow business secretary, said: ‘Unemployment is the only thing growing under Labour.’ As Reeves weighs up tax rises likely to fall heavily on businesses to plug