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Ronald Reagan famously asked voters: ‘are you better off than you were four years ago?’ At the next election, the Tories face a public thinking over the last fourteen years. Chancellor Jeremy Hunt gave a speech today defending the UK’s record tax levels and attacking Labour’s economic plans. But who should we trust more on tax? Fraser Nelson and James Heale join Katy Balls to discuss. Produced by Megan McElroy and Patrick Gibbons.
Featured economics news and data.
Another day, another all time high. As the week closed, the FTSE 100 index hit 8,433 — the highest level it has ever reached — and this is turning into a regular occurrence. The FTSE has now hit 11 all-time-highs over the last month, and it is close to equalling the record set way back in 1984 of 12 all-time-highs within a single four-week period. Add in a mega-bid and better than expected growth figures and it may look as if the UK is booming again. Well, perhaps. In reality, however, all that is happening is that the FTSE 100 is finally recovering from two decades of miserable under-performance —
Londoners don’t agree on much, but on one subject many of the capital’s residents are united: Amy Lamé, the mayor’s ‘night czar’, is a colossal waste of money. Whether you’re on the left or right, a cyclist or motorist, religious or not, it’s hard to defend her £120,000-a-year salary for ‘ensuring London thrives as a 24 hour city’. But Lamé isn’t the only beneficiary of the Mayor of London Sadiq Khan’s largesse: more than 1,100 staff working for various public sector organisations in the capital, including City Hall, Transport for London (TfL) and the Metropolitan Police, were paid more than £100,000 last year. Khan certainly thinks these fat cats are worth
Is Britain’s economy ‘turning a corner’? Rishi Sunak thinks so, but convincing his fellow MPs and the public is going to be difficult. At the ‘SME Connect’ conference in Warwickshire this morning, the Prime Minister spoke about the ‘tough couple of years’ the country has been through, insisting the UK economy is now heading ‘in the right direction.’ Perhaps there is more to come in the way of tax cuts On several metrics, Sunak is right. January’s growth figures, coming in at 0.2 per cent, suggest the UK is likely to consign its technical recession to the end of last year. Forecasters expect April will return the inflation rate back to the
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
Ask any group of consumers to name the UK’s most enduringly successful mutual enterprise and they will probably point to the Co-op or the Nationwide building society. But there’s a cognoscenti who will come up with a different answer: a business that operates from giant sheds beside a railway track at Stevenage. It is the Wine Society, now celebrating its 150th year. Back in 1874, a quantity of Portuguese wine lay in the cellars of the Royal Albert Hall in Kensington, shipped there for an International Exhibition but overlooked and unsold. After the Portuguese shippers complained, a series of tasting lunches was organised – by Major General Henry Scott, one
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
St James’s Place is a posh London cul-de-sac that will forever be associated with the late Jacob Rothschild, who based his financial empire there and restored the stately Spencer House across the road. One of his enterprises, J. Rothschild Assurance, was renamed St James’s Place Capital in 1997 and ended up majority owned by Lloyds Banking Group – until Lloyds sold it to stockmarket investors in 2013. Combining fund management, financial advice and life insurance, SJP (as it’s known) joined the FTSE 100 a year later. Though its headquarters are now in Cirencester, the poshness of its name and origin helped polish SJP’s upmarket cachet. But not any more: faced
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
Jeremy Hunt’s Budget was short on surprises. The Chancellor cut National Insurance for workers by another 2p in a bid to address the Tories’ poll slide ahead of the upcoming general election. Hunt also announced a shake-up to child benefit charges, said that ‘non-dom’ tax status would be scrapped and said that alcohol and fuel duty would be frozen. Here are the Budget announcements in full: Follow all the analysis as it unfolded on our live blog:
Long gone are the days when you had a job for life. But, for young folks especially, it seems we don’t just do one job in a week. The strivers are scrambling for second jobs. Though it is hard to ascertain exact numbers through official statistics, some surveys suggest more than two-thirds of British Gen Zs are now supplementing their income with side hustles. A side gig could well be the most sensible way to improve your prospects Some of this is out of necessity, thanks to stagnant wages and rising living costs. But it is also being driven by attitude changes, and a desire to choose more purpose and freedom in
Anyone expecting Jeremy Hunt to unleash the animal spirits of wealth creators in his Budget today cannot have been paying much attention to the Treasury’s pre-briefing. Two per cent off National Insurance is likely to be as good as it gets, we are told. Perhaps a white rabbit will be pulled from a hat during the speech itself but more likely the animal in question will be a sloth. Such a creature – steady and dependable but resolutely undynamic – would be emblematic of the condition of what pundits used to term ‘UK plc’. For Britain under Hunt does not have an economy so much as a ‘meh-conomy’. While talk
This Budget is probably Jeremy Hunt’s last fiscal event before the election, and the Chancellor will want to at least set a fair wind for the Conservatives to head into polling day. That means giving voters a sense that sticking with the Tories is the safer option, offering them giveaways on tax and the sense that more tax cuts might be to come – as well as avoiding the sort of post-Budget rows that can define a government in all the wrong ways. Hunt is expected to cut National Insurance by a further two percentage points, on top of the 2 point cut he made in the autumn. This is
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
We must be bolder in seizing frozen Russian assets, writes the Prime Minister in a Sunday newspaper. ‘That starts with taking the billions in interest these assets are collecting and sending it to Ukraine.’ Can that really be done? Having consulted international legal opinion, here’s my summary. The principle of ‘sovereign state immunity’ doesn’t prevent the freezing of state assets, but confiscating them would create a very dangerous precedent, namely that no state’s reserves would be secure in anyone else’s banking system. But in a conflict where the aggressor has clearly breached international law, as Russia has in Ukraine, the wrongfully harmed state has a right to restitution; and the
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
Does Jeremy Hunt have the cash to spend on tax cuts in his spring Budget next week? That’s the billion pound question that the Institute for Fiscal Studies (IFS) focused on during its pre-Budget briefing this morning, hosted by Director Paul Johnson and Deputy Director Carl Emmerson. As Ross Clark notes on Coffee House, the latest rumours suggest that the Chancellor is pivoting away from an income tax, inheritance tax or stamp duty cut (the last of which is considered most desirable by economists, including those over at the IFS, due to how badly it distorts the housing market and weighs down growth). Instead he may be opting for another penny
