Economy

That Rishi Sunak chose to announce his decision to give public sector workers a 5 to 7 per cent pay rise with a press conference tells you everything you need to know. There is no requirement for him to be anywhere near a pay announcement: indeed, it was chief secretary to the Treasury John Glen who made the statement in the Commons. But Sunak clearly thinks there is a big political win here for him in dealing with the ongoing strikes. Sunak confirmed in his opening statement that ‘we are accepting the headline recommendations of the Pay Review bodies in full but we will not fund them by borrowing more,

What will Liz Truss’s legacy be? The obvious answer is her 49-day stint in Downing Street. But she is determined not to settle for that. Today in Westminster, she oversaw the formal launch of her new project, The Growth Commission, dedicated to spreading the message she tried to convey as prime minister: the importance of growing the size of the economy. Truss can take some credit for shifting the national conversation towards a more pro-growth agenda Today’s launch was attended by Truss, who is stressed to have convened the commission but holds no formal role within it. The Telegraph’s Liam Halligan chaired a panel of four members of the commission:

Mortgage costs have reached a 15-year high today, with the average two-year fixed deal hitting 6.66 per cent – the highest level since the summer of the 2008 financial crash. But today’s mortgage news is being pegged to far more recent history, as average deals just topped their peak from last autumn, when Liz Truss’s mini-Budget sent interest rate expectations soaring, and mortgage offers along with them. Truss’s premiership came to an end because so many numbers were spiralling upward, including the cost of government borrowing, mortgage repayments, and the number of Tory MPs who – amid all the chaos – were simply not going to take instructions from her

Anyone fancy having a flutter with 5 per cent of their pension fund on unlisted start-ups? It is not necessarily a bad idea – it is only 5 per cent, after all. As part of a portfolio which is balanced by more bread and butter investments it need not be reckless. At best, you might just pick a future Microsoft or Google – and at worst, well, the other 95 per cent of your investments could smother your losses. But it seems that we are not really going to have the choice – at least not those of us who have defined contribution pension funds. The Chancellor, Jeremy Hunt, used

Are house prices falling? The Halifax house price index, published today, is finally showing a significant year on year fall: average prices are 2.6 per cent down in the 12 months to June. This is the biggest annual fall shown by the index in 12 years. But it is still hard to depict what is happening in the housing market as a bloodbath. The finer print shows that prices are actually up over the last quarter, by 0.3 per cent – with the 12 monthly figure pulled down by what happened by last autumn. As has happens so often in the housing market, predictions of deep gloom (or deep joy, if you

Water, water everywhere in the media this week, as the Thames Water utility – crippled by debt and shamed by Niagaras of raw sewage – reached the brink of collapse. Anticipating government intervention if Thames’s owners cannot inject sufficient new equity, pundits decried the 1989 privatisation of English and Welsh water – which passed from conventional shareholders to private equity and foreign sovereign wealth that combined to extract £72 billion of dividends while loading the industry with £60 billion of debt and allegedly denying it new reservoirs and leak-free pipes. Put like that, the fate of water – a resource so natural that some say it should be immune from

When the average two-year fixed mortgage hit 6 per cent last month, panic started to set in. For the 1.3 million homeowners set to renew before Christmas, many would now be facing interest payments three times higher than what they had originally paid. Chancellor Jeremy Hunt immediately called a meeting with lenders and customer representatives to formalise safety nets, including repayment holidays and moving people over to interest-only payments.  But this was always set to be the start – not the end – of mortgage pain. Today we learn from Moneyfacts that the average five-year fixed-rate mortgage has also now passed 6 per cent.  The last time five-year fixed rates

Bridget Phillipson was appointed Labour’s shadow education secretary in November 2021. After 18 months in the role, she has now finally unveiled Labour’s ambitious new idea to help tackle the teacher retention and recruitment crisis: use the tax raid on private school fees to fund a £2,400 welcome bonus to every teacher who has completed their two years of training. This is a classic case of copying someone’s homework, except – no surprises – it wasn’t very good the first time round. The Conservatives have already increased the starting salaries of newly-qualified teachers to £30,000. Teaching unions have already overwhelmingly voted to reject a one-off payment. The government has already tried giving bonuses to maths teachers,

The Bank of England was made independent to take monetary policy away from flighty politicians who are slaves to expediency and fashionable sound bites. Instead, central bankers imbued with objectivity, prudence and, most of all, economic expertise would be in charge. But when it comes to climate change and net zero, the Bank has shown that poor judgment is certainly not exclusive to elected officials. Only a month ago, Andrew Bailey, Governor of the Bank of England was touting net zero as a growth elixir. ‘The transition to net zero is a major structural change that needs substantial investment and can over quite a prolonged transition period help to raise

Thames Water appears to be in trouble. The company, which has billions in debt, is in talks with the Treasury about a possible bailout. We may soon be adding the firm, which serves one in four Brits, to the list of victims of rising interest rates. ‘Victim,’ in this case, is perhaps the wrong word. It’s hard to feel sorry for a company that has been relying on ultra-low rates to keep itself afloat, racking up £14 billion worth of debt and now severely struggling to service it. Financial mismanagement is just one of a series of accusations levelled against the company. Its problems have been in the spotlight for years, especially

With every passing week it becomes clearer that the British economy is in crisis. Not the ‘here today, gone tomorrow’ sort of crisis that bedevils the financial markets, but rather the deep-seated, slow-burning crisis of a progressive, life-threatening disease. ‘I am totally 100 per cent on it, and it is going to be okay and we are going to get through this,’ the Prime Minister promised last week. If so, he’s got his work cut out. The economic performance of the UK economy has deteriorated sharply over the last decade-and-a-half compared to its performance beforehand. On key measures, such as output per hour worked, the UK was a poor performer even before the

After a bruising week, perhaps Andrew Bailey could take some solace in Rishi Sunak’s interview with Laura Kuenssberg this weekend. For a start, the Prime Minister threw his support behind the Bank of England governor, after senior figures within the Conservative party accused Bailey of being ‘asleep at the wheel’. But it was also a reminder that, no matter how bad things may seem at Threadneedle Street, they’re probably worse in No. 10. When Bailey hits out at wages, it looks like another desperate attempt to deflect blame away from his own institution Sunak is facing demands for proof that his plan for our economic recovery will work at a

The Monetary Policy Committee has voted seven to two to take interest rates to 5 per cent, a 0.5 point increase. Its thirteenth rise in a row takes rates to their highest level in 15 years, and is being described as a ‘shock’ increase, brought in as a response to the rise in core inflation on the year in May, which has hit 7.1 per cent. The horror of inflation is that it gobbles up your income and your savings After this week’s dire inflation update, the question wasn’t whether the Monetary Policy Committee would raise interest rates, but by how much. After last week’s labour market update, which saw nominal wages

The Supreme Court is hearing a case today that, if successful, could mean the end of new fossil fuel projects in the UK on climate grounds.  The justices will decide whether to reverse approval for oil extraction at Horse Hill based on downstream emissions from the use of the oil. Whatever the outcome, this case is a damning indictment of the UK’s absurd climate laws.  This is a long-running affair. Horse Hill was first test drilled in 2012 and permitted by Surrey County Council to expand to a commercial scale in 2019. This is the teeth of opposition from local campaigners, including the Weald Action Group, Friends of the Earth, and