Economy

During a lull in the pandemic I rented a little flat in Oxford for the academic year I was thrilled to have been offered; then Covid came back, my college all but closed and I made so little use of my lodgings that it would have been cheaper per night to stay in a suite at Le Manoir aux Quat’Saisons. As bills mounted, I learned that modern renting is astonishingly expensive – while for the landlord, I thought, it looked like easy money. So in the next phase of life, I became a buy-to-letter myself – and as I do the maths at the end of the tax year, I’m

Lockdown ended, the economy reopened – and public sector borrowing went up. Provisional figures for 2022/23 released by the Office for National Statistics (ONS) this morning show that the government borrowed £139.2 billion. This is an increase of £18.1 billion on the previous year, when the economy was still being disrupted by Covid. The figure was made much worse by figures for March this year, when the government borrowed £21.5 billion – £16.3 billion more than in March 2022.  A huge surge in borrowing during the pandemic was to be expected. The government was, after all, paying the wages of 9 million people at one stage through the furlough scheme.

‘March madness’ was a tag applied with hindsight to last month’s scare provoked by the unconnected collapses of Silicon Valley Bank and Credit Suisse. Nothing systemic there, said the wise men. But this week began with another rumble, as reputable US institutions, including State Street of Boston and the stockbroker Charles Schwab, reported large deposit outflows, while shares in others dived. Meanwhile, the Bank of England was assessing whether to raise the state guarantee of bank deposits from its current £85,000 to avert social-media panics. But the problem is becoming circular: as interest rates rise, depositors are keener to move money around in search of higher yield. The bigger the

The UK’s labour market is cooling down, slowly. Although unemployment rose from 3.7 per cent to 3.8 per cent, figures published by the Office for National Statistics this morning show that job vacancies have fallen for the ninth consecutive period. They’re now down 47,000 but still stand at over a million. The number of people out of work and not seeking it (economically inactive) fell too, as students started hunting for work. The most startling figures, however, were those for wage growth. They showed that average pay rose 6.6 per cent in the three months to February. Hefty pay raises in normal times – but adjusted for inflation, that’s a

As the battle of the economic forecasts rages on, it’s useful to note that (right now, anyway), the predictions aren’t all that different. The more optimistic scenarios, like the one published by EY ITEM Club today, suggest the UK will see minuscule growth this year but avoid technical recession. The pessimistic scenarios, like the IMF’s latest forecast, are being revised upwards but still show the UK economy experiencing a short and shallow contraction.  The good and bad scenarios are, therefore, both largely within the margin of error –  and all are pretty lousy at that (albeit better than previously expected). Regardless of which proves right, this is shaping up to

How big a deal is long Covid and can it be treated? Opinions range from it being a serious impediment to the health of millions of those who suffered from Covid-19 to a figment in the imagination of the workshy. A study by the University of Oxford of a drug developed by US Pharmaceutical company Axcella Therapeutics may just help to shed some light. The drug, AXA1125, is designed to boost the performance of mitochondria, which generate energy for our cells and control the amount of inflammation in the body. It is believed that long Covid causes fatigue – among other symptoms – by inhibiting the mitochondria.    While a drug to treat

February was a no-growth month, according to the latest update from the Office for National Statistics, published this morning. A rise in construction was offset by a fall in services, resulting in zero headline growth. The strikes are taking their toll. The biggest contribution to the fall in services came from education and public administration, as striking teachers downed tools. Education fell by 1.7 per cent. Meanwhile public administration fell by 1.1 per cent, as ‘this industry also saw industrial action take place within the civil service during February 2023.’ An optimist might note that while the strikes offset economic activity in other sectors, at least there was some growth to point

Three months ago I praised Tony Danker, director general of the Confederation of British Industry, for berating the government over corporate tax rises and skill shortages: at last, I said, a CBI chief con brio. But now he’s been fired following an investigation into his ‘workplace conduct’ and three other CBI staffers have been suspended over other claims, including a rape allegation. The taint is life-threatening: if members flee, the CBI won’t survive. And if it doesn’t, say critics, not much is lost – because as a lobby group for the interests of its dominant large corporate subscribers, the UK’s leading employers’ organisation was already past its sell-by date. Fair

Good news – at least for those who hold faith in economic forecasts. The IMF has just eradicated half the recession it forecast, in January, for Britain. At that point, it expected the UK economy to shrink by 0.6 per cent over 2023 – which would have meant Britain uniquely suffering a recession among advanced nations. Today, in its latest World Economic Outlook, the IMF has revised that down to a fall of 0.3 per cent. Moreover, while the outlook for Britain has improved, for a number of other countries it has worsened, most notable for Germany and Japan. Germany is now also forecast to share our recession, with output

The memory of Nigel Lawson will always be a blessing. He was the embodiment of serious radicalism, a politician who changed Britain for the better – and for good. When I became chancellor, I hung a picture of Nigel behind my desk in No. 11. It was a large photograph of him holding up his red Budget box. It was an image which summed up the intellectual confidence that he brought to the job. But it was also a reminder of the sheer amount of preparation, hard work and attention to detail that he had put in to get the party and the government into a position where it could do

Just when we thought inflationary forces were softening, the price of crude oil has shot up sharply today in response to an announcement by Opec that it will try to reduce production. A barrel of Brent crude, which touched $120 last summer before falling back to $75 last month, reached $85 at one point today. Some analysts expect it to hit $100. Given that the benign forecasts for inflation which shaped Jeremy Hunt’s budget were predicated on a falling oil price, has the case for economic recovery now collapsed? Unfortunately, in spite of the US’s drive towards energy independence in recent years, the world remains depressingly reliant on Opec for

I’ve read Kwasi Kwarteng’s surprisingly positive review of my book, Crack-Up Capitalism. Although it was unexpected to see someone from the libertarian corner being so enthusiastic about what is clearly a critical book, the experience was not new. After my previous book, Globalists: The End of Empire and the Birth of Neoliberalism, was published in 2018, I was startled to find Deirdre McCloskey, a leading classical liberal historian, praising the book as a manual for ‘keeping a liberalism which has made us rich and free.’ Globalists explained how neoliberals wanted to keep decision-making from democratic electorates. I took McCloskey’s praise as a validation of my core thesis. If it’s bracing to see a neoliberal academic

Yesterday’s announcement that the UK has joined the Comprehensive and Progressive Trans-Pacific Partnership brought with it a unique sense of unity within the Conservative party, with very different Tory factions praising the new trade bloc. But yesterday is behind us. Now it’s back to business as usual. Today ushers in the corporation tax hikes that Rishi Sunak first announced as chancellor back in 2021. The rise – from 19 per cent to 25 per cent for the largest companies – is, if anything, more divisive today than it was two years ago, as the decision was fiercely debated during the leadership election last year and then scrapped by Liz Truss