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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 —
Time was when a chancellor had to resign for leaking the Budget – Hugh Dalton famously lost his job after telling a reporter a few details of what he was about to deliver. Dalton assumed it was past the newspaper’s deadline, but he was wrong. Nowadays, it seems to have become customary for chancellors to leak beforehand, just leaving a ‘rabbit in the hat’ for the day itself. Therefore, we should take seriously reports in the Times this morning that Jeremy Hunt has abandoned plans to cut income tax, inheritance tax or stamp duty next week and instead intends to limit himself to a further one pence reduction in National
The Competition and Markets Authority report on the housing sector should be a boost to the Yimby policy machine. It expressed grave concerns about the housing market operating like a cartel, and said that much of this was enabled by the current planning system. The CMA was tasked with looking at the housing market a year ago, because targets are consistently missed, prices are consistently rising, and there are allegations that tactics such as ‘land banking’ are used to drive up profits. The result was a strong indictment of the planning system as it currently stands. The report found that under-staffed planning departments, combined with a veto-heavy system, made getting
Here’s a good wheeze: prod every last inch of your own country, open the taps and become the world’s largest producer of fossil fuels. Then, when other countries start to try to develop their own resources, tell them they mustn’t, for the good of the planet. In other words, make them all dependent on you. That is pretty well what John Kerry, the outgoing US special envoy on climate change, suggested on the BBC’s Today programme this morning. The US is shamelessly using climate change to promote its own industries ‘We do need gas to keep our economies moving but we don’t need to open a whole raft of new
It is of course good news that the Ofgem price cap for a dual fuel household bill will fall from £1,928 to £1,690 from April (that is the bill paid by the average householder). It means that there should be strong downwards pressure on inflation (the Consumer Prices Index) in April. Barring a jolt in inflation in other goods and services or an acceleration in earnings it ought to mean the Bank of England finally has the courage to cut its base rate, probably in May. None of that, though, should distract from the fact that energy prices in Britain remain far too high. For one thing, the huge fall
The good news started with the revelation that last month had produced a surplus of £16.7 billion for the Treasury – double the surplus of the same month last year and a record-breaking amount (in nominal terms) since records began. This has boosted hopes that the Chancellor will be able to offer up more tax cuts in his Spring Budget (though admittedly his headroom to do so still seems to be notably less than the amount he had to play with last autumn to deliver the business tax cuts). Now, as money comes off workers’ tax bills, their energy bills will fall too. This morning Ofgem announced changes to the
It has been a miserable few years for our quality of life. People have gotten used to that sinking feeling every time you read a price tag at the supermarket, receive an electricity bill or – particularly for younger generations – think about someday buying a house.This squeeze comes from prices rising faster than wages, and has resulted in the biggest slump in living standards since records began. According to the Office for Budget Responsibility’s latest forecasts, household incomes will still be 3.5 per cent below pre-pandemic levels over the coming year. The immediate causes of this crisis are well-known. The Bank of England printed too much money during Covid,
A lot has happened over the past 34 years: the Cold War ended, several wars have taken place in the Middle East, a banking collapse occurred, and a global pandemic left millions stuck inside their homes. But one thing remained constant throughout: the bear market – a price drop of 20 per cent or more from the most recent high – in Japanese equities ground on and on relentlessly. After hitting an all time high of 39,915 points on 29 December 1989, the Nikkei 225 which covers the country’s major companies slumped and slumped again. Today, it finally recovered all those losses, setting a fresh all time high. There is
When I read news of a fresh strategic plan for Barclays, I seem to hear a ghostly rustling from the corner cupboard in the living room. Could it be a forlorn protest from the dusty bundle of share certificates that are the last vestiges of my late father’s lifelong service to Barclays from junior clerk to deputy chairman? They were a modest farewell reward – 40 years ago, in the era before mega-bonuses for senior executives – that might once have been swapped for a country cottage but today would barely yield enough to pay for his upcoming centenary dinner. Even the Qatari sheikhs have sold down their Barclays holdings
Jeremy Hunt needed some good news this morning, when the monthly public sector finance update was released by the Office for National Statistics (ONS). Having promised meaningful tax cuts last month – and then rowed back expectations this month – the Chancellor was hoping for a notable surplus and reduction in borrowing to give himself a bit more room within his fiscal rules to cut tax. January delivered. The ONS reports a surplus of £16.7 billion in January 2024 – not only double the surplus of the same month last year, but a record-breaking surplus (in nominal terms) since records began. Receipts jumped up to £111.4 billion – almost £4 billion more
The City of London would be hollowed out. Bankers would have to retrain as burger chefs. And Paris and Frankfurt would emerge as the twin centres of the European financial markets, leaving London as little more than a backwater. Of all the predictions made by some Remainers during Brexit, there was one that kept re-emerging: that financial trading would inevitably move to the other side of the Channel. It’s clear that this doom mongering was overblown. A deal has finally been struck between EU chiefs and the bloc’s member states that will keep the City of London in business for several years to come. According to Politico, following pressure from
The German economy is set to tip back into a technical recession in the first quarter of 2024, according to the Bundesbank. This means it will continue to shrink in the first three months of this year – after contracting last year and registering as the worst-performing major economy in the world. A technical recession is ‘technical’ in the sense that it follows a pretty arbitrary rule of thumb used by economists to identify when an economy is in decline. It was once useful for indicating serious and shocking problems in an economy, but since western economies entered a period of deep stagnation at the turn of the decade it
We’re not cutting interest rates because we think the recession may already be over and we’re not even sure we are in recession anyway. That was the gist of Governor of the Bank of England’s evidence to the House of Commons Treasury Select Committee this morning. Bailey fell back on the traditional excuse of CEOs who get it wrong and send their businesses into a downwards spiral: the weather Andrew Bailey reminded the committee of what happened ten years ago when Britain seemed to be on the verge of a triple dip recession. In the end, revisions of the GDP figures revealed that we had never even entered a double
Maybe the Office for National Statistics should stop seasonally adjusting its data. That is the lesson from today’s retail sales figures, which show a strong rebound in sales volumes of 3.4 per cent in January. All areas of spending were up except clothing, which was down by 1.4 per cent. The overall figures might sound promising, but all they really do is to cancel out December’s fall of 3.3 per cent. Look at the figures for the past three months and sales are pretty flat, falling by 0.2 per cent in that time. The high street is in a stupor, just like the economy as a whole. Why did retail appear
At the start of last year Rishi Sunak made the promise to ‘get the economy growing’ one of his five major pledges. Today he is confronted with headlines that the UK fell into recession at the end of last year, as the Office for National Statistics reported this morning that the economy contracted by 0.3 per cent between October and December 2023. This fall in the fourth quarter followed a fall of (an unrevised) 0.1 per cent in the third quarter. That’s two consecutive quarters of negative growth – the technical definition of recession. Today’s revelation is going to spark debate about what constitutes a recession. The technical definition has been met, but
Happy birthday to me. Today I turn 48. I’m celebrating in an age-appropriate way: a trip to the physio for a stiff shoulder, then publishing some gloomy words about pensions. Being born in 1976 makes me part of what marketers called Generation X. Arguably though, the 1965 to 1980 cohort should be tagged the ‘Forgotten Generation’. We talk and write a lot about generations and their supposed differences, in terms of attitudes and economic experiences. I’ve done my fair share of generation-journalism, but I’m not blind to its failings. I think a lot of those differences are overstated: culturally we all have more in common than the hot tales suggest. And generational commentary
The future trajectory of the Chinese economy is a subject for doctoral theses rather than casual column items. But the advent of the Year of the Dragon, at last weekend’s Lunar New Year, was greeted with such pessimistic commentaries that the natural contrarian should ask whether the consensualists are getting it wrong: maybe the dragon is merely marking a pause before martialling its mighty resources for the next transglobal burst of fire? The negative narrative goes like this. In spite of deflation in consumer prices, Chinese shoppers are frightened of spending. Despite central bank interventions aimed at boosting asset prices, the property market is crashing after the collapse of the
The collapse of the retail chain The Body Shop marks a new low in the sorry tale of Britain’s shops and their struggle for survival. The brand was put into administration by private equity firm Aurelius only a few weeks after it had been acquired from its former owners Natura & Co for £207 million. The demise of The Body Shop could see the loss of its 199 shops across the UK and an uncertain future for nearly 2,000 employees – but sadly it is only the latest in a long line of big retail closures. Only last month, Lloyds Pharmacy entered liquidation owing nearly £300 million to its creditors.
The government had been facing two economic challenges this week, ahead of the by-elections in Kingswood and Wellingborough: the publication of the latest inflation figures and the economic growth figures for the last quarter of 2023. It has just about survived the first challenge. This morning’s update from the Office for National Statistics shows the inflation rate sticking at 4 per cent on the year in January, unchanged from December. This is still double the Bank of England’s inflation target, but it is better than expected news, as economists were predicting an uptick to 4.2 per cent. A combination of factors – including the January sales for home goods and furniture and
Britain’s worklessness crisis is getting worse. This morning the ONS released figures showing that 1.3 million are on unemployment. But that figure masks a welfare crisis that politicians are doing little to address. Unemployment only covers those actually looking for a job – the real problem is how few are. The true benefits figure goes unpublished and is buried in a password protected DWP database. Every three months the database is updated and we track the results on The Spectator data hub. It was updated this morning and shows the number claiming out-of-work benefits has hit some 5.6 million people. The increase is being driven by those in the Universal Credit (workless) category
Has the Labour market cooled down enough for the Bank of England to change its mind on interest rates? Almost certainly not, based on the latest data from the Office for National Statistics, out this morning. The reintroduction of the Labour Force Survey data, which had to be suspended temporarily due to poor and limited feedback, has now been reinstated, showing fewer changes in the labour market than experts were hoping to see. Job vacancies fell for the nineteenth consecutive time – but not by much. Vacancies were down to 932,000 on the quarter – a fall of 26,000, still well above pre-pandemic levels. Despite expectations that the unemployment rate would rise