Economy

What does Jeremy Hunt want us to know about the Autumn Statement? The Chancellor is in the final hours of writing the economic announcements for Thursday, and today he had his last Treasury questions in the Commons before he gives his long speech. Hunt has been rolling the pitch more assiduously than an MCC groundsman over the past few weeks, with endless briefings about black holes, tax rises and unpopular spending cuts. Today, he was talking again about how ‘difficult’ things were going to be. He said: ‘Despite the difficulty of the package I will be announcing, I will sadly not be drinking any whisky as I do so.’ Hunt

There is a conundrum at the heart of Jeremy Hunt’s comments leading up to the Autumn Statement. Hunt describes inflation as an ‘​​evil’ that ‘erodes the pound in your pocket’: uncontroversial. So Autumn Statement, he says, has been designed by his Treasury to ‘help the Bank of England bring down inflation.’ But controlling inflation is the Bank of England’s remit, so any action will be indirect. By tightening fiscal policy, Hunt is lifting pressure off the Bank to keep pushing raising interest rates. This will be by design on the part of the Treasury. After Liz Truss and Kwasi Kwarteng’s disastrous mini-Budget, markets were predicting rates headed for over 6

Is the inflationary spike past its peak? That is the obvious reaction to the news that US inflation fell to 7.7 per cent in October, down from 8.2 per cent in September and significantly lower than the 8.0 per cent that markets had been expecting. Clearly, inflation remains high, but US inflation is now lower than at any stage since January. A further couple of months of falls would seem to indicate that, for now, inflation has been tamed. It ought to come as no surprise. The US Federal Reserve has been fighting inflation aggressively all year with interest rates. It is some way ahead of the curve being followed

‘Reparations’, much bandied about at Cop27, is a dangerous word. It speaks of an admission of historic guilt, which no one can deny has a place in public discourse. But its intention is to put a punitive price on guilt itself, rather than to advance collaborative work needed to rectify damage that can be traced back to bad acts, whether committed through greed, prejudice, aggression or ignorance. It says, in short: ‘Don’t send us your supposedly superior expertise and your lectures about how to improve ourselves. Just send cash. And keep sending it until your tortured conscience is assuaged.’ But in relation to climate impacts, the argument over who pays,

We can be grateful for small mercies. 4 November 2022 will go down as the day when a presenter on the Today programme finally challenged a dodgy statistic trying to blame economic collapse on Brexit. The statistic in question was put forward by former Bank of England governor Mark Carney in an interview with the Financial Times last month in which he said: ‘Put it this way, in 2016 the British economy was 90 per cent the size of Germany’s. Now it is less than 70 per cent.’     Was Carney’s ultra-loose monetary policy not part of the cause of today’s inflationary environment? Mishal Husain, to her credit, put this to Carney

Alongside a rather defensive interest rate hike today, the Bank of England unveiled some alarming forecasts for economic growth. The BoE predicts the economy will be in ‘recession for a long period’ – until mid-2024 – with inflation peaking around 11 per cent.  While the Bank is predicting that the recession will be shallower than other contractions, we are looking at the longest recession on record. The Bank thinks recession is already underway (the economy contracted by 0.3 per cent in August –we will get September’s figures next week) and will last for two years. The driving factors for economic contraction, the Bank thinks, will be ‘high energy prices and materially tighter

There is no such thing as free money. This was learned the hard way last month, when investors made clear after Liz Truss’s mini-Budget that the era of cheap money was over. Mass borrowing for day-to-day spending was going to have a big premium attached: a bill so large that no government would want to pay. Rishi Sunak understood this delicate dynamic, and said so many times over the summer. His willingness to admit the truth – that the government’s many promises can’t be delivered for free – is what, eventually, landed him in No. 10. But now in power, Sunak and his chancellor Jeremy Hunt risk making another ‘easy

So much for those ‘stranded assets’ which former Bank of England governor Mark Carney and many others tried to warn us about. It wasn’t long ago that climate activists were urging the world to dump shares in oil companies, not just because we should want to punish them for climate change but because, they said, oil companies’ fortunes were on a downward trajectory as the world turned green. ‘The exposure of UK investors, including insurance companies, to these shifts is potentially huge,’ Carney said in 2015. ‘Once climate change becomes a defining issue for financial stability, it may already be too late.’ But that’s not how it looked in BP’s boardroom

Britain’s economic problems can, of course, be laid at the door of Brexit. We know this because it was asserted on a BBC podcast which went viral over the weekend – and no one would question the BBC’s objectivity. But maybe there ought just to be a scintilla of doubt in the heads of the staunchest remainers given this morning’s news that eurozone inflation has reached 10.7 per cent – even higher than Britain’s latest CPI figure of 10.1 per cent. Markets had been expecting Eurozone inflation to stay a little below the 10 per cent mark. Far from Britain parting off from the rest of Europe and entering a

Rishi Sunak deserves one of those ‘climate champion’ badges they hand out at primary schools. Why? Because he is not going to fly to the COP27 summit in Egypt – thereby saving 1.65 tonnes of carbon emissions, according to the World Land Trust’s carbon calculator. So what if Ed Miliband thinks it is a failure of leadership? There is no point in any UK Prime Minister travelling to any more of these summits when the world’s largest carbon emitters have made it perfectly plain that they have no intention of copying Britain’s example. They will not be putting themselves under legal commitment to eliminate net carbon emissions by 2050 or any

Given the swift defenestration of his predecessor after her mini-Budget panicked the markets, it is not surprising that Rishi Sunak has delayed the Treasury’s autumn statement until 17 November. No set of fiscal plans will satisfy everyone, but markets and public opinion do seem to be especially sensitive to changes in fiscal policy at present. And there’s this: left-leaning thinktank the Resolution Foundation this morning said delaying the statement for just two weeks will reduce the apparent black hole in the public finances as the cost of government borrowing comes down. The two-week delay could create the illusion of an extra £15 billion in the government’s coffers (or rather £15

Let’s hope Tuesday’s partial eclipse of the sun was a good omen for the return of Rishi Sunak to Downing Street, this time as Prime Minister. Understandably, he looked more earnest than triumphant. Business leaders and financial markets gave him a positive welcome but – understandably also after months of turmoil, with huge challenges ahead – rather a tentative one. Ten-year gilt yields dropped from a panic-driven 4.5 per cent to a still worried 3.8 per cent, double their recent lows; the pound blipped up, then settled back to its recent benchmark of $1.13. A ‘dullness dividend’ is what money men are hoping for, we’re told, after Johnson’s narcissistic inattention