Why the Bank of England must cut interest rates

As the Bank of England’s Monetary Policy Committee (MPC) announces its interest rate decision today it has the chance to reverse the damage caused by its interest rate hikes. Rates have been fixed at 5.25 per cent since last August and the Bank has stubbornly refused to cut them. We’re all paying the price. Those final rate rises were clearly an error The truth is that inflation is lower and has fallen much faster than the Bank used as its justification for raising rates. In August, the Bank’s model indicated that, even with interest rates raised to 5.25 per cent, inflation would be 5 per cent last year. It was

Kate Andrews

Can Labour or the Tories fix the economy?

It’s all but certain that the UK’s exit from recession will be confirmed at the end of this week. Preliminary Q1 data, released on Friday, is expected to how slow and steady growth in the first three months of the year. It is also very likely that inflation will return to the government target of 2 per cent this month, due to Ofgem’s changes to the energy price cap last month and higher energy costs falling out of the data. The return to target may not last – which is one of the reasons hopes for a spring rate cut have been dashed. But all this will help cushion what

Will John Swinney end the SNP’s war on business?

Accepting the leadership of the SNP on Monday, John Swinney said his political priority as Scotland’s seventh First Minister would be the eradication of child poverty. If he is sincere in his desire to achieve this ambition, then Scotland’s economic growth – just 0.2 per cent last year – needs be a great deal better. As soon as Swinney gets his feet under the First Ministerial desk, he must throw open his doors to Scotland’s business leaders and show them the love his party has been withholding for the last decade. Shortly after the SNP won its first Scottish parliamentary election in 2007, new First Minister Alex Salmond fired off

James Kirkup

What Rishi Sunak can learn from Gordon Brown’s golden mistake

Gordon Brown is a historian by education, so he might just appreciate the fickleness of posterity. Over a decade at the Treasury from 1997 to 2007, he did many things that he might believe should be widely remembered. Yet few, if any, of his decisions live as clearly in memory as ‘Gordon Brown sold the gold’. Brown sold the gold. He raided pensions. He put 75p on pensions Exactly 25 years ago, Brown’s Treasury stunned the gold markets by starting to sell of much of the UK’s gold reserves. In total, 395 tonnes of gold were sold over three years, yielding $3.5 billion (£2.8 billion) in revenues. That’s a big number, but

Why Britain is building the world’s most expensive nuclear plant

For over 20 years, Britain effectively gave up on building new nuclear power stations. But that’s changed now Hinkley Point C in Somerset is under construction. When completed it will provide around 7 per cent of the UK’s electricity. Hinkley Point C is set to be the most expensive nuclear power station ever built. In fact, it is more than four times more expensive on a pound-for-megawatt basis than the average nuclear power plant built in South Korea. Even Flamanville 3, a French plant that uses the same reactor (EPR-1750) and built by the same company (EDF), is set to cost at least 25 per cent less. Why has Hinkley Point C

Matthew Lynn

Is Javier Milei’s medicine working?

Javier Milei was taking too many risks. Argentina’s president didn’t have enough political support. And his radical version of free market economics didn’t offer any solutions anyway, especially in a world where the state is more crucial than ever. When Milei won the presidency last year there were plenty of predictions that he would fare as well as Britain’s Liz Truss. And yet, there are signs the medicine is starting to work – and that will be globally significant.   Over the past couple of weeks, the data coming out of Argentina has been far better than anyone expected. This month, inflation is forecast to dip below 10 per cent

Matthew Lynn

The truth about Ireland’s £600 million Brexit ‘bonanza’

Ireland is reaping the benefits of a Brexit bonus to the tune of €700 million (£600 million). It is not hard to understand why hardcore Remainers are gleefully reporting the news that the government in Dublin is collecting huge extra revenues, much of which comes from imposing tariffs on British goods. What is being reported as a ‘Brexit bonanza’ for the Irish isn’t quite what it seems ‘The level of customs duties has effectively doubled in recent years compared to the previous decade, reflecting the transformation of Great Britain into a third country in 2021,’ says the Irish Revenue Commissioners. British companies suffer, and a foreign government makes lots of

Martin Vander Weyer

How Pret ate itself

How bad would it be if Royal Mail’s parent company, International Distributions Services (IDS), were to be taken over by the Czech billionaire Daniel Kretinsky? Our historic postal service is heavily lossmaking, struggling to maintain its universal delivery obligation and at war with its unions: a foreign owner would surely take an axe to it. Kretinsky, who owns almost 28 per cent of stockmarket-listed IDS, has gone back on an assurance that he would not try to take the company private and has tabled a £3.1 billion offer – above the group’s current market value but well below what other shareholders think it is worth. He won’t win with this

Ross Clark

Who will pay the price for the boost in defence spending?

Rishi Sunak’s announcement that the government will increase defence spending to 2.5 per cent of GDP has been warmly welcomed, but how much is it really going to transform the UK’s military? Former armed services minister James Heappey was quick to scotch expectations this morning when he said it wouldn’t necessarily be enough to reverse falls in the size of the Army, Navy or Royal Air Force – the money could quite easily disappear simply in upgrading equipment. Nor is there anything particularly novel about the Prime Minister’s announcement: Boris Johnson made the same promise – to raise defence spending to 2.5 per cent of GDP by by 2030 – at the

Why did it take Rishi Sunak so long to up defence spending?

Britain is putting its defence industry on a ‘war-footing’, the Prime Minister has said, as he vowed to boost spending to 2.5 per cent of GDP by 2030. It was only a matter of time that Rishi Sunak made such an announcement. After all, Russia’s invasion of Ukraine illustrated a simple truth: that the world is more dangerous now than for a generation, and nations will need to increase their defence spending if they want to protect themselves and their interests. Grant Shapps, Penny Mordaunt and Tom Tugendhat had all expounded this view from within government, and now it seems the PM has given his seal of approval. The money

Ross Clark

What happened to the Tory promise to balance the budget?

There is one big reason why a summer general election is unlikely, however tempted the Prime Minister might be to try to take advantage of the first migrant flight to Rwanda. Read between the lines and it is clear that Rishi Sunak and Jeremy Hunt want to hold another ‘fiscal event’ before going to the polls. Nibbling away at a few more taxes, they appear to believe, will give them the best chance of clinging to power, or at least limiting the electoral damage to the Conservatives. They must be hoping that few people will notice the public borrowing figures. This morning it was revealed that last month the government

Elon Musk (Photo: Getty)
Matthew Lynn

Elon Musk doesn’t know how to turn Tesla around

The share price is in freefall. Sales are sliding at an accelerating rate as customers lose interest. The Chinese are moving in, and the brand is tarnished. When Elon Musk unveils the quarterly results for Tesla later today, he will need to convince his shareholders he has a plan to turn the company around. The only trouble is, right now there is not much sign Musk has a clue what to do. Musk is a brilliant entrepreneur. There is no question of that. But he has also spread himself too thinly Tesla’s results this week are expected to be its worst in years. Sales have already fallen by 8 per

Ross Clark

Labour should think twice before taxing pensioners

Labour, according to Rachel Reeves, is now the party of low taxes. She has said she won’t raise income tax, National Insurance, capital gains tax and corporation tax, as well as ruling out a wealth tax. But that still leaves a few options for jacking up taxes, as one of Reeves’ advisers, Sir Edward Troup has hinted. Last week, Troup, a former head of HMRC, was appointed by Reeves to look at efforts to reduce tax avoidance. This is a slightly ill-timed initiative given that Labour is simultaneously trying to play down the case of a particular taxpayer who stands accused of failing to pay capital gains tax on a

Ross Clark

Inflation is down again – but don’t expect interest rates to follow suit

Interest rate cuts are beginning to look like a mirage: the closer we seem to get to them the more they seem to recede into the distance. Bank of England governor Andrew Bailey may have hinted this week that UK rates could soon be cut regardless of what happens in the United States, where strong jobs data is putting off the Federal Reserve from cutting rates, but this morning’s inflation data will not encourage an early cut. While the Consumer Prices Index (CPI) did fall in March, from 3.4 per cent to 3.2 per cent, this was less than the fall which was expected. The rise in road fuel prices

Michael Simmons

Worklessness hits eight-year high

Britain already has the worst post-pandemic workforce recovery in Europe. New figures out today show the problem is getting even worse. The number of those ‘economically inactive’ (not in work or looking for it) rose by a remarkable 150,000 in the last three months to 9.4 million – equivalent to the adult population of Portsmouth and some 850,000 since the first lockdown. Taken as a share of the working-age population, it’s now at an eight-year high – and significantly worse than it was during Covid or its aftermath. What’s driving the worklessness? The biggest single factor is long-term sickness, also at an all-time high. Is this just economic long-Covid, the

Ross Clark

Martin Lewis is wrong about the ‘energy poll tax’

Given that a fair proportion of the UK public seem to want Martin Lewis to be prime minister, the government might well hesitate to dismiss the Money Saving Expert’s latest grumble: that Ofgem’s cap on standing charges is to be jacked up from today – from 53 pence to 60 pence per day in the case of electricity and from 29 pence to 31 pence in the case of gas. This rise comes in spite of the sharp fall in Ofgem’s energy price cap, which should see average annual dual fuel bills fall from £1928 to £1690. Lewis is not the least bit pleased, tweeting that standing charges are ‘an

How Starmer wants to reverse Thatcher’s legacy

Members of Labour’s frontbench have recently fallen over themselves to acclaim Margaret Thatcher. Hot on the heels of Rachel Reeves feting the Iron Lady’s determination to reverse Britain’s decline, David Lammy lauded the woman who defeated his party three times as a ‘visionary leader’. But like Mark Antony’s attitude to Julius Caesar, Reeves and Lammy come to bury Thatcher rather than to praise her. This appropriation of a Conservative icon like Thatcher is highly mischievous Labour’s shadow ministers invoke the ‘Iron Lady’ because they know a certain kind of voter, one Labour needs to help it win power, still goes all of a quiver at the mere mention of her

Fraser Nelson

There’s nothing conservative about the Tories’ free childcare rollout

On Monday, the UK welfare state will expand to cover 15 hours of free childcare for working parents with two-year-olds. In September, this will be extended to infants of nine months or more. Next year, cover doubles to 30 hours. The total cost: £5.3 billion a year. It’s the ‘largest ever expansion of childcare in England’s history,’ says Gillian Keegan, the Education Secretary. This Easter weekend we see the bizarre spectacle of Tories attacking Labour from the left What is conservative about this? Nothing, of course. It pushes up costs and taxes. But the idea, at the time, was to to do this before Labour proposed it. To shoot Labour’s fox.

John Ferry

The SNP’s star economist eviscerates the case for independence

He’s only gone and done it again. Mark Blyth, born in Dundee but now professor of international economics at the prestigious Brown University in the United States – the man who was wooed by the Scottish government to join its economic advisory council in 2021 in the obvious hope he would lend credibility (and maybe a touch of stardust) to its case for secession – has eviscerated the economic arguments for splitting from the UK. What was meant to be a PR triumph for the SNP completely backfired As a quick recap, not long before Blyth took up his role formally advising the Scottish government, video emerged of him criticising

What happened to the post-Brexit free trade deals?

When people talk about the ways the Conservatives have squandered this parliament, and with it their first and best opportunity to demonstrate to voters the benefits of Brexit, they often focus on domestic concerns: the failure to tackle legacy EU red tape, or the lack of progress on levelling up. But one of the biggest disappointments of the past few years must be the United Kingdom’s dismal record on international trade. Time and again the UK has walked away from transformative deals over trivial domestic hang-ups Outside the bloc, Britain ought to have been in a good position to bolster our commercial relationships across the globe, losing the sheer mass