Money

Happy Friday: the economy is growing. After two consecutive months of no growth, GDP picked up in August, rising by 0.2 per cent. Production and construction output finally turned around, growing 0.5 per cent and 0.4 per cent respectively, after contracting in July by 0.7 per cent and 0.4 per cent. Services output grew by 0.1 per cent, with the biggest contributions in the three months to August coming from professional, scientific and technical activities and from information and communication sectors.  Despite growth forecasts being revised upwards throughout the year, the news today is welcome relief for those who started to fear that growth in the UK had flatlined. Still,

It could be 30 per cent. Or 35 per cent? Or perhaps 39 per cent? Heck, who knows, if Rachel Reeves wants to keep the accountants on their toes, perhaps 39.657 per cent. The Treasury is, according to the latest leaks to the Guardian, looking at an increase in Capital Gains Tax as it scrabbles around for tax rises to fund the Chancellor’s spending plans, while not putting up the amount ordinary people are paying. The trouble is, whatever number she picks it is not going to work – and Rachel Reeves is fast gaining a reputation as a shambolic Chancellor. The list of failed tax rises from the new government

At Prime Minister’s Questions this afternoon, Rishi Sunak took a technical turn. Why is Rachel Reeves considering changing the fiscal rules, he asked the Prime Minister, when just last year she said doing so would be ‘tantamount to fiddling the figures.’ No clear answer followed.  The wisdom during the general election was that borrowing more money – to finance Labour or Tory spending promises – was simply not an option. No one dared to propose anything resembling Liz Truss’s mini-budget saga, which saw her attempt to borrow £100 billion to limit energy price rises for consumers.  Instead, the parties said they would make good on their spending promises by going

Water companies have sweated the assets they were handed upon privatisation in the late 1980s. They have failed to invest properly, and have regarded fines for sewage spills as a business cost, to be balanced against the price of investment, rather than as a deterrent. They have, as Ofwat chief executive David Black told the Today programme this morning, blamed the weather rather than their own failures. Sewage spills more than doubled last year All this is true. Even so, is what the water industry really needs at the moment an order to return £158 million to customers through lower bills in 2025/26? That is what Ofwat has just ordered the

Business confidence has plummeted back to the levels last seen in the wake of Liz Truss’s unfortunate mini-budget. Hiring has slowed down as employers worry about all the new rights Labour is about to award their staff. Consumer confidence has fallen, as people worry about the tax rises that will be imposed in the ‘Horror Budget’ set for the end of the month. And the economy, which was growing at a decent clip when the Conservatives left office, has now stalled, with zero growth in the latest quarter. The new Chancellor Rachel Reeves was facing a spluttering economy. But, hey, never mind. It turns out that the Bank of England

Jeremy Hunt is one of the few Tories willing to take the fight to Labour while the Conservative leadership contest drones on. The shadow chancellor gave an on-stage interview at party conference in Birmingham this morning where he continued to attack Chancellor Rachel Reeves’ ‘£22 billion black hole’ narrative. Hunt suggested that not even Labour MPs and members believed that claim, which was why they were having such a big row over the winter fuel payment. ‘We were trounced at the election,’ Hunt said Hunt also warned that Labour was in danger of making decisions based on its own ‘propaganda’, telling Daniel Finkelstein: ‘My worry is that Labour believes its

Russia’s spending on its war in Ukraine continues to grow. Somehow, despite tightening sanctions and increased global isolation, two-and-a-half-years in to the conflict, it appears Moscow can continue to splash the cash on its army – for now. Spending on president Vladimir Putin’s military is set to increase by more than a quarter to 13.3 trillion roubles (£107 billion) next year, according to a draft of the Russian state budget for 2025 revealed this week. This colossal sum – which is nearly double the 6.4 trillion roubles (£52 billion) spent last year – is roughly twice the size of the amount spent by Britain on its own defence. Russia’s government

China’s leaders and economic policymakers – who have been optimistic and confident about the economy for years – are clearly spooked.  Just two weeks ago, Chinese state media was happily insisting that the country was experiencing ‘stable economic growth’. China requires a major rethink when it comes to the economy, something which may be politically impossible for a Leninist government Yet in the last week, Beijing has announced and is expected to approve over £319 billion in new fiscal measures – the biggest monetary policy stimulus since the pandemic. The move is a clear acknowledgement that China has a weak economy with an array of systemic economic and social problems. In another

It takes something when even the Guardian is warning you that your tax rises might end up costing more than they raise in revenue. The paper is reporting today that Treasury officials are becoming worried that the Office for Budgetary Responsibility (OBR) will conclude that plans to abolish non-dom status and its associated loopholes will persuade so many rich individuals to leave the country that, even with higher taxes, the government will be the net loser. If that is what the OBR concludes it will blow a hole in Rachel Reeves’ budget next month. Ending non-dom status was one of the handful of planned tax rises which the government was prepared to

The OECD’s interim Economic Outlook report has landed this morning and its forecast for the UK has been revised significantly upwards. Having predicted in May that the economy would grow by 0.4 per cent this year, the policy organisation now expects the economy to grow by 1.1 per cent. This lifts the UK from the bottom of the pack of advanced economies and ties it in second place – alongside France and Canada – for the fastest growth in the G7. The news comes as the OECD declares that the global economy is ‘turning a corner’ (the name of today’s report), as global GDP looks set to ‘stabilise’ at 3.2 per

It wasn’t long ago that a Conservative government was congratulating itself for achieving the lowest unemployment figures in half a century. This won’t wash any more, since the wider picture has become clear: while official unemployment figures remain low, figures for ‘economic inactivity’ have seen a sharp rise. We have 9.4 million of working age who are economically inactive – a number that has increased by one million since before the pandemic. It is just that only a small proportion of them show up in the unemployment figures. Many of the remainder – 2.8 million – are on long-term sickness benefits, a number that has risen by 700,000 since the

It is not hard to imagine what will be in Rachel Reeves’ ‘industrial strategy’. There will be lots of ‘green industries’, along with plenty of ‘cutting-edge technologies’, all designed to nurture ‘national champions’ in the ‘sectors of the future’. And presumably Lord Alli, the Labour donor who has been footing the bill for Keir Starmer’s wardrobe, will be put in charge of overseeing all the details. Alongside the tax rises in the Budget planned for next month, the Chancellor’s promise of a full-blown industrial strategy is a troubling prospect. ‘Around the time of the Budget we will publish a green paper on a new industrial strategy focused on driving and