Money

‘The main job of a government is to ensure that the economics don’t go wrong.’ So argued an economist friend of mine to me many years back. And I must admit that my first response was uncommonly cynical. ‘Well, you would say that, wouldn’t you?’ I replied. ‘You’re a political economist.’ It is to be expected. In the same way a military-defence type might say that the most vital job of government is to be able to defend these islands and project military force. Or Lulu Lytle might explain that the most important thing in government is to get the interiors right. But as the years have gone by, I

After promising not to raise National Insurance in the 2019 manifesto, the Tories are preparing to do just that in April with their new ‘health and social care levy.’ The levy is set to add £200 to the average worker’s tax bill. Why have the Tories broken this manifesto promise? Because there was a pandemic, the government says. There was no choice. Tory MPs are getting antsy. Backbenchers, including former cabinet ministers David Davis and Robert Jenrick, are calling for the National Insurance rise to be postponed or scrapped, as relatively high inflation and the cost-of-living crisis is creating enough of a burden on taxpayers already, even before the new

While the Tories limp from one scandal to the next, an opportunity has opened up for Labour when it comes to courting business. Although it’s unlikely many voters elected Boris Johnson into office because they trusted his moral compass they did at least think he would deliver on his promise of sunlit uplands. But two years and a pandemic later, government spending as a percentage of national income is set to top 45 per cent, we’ve yet to ignite a bonfire of EU regulations, inflation has reached 5.4 per cent (and still rising) and the cost of living crisis is rapidly worsening. Voters are starting to question whether, with the

If Boris Johnson manages to cling on to his job, he’ll have much more than the parties of lockdowns past to worry about. Britain’s cost of living crisis is worsening still, with CPI inflation rising by 5.4 per cent in the 12 months leading up to December last year. This has, once again, outpaced consensus, surging even further past the Bank of England’s most recent official forecast. There’s little doubt left that heavy government spending is playing a significant role in the inflation we’re experiencing now Inflation is now at a 30-year high. And it’s still rising. Capital Economics now estimates a peak of 7 per cent around April, and there

Nadine Dorries came out fighting over the weekend to declare it was time to discuss new ways to fund and sell the ‘great British content’ produced by the BBC. But it turned out she had little in the way of ammunition once she reached the Commons yesterday. There will be a two-year freeze in the £159 fee — a measure that will represent a real-terms cut in the corporation’s funding, but hardly the ‘mortal threat’ some alarmists have declared. In 2019–20, the BBC generated total income of £4.94 billion, of which £3.52 billion was public funding from the licence fee. The Department for Culture, Media and Sport said the BBC

Nearly two years after the UK experienced its biggest economic collapse in 300 years, the economy has returned to pre-pandemic levels. GDP is estimated by the ONS to have grown by 0.9 per cent in November, almost twice what had been expected – making it 0.7 per cent larger than it was in February 2020. The US and Sweden managed to pass pre-pandemic levels last spring. China took just a few months. But Britain, whose economy fell further than almost any developed country in 2020, is catching up. Britain, whose economy fell further than almost any developed country in 2020, is catching up The below chart shows how UK growth

A nudge on interest rates from the Federal Reserve. A gradual winding down of quantitative easing. No more stimulus cheques flying out of the White House window. And rising energy prices dropping out of the annualised headline rate. This was meant to be the month when the spurt of inflation in the United States turned out – as president Joe Biden and his officials insisted it would – to be mostly transitory. We were told that it would die down over the course of this year. For Biden and the US economy, there is now no easy way back But, whoops, if that was the plan, it has already gone

Is it time for a windfall tax on energy companies? Judging by a poll during the first lockdown – which found more than half of the UK public would welcome an additional tax on businesses that had thrived because of the extraordinary circumstances of the pandemic – it would be a popular measure. A windfall is typically something you get for free, after all. Energy policy has become increasingly muddled in recent years Advocates often reference Chancellor Gordon Brown’s windfall tax on privatised utilities in 1997, which raised £5.2bn over a number of years and was justified on the grounds that corporate profits had risen due to failed government policy.

When the whole opioid crisis blew up, the Sackler family — whose fortune was substantially built on getting thousands of Americans debilitatingly addicted to OxyContin — withdrew for a period from their charitable giving. It was reported yesterday, though, that they’re back in the philanthropy business, and last year gave £3.5 million to various British causes — among them the Oxford Philharmonic Orchestra, the Watermill Theatre, King’s College, London, the homelessness charity Amber Foundation, various churches, academies and conservation projects. ‘The return of the Sacklers to philanthropy in the UK,’ the report stated confidently, ‘will cause outrage’. Really? I remember being similarly perplexed when green campaigners were protesting about the National

Many of the thorniest problems of politics come down to the same thing: timeframes. Big problems generally require solutions that take a long time to develop and implement. But the decision to do this must be made by politicians who work to much shorter timetables: news cycles measured in days and weeks, ministerial appointments that last months, and elections that are never more than a few years off. The approaching pain of rising energy prices is a case in point. It may well be surprising and new that European wholesale gas prices rose by 800 per cent last year. It is neither surprising nor new that the UK depends for

For once, yesterday’s Downing Street press conference included a worthwhile question, and not of the ‘why aren’t you locking us down?’ variety. In fact, it had nothing to do with Covid at all. Harry Cole of the Sun asked why, given that the Prime Minister had once cited the ability to remove VAT from fuel bills as a tangible benefit of leaving the EU, he was not now taking advantage of his new-found freedom, especially as bills are heading sharply upwards. Boris Johnson mumbled something about not wanting to help people who could easily afford their energy bills and that the government might consider more targeted help instead. The VAT