Money

Most economists and central bankers would have us believe that long-term inflation is a technocratic problem that has long been solved. Indeed, today’s millennials and Gen Z have experienced more grade inflation than price inflation, and don’t really understand what all the fuss is about. Markets, which are never terribly good predictors of major turning points in the economy, don’t seem at all worried, either, as measured by the levels of expected inflation implicit in inflation-indexed Treasury bonds. What might everyone be missing? The problem is that controlling long-run inflation is fundamentally a political-economy challenge, not a technocratic one. There is rarely a moment where governments find it convenient to

Imagine you run an independent store on the high street. Your business has already been ravaged by repeated lockdowns, which boosted the likes of Amazon at your expense. You are already at a huge disadvantage to online retailers because of your fixed costs. At great risk, you have invested in setting up your own online operation – which obviously costs you a lot more per unit of sales than it costs the online giants. In your shift online you have effectively become shunted up a side street, while Amazon, eBay and the like occupy the prime spots on the high street. How, then, are you going to react to the

Are MPs underpaid? Yes, according to Sir Peter Bottomley, who declared that life on an MP’s salary of £82,000 can be ‘really grim’. In saying so, Bottomley succeeded in uniting his fellow MPs – who would rather not have to deal with a further round of anger at their pay and conditions – and the general public – who resent having to pay for their elected lords and masters in the first place. But the furious backlash doesn’t mean Bottomley isn’t right. In Parliament, as anywhere else, you get what you pay for. If we want a better class of MP, it’s time to splash the cash. Not everyone sees it this way, of

The health secretary has announced more money for the National Health Service. It’s a story we’ve heard time and time again – but this time the details are different. Sajid Javid has committed an additional £250 million for GP health practices to assist them in expanding their hours and upping the number of face-to-face appointments they offer. In-person appointments plummeted during lockdown and have never recovered: they are now hovering around 60 per cent, compared to 80 per cent pre-pandemic. So what’s new? In short, the money comes with more accountability. A league table is being created to rank surgeries on how many in-person appointments they offer. Patients will also

Compared with July, August’s GDP boost looks much healthier — but that’s not saying much. Originally thought to have stagnated at 0.1 per cent, the economy in July actually shrank by 0.1 per cent, according to the latest update from the Office for National Statistics. If inflationary pressures continue to surge, the Bank may have no choice but to act Still, August’s GDP increase of 0.4 per cent puts the economy back on the upwards trajectory, now estimated to sit 0.8 per cent below pre-pandemic levels. Despite so-called ‘freedom day’ arriving halfway through July, people continued to socially distance in order to avoid being mandated back into their homes. A

Now that the Chancellor’s furlough scheme has come to an end, are employers rushing to lay off those workers whose wages have been paid, at least in part, by the government?  The good news for Rishi Sunak – and the taxpayer, who footed the bill for this multi-billion pound scheme – is that the early evidence suggests they are not: in the three months leading up to August, the headline unemployment rate dipped again. It is now down to 4.5 per cent, having peaked just over five per cent last winter. The picture in the labour market isn’t necessarily all rosy Figures from the Office for National Statistics will still take several months

International cooperation is alive and well – at least when it comes to raising taxes. One hundred and thirty six countries have now signed up to a global minimum corporation tax of 15 per cent, proposed by G7 countries in June and pushed heavily by the UK Treasury. This is another step forward for what is thought to be the biggest overhaul to the international tax system in a century. The installation of a corporate tax floor is part of a comprehensive effort to reform how multinational companies are taxed: that is, to more precisely target where profits are being made (instead of where products are being created). ​​Firms with

How is the Prime Minister’s bid to turn Britain into a high-wage economy progressing? It couldn’t be going better just at the moment, to judge by a survey by IHS Markit for KPMG and the Recruitment and Employment Confederation. In September – data was collected between the 13 and 24 September – there was a sharp rise in hiring, while starting salaries were rising at their fastest pace in the 24 years in which the survey has been undertaken. The number of permanent as well as temporary appointments was high, although the latter fell back from a record high in August. The survey suggests that the jobs market turned in

The biggest story of the Tory conference wasn’t about a gaffe or a controversial statement. It was about something that wasn’t said, and the person who didn’t say it. Rishi Sunak’s silence on net zero is a big deal, as the next few weeks will prove. The Chancellor didn’t mention net zero in his conference speech. So what, you might ask? After all, it’s an environmental thing and he’s Chancellor, right? No. net zero is an economic story, and a big one. It’s about growth, investment, public spending, tax and jobs. According to Sunak’s Treasury: This will be a collective effort, requiring changes from households, businesses and government. It will

Until this morning, few people in Britain will have heard of the works of Wilfredo Pareto (1848-1923). Now, thanks to prime ministerial recommendation, his name is suddenly on everyone’s lips. Maybe he was even the inspiration for the name of Boris Johnson’s one-year-old son. Pareto, apparently, is the inspiration behind the whole idea of ‘levelling up’ But was it good idea to raise the memory of the Italian economist and political philosopher? Pareto, apparently, is the inspiration behind the whole idea of ‘levelling up’. The slogan, implied the PM, is derived from the concept of ‘Pareto Improvements’ — improvements, he said, which can raise the quality of one person’s existence

Rishi Sunak didn’t give too much away tonight when he spoke in the ‘ThinkTent’ at Conservative Party Conference. The Chancellor is known for being cautious with his words, and has been increasingly tight-lipped in the weeks leading up to his October Budget. But his presence at the fringe event was telling in itself. Sunak was only billed for one public fringe event this year, co-hosted by the Institute of Economic Affairs and Taxpayers’ Alliance. Their ‘ThinkTent’ boasts some of the most free-market, libertarian events you’ll find at conference: both organisations are strong advocates for a low-tax, smaller state. So, not necessarily an obvious place to find the Chancellor who has overseen record peacetime

There are two Tory conferences simultaneously taking place in Manchester, within the same conference hall and inside the same fringe events. One is attended by elated activists, who are revelling in the December 2019 victory they never got to celebrate at party conference last year. The other is attended by increasingly agitated grass root faithfuls, who are up in arms about their party hiking taxes: especially the National Insurance rise on workers and employers, set to kick in next year. Unsurprisingly, most ministers are tapping into the mood of the first group. They hail the success of the party on fringe panels and at drinks receptions. Yesterday evening, Michael Gove

Concorde obviously. The Iraq War perhaps? Or Scottish devolution? It is not hard to come up with a list of really terrible ideas that the British government has wasted money on over the last 50 years. Even so, and despite some tough competition, we now have a fresh contender. It looks as if the furlough scheme will top them all. The scheme ends today, with roughly a million people still collecting a slice of their wages from the Treasury. The total bill is set to come in at around £70 billion. To put that in context, for the same money we could have tripled spending on policing and just about

Economic liberals may feel vindicated by events of the past fortnight. It turns out energy price caps, limits on immigration, over reliance on wind power and IR35 – the taxman’s crackdown on contractors – are all bad ideas, just as they had forewarned. Those same free marketeers may experience a strong temptation to enjoy the schadenfreude. In 2017, some insisted that the only good argument for energy price caps was the Leninist principle of ‘the worse, the better,’ as the move would bring forward the day when the entire policy collapsed. But governments bought into the baseless narrative propagated at the time that energy companies were greedy, price gouging profiteers, and

Labour avidly disagrees with the Tories’ plan to fill budget gaps by hiking National Insurance. So what would they do differently? This was one of the many tasks Rachel Reeves had today as the shadow chancellor delivered her speech at Labour party conference. Reeves not only had to set out an alternative tax-and-spend policy but also take aim at the financial decisions made by Boris Johnson’s government. Did Reeves succeed? No doubt her job was made much easier over the weekend as an energy crisis, which the government should have seen coming, continued to splash across the front pages, exacerbated by fuel shortages at the pumps brought on by a lack of

There is about to be a two-phase onslaught on the living standards of those on low-to-middling incomes. On 1 October the energy price cap, for dual fuel, rises from £1,150 to £1,277. This is a rise of 11 per cent, at a time when furlough is ending and just a few days before the £1,000 a year uplift to Universal Credit is removed (which presumably Boris Johnson will not be swanking about in his big speech to Tory conference). That’s the first hit to living standards. There’ll then be a gradual further erosion of living standards with rising food inflation (of around five per cent, as per what Tesco’s chairman John

A perfect storm is battering the UK’s energy sector. Due to a mix of high demand, maintenance issues at some gas sites, and lower solar and wind output, wholesale gas prices are up 250 per cent since January, and a handful of energy firms have folded. Some economists are suggesting the huge rise in gas prices could be an indicator of nascent inflation, and senior Tories have warned that a looming ‘cost of living crisis’ could erupt into the biggest political issue of the decade. Ofgem has announced that it has appointed British Gas to take on 350,000 customers from People’s Energy, one of two smaller suppliers which collapsed last