The £5.4 billion government surplus masks a larger economic issue

There have been celebrations this morning about a government surplus of £5.4 billion last month, and people are even talking about a ‘windfall’ for Chancellor Jeremy Hunt in next month’s Budget. But all this shows is how conditioned we have become to appalling economic news – and that we will grab at anything which seems to indicate a shaft of light. Nevertheless, any talk of a government ‘surplus’ masks the very real problem the government still has While any surplus is to be welcomed – and last month’s borrowing figures are far better than the Office for Budget Responsibility predicted – we would be in serious trouble if the government had not

Government borrowing hits £27.4 billion

Rishi Sunak ruffled his own party’s feathers last week when – in reference to last autumn’s market turmoil – he told an audience in Lancashire: ‘You’re not idiots, you know what’s happened.’ This was quickly interpreted as the Prime Minister branding the MPs and business leaders calling for immediate tax cuts as ‘idiots’, sparking not only backlash but also another round of debates on a topic that has been dividing the Tory party since last summer. Just how quickly and aggressively can the party start to cut the tax burden down from its 72-year high? Today’s public sector finance update for the month of December certainly doesn’t settle this debate,

The problem with Biden’s student debt plan

In Europe it is handouts to help pay our energy bills – even for people who could easily afford to pay them. In the US, it is student debts being written off. With remarkable speed the West is emerging into a new age of big – no, make that huge – paternalistic government. Today, Joe Biden announced that graduates who earn less than $125,000 a year, and who live in a household whose joint income is less than $250,000, will have $20,000 worth of student debt written off. For those who work in the non-profit sector, the military, or federal or local government, the write-off will be 100 per cent.

Has the past decade blunted our sense of the duty of care?

Modern British history can be divided into two parts: before Covid and after. That is the central pillar of this at times arid but ultimately compelling account of British social policy since 1945. We recovered in the aftermath of the second world war. Can we do it again, post-pandemic? Peter Hennessy, a crossbench peer, starts with the observation that government has a duty of care to the people, a conviction that emerged in the aftermath of the war and underpinned the creation of the welfare state. At the centre of it all was William Beveridge – ‘dry, prickly and difficult, but a genius when it came to the social arithmetic

Is this the end of borrow and spend?

Since the spring statement last week, Rishi Sunak has been dealing with complaints from all sides: the right have been arguing he should have been bolder with tax cuts, the left insists more support is needed to help people with the rising costs.  With the Office for Budget Responsibility projecting the biggest fall in living standards since records began, rumours of U-turns and further announcements started bubbling over the weekend. The media, the opposition, and even some Tory MPs have been asking Treasury representatives over and over again: is that all? In a keynote address hosted by the Institute of Economic Affairs this morning, chief secretary to the Treasury Simon

The best podcasts about money

Stories about money are never about money. They are about pain, about family, about atrocity, about luck, about health, about politics. And while we get a kind of vicarious thrill from listening to other people’s financial tales of woe, whether we are morally condemning a millennial for buying a daily flat white when she could be putting that $3 into a savings account that earns zero interest in the hopes that the city she lives in won’t be underwater from rising sea levels by the time she has enough for a deposit or just feeling gratitude that we are better off than the poor shmuck explaining their hundreds of thousands

Why we should worry about the post-Covid exodus of older workers

Concerns around unemployment during the pandemic have, understandably, been focused on younger people. Last year it was under-24 year olds most likely to be furloughed and then subsequently made unemployed when coming off the government’s scheme. For millions, the fate of their jobs remains on the line, as unemployment is expected to rise over the course of the year (albeit far less than originally predicted), even as the economy rebounds when lockdown restrictions lift. But today the Office for National Statistics flags another concern; one that could potentially have a bigger impact on the labour market’s recovery post-pandemic. While the youngest have experienced a substantial economic hit from the virus,

The thinking behind Rishi Sunak’s cash grab

Rishi Sunak’s tax hikes pack a punch: by 2025, over £19bn is estimated to be raised from the freeze to the personal tax threshold, and a staggering £50bn from a new, tiered corporation tax structure. That’s a lot of people out of pocket, and businesses diverting their profits away from workers and consumers and towards the state. Criticisms of the cash grab are splashed across the front pages of the papers today. Across the pond, the Wall Street Journal has lambasted Sunak’s policies: ‘Britain’s political class, and especially the governing Conservative party, prides itself on fiscal rectitude. So Mr. Sunak already faces pressure to “pay for” all this relief. We

Why 2021 could be the year of economic Armageddon

The British economy is wrapped in bandages – we won’t know whether the wound has scabbed or turned septic until they are ripped away. By the time the furlough scheme ends in April, whole sectors of the economy will have been out of action or severely incapacitated for over a year. Cash grants and the job retention scheme, both riddled with fraud, have propped up zombie businesses, some of which would have gone bust in the last year even without a pandemic. Of the businesses frozen in March 2020, how many will come out of hibernation in April 2021? How many people on furlough will discover that they have, in

Italy is about to hijack the eurozone

There is still some debate about who came up with the adage that ‘if you owe the bank $100 that is your problem. If you owe the bank $1 million dollars that is their problem’. It is usually attributed to the oil tycoon J. Paul Getty, which may help explain how he became the richest man of his era. Occasionally, and in a slightly modified form, it is attributed to John Maynard Keynes in his advice to the British cabinet after world war two. And yet in truth, it should probably have been coined by an Italian. Why? Because the country now owes so much money to the rest of

Can Britain get its record-high debt under control?

Last month, Britain joined the club of countries whose national debt is greater than 100 per cent of economic output. According to an Office for National Statistics update, public debt exceeded £2 trillion, taking the debt to GDP ratio over 100 per cent for the first time in 60 years. A fast economic recovery will prove vital for getting the Britain’s deficit under control Crossing this mark doesn’t come as much of a surprise given the copious amounts of spending the UK has done on Covid-related policy. July saw the fourth highest borrowing of any month on record – the top three coming in the previous three months when the