Economics

Gordon Brown is demanding Parliament be recalled for an emergency budget. By October, he says, quoting a study he commissioned from the University of Loughborough, half the population could be living in fuel poverty. ‘Not enough thinking is being done about the major social crisis,’ he told Radio Four’s The World at One on Monday. The former Chancellor and Prime Minister does, of course, have every right to make what representations he wishes to the government, and no-one can call him a hypocrite for wanting the Chancellor and MPs to sacrifice their summer holidays for an emergency budget. His first holiday as PM, in 2007, famously lasted half a day

There’s an almighty debate ongoing in the US about what exactly a ‘recession’ is. Treasury secretary Janet Yellen said the US economy is not shrinking, saying it is in a state of ‘transition’, not recession. But in a clip from 2000 being circulated on Twitter that is comically apt, Bill Clinton said ‘a recession is two quarters in a row of negative growth’. Regardless of who’s right, the US is currently in Bill Clinton’s definition of a recession. Figures show that the economy shrank by 0.2 per cent in the second quarter of this year, following a 1.6 per cent fall in the first quarter. Over the year, the US economy is now 0.9

Interest payments on the national debt rose 70 per cent last month to £7.6 billion (compared with a year earlier) – largely because of the impact of inflation on income paid to holders of index-linked gilts, which are inflation-protected government bonds. More worryingly, this was 49 per cent more than the official forecast made in March by the Office for Budget Responsibility (OBR). It suggests the OBR’s forecast that the government will have to pay £87.2 billion in interest payments (a colossal sum) may be too low, especially since the ONS is not factoring in the most recent inflation figures in its calculations of the monthly bill. Little wonder Rishi Sunak says ‘rising

It was a ‘destroyer of society’, a ‘tax on ordinary people’s savings’ and a threat to social order. You don’t have to spend very long browsing the history books to find thumping quotes from Ronald Reagan or Margaret Thatcher denouncing rising prices as an evil that had to be defeated. And today? Even with prices in the UK now rising at 9.1 per cent, the fastest for 40 years, there are just a few mumbled apologies, coupled with some evasive excuses. That is not good enough. If we are going to defeat inflation all over again, it will take some leadership. We learned today that inflation has nudged up again,

A wave of government spending would reboot the economy. Fairer taxes would pay for restored infrastructure. Skills would be improved, productivity raised, and new digital champions would emerge. When Joe Biden was elected, he promised the most radical programme of economic reform since Franklin Roosevelt’s New Deal in the 1930s, and, to his army of cheerleaders at least, the American economy was about to be completely transformed. But hold on. Only a year into his term, the reality is very different from the promises. In reality, the Biden Bust has arrived. Donald Trump may have been personally obnoxious, but he bequeathed an economy in perfectly good shape The US GDP figures

What support might the Chancellor dish out to help with the cost of living squeeze in the Spring Statement this week? In line with his previous media appearances, Rishi Sunak’s statements ahead of his mini-Budget this morning on the BBC didn’t give much away, as the Chancellor ‘can’t speculate’ on what’s to come in his announcements this week. But the pressure is on to address the energy and basic goods prices which have been skyrocketing since we emerged from the height of the Covid emergency: the energy price cap lifts nearly £700 this spring, and is likely to rise again in the autumn. Sunak reiterated that his job now is

This morning’s revelation that the UK economy grew 0.8 per cent in January, the fastest growth since April last year, is welcome news after a Christmas plagued by Omicron – but it’s news that’s out of date, too. As Capital Economics warns: ‘This is as good as it gets for the year’. Russia’s invasion of Ukraine, the commodity price jump and the cost-of-living crisis will soon show in the figures. Today’s ONS release warns that even in January, businesses were already reporting significant rises in the cost of energy and staff wages. The week after next, Rishi Sunak will present a mini-Budget. The Chancellor faces a conundrum: how to explain the inflation and

The priority for the UK and other rich democracies is to protect the people of Ukraine from the depredations of Putin’s forces. A close second should be protecting the poorest people in our countries and vital public services from the cancerous impact of soaring inflation, made much worse by the West’s economic warfare against Putin’s Russia. The most basic costs of living are soaring. And that means a devastating recession that has already begun for all those but the richest. This blow to living standards will be the worst in living memory, more pernicious than the impact of either the banking crisis or Covid. Talking to ministers and MPs, it is

The way we measure inflation is changing, and there could hardly be a less crucial time for it to do so. The ONS will be updating the method for collecting individual prices from supermarkets, and will also publish new figures on inflation rates for different types of household. The anti-poverty campaigner Jack Monroe has tweeted that the ONS ‘have just announced that they are going to be changing the way they collect and report on the cost of food prices and inflation to take into consideration a wider range of income levels and household circumstances’. But Monroe, who hope that the new metrics will show that inflation is hitting poorer families harder, will

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

Forget the desirability (or lack thereof) of tax hikes: can Britain survive them? That’s the economic question that kicked off the new year in cabinet this week when Jacob Rees-Mogg was reported to have encouraged the Prime Minister and his colleagues to roll back plans to bring in the new National Insurance levy this April. A recap on the proposals: the 1.25 per cent National Insurance hike will be paid by both employers and employees, and will eventually be funnelled into social care, we’re told. But for the first few years, most of the tax revenue it raises (roughly £12 billion) will go to addressing the NHS backlog and the millions

Tesla’s sleek, if expensive, electric cars are leading the battle against climate change. Its batteries are moving renewable energy into the mainstream, while its founder Elon Musk, the world’s richest man, likes to present himself as a free-thinking radical. It is hard to think of a company more right on than Tesla — well, okay, perhaps Unilever — or one that depends more on its politically correct credentials. But hold on. There turns out to be one opposed minority that Tesla couldn’t care less about: China’s Uighurs. Most of the corporate world will sooner or later have to make a tough decision: do they care about human rights? The company has landed

It is called managing expectations: the steady drip of forecasts and scenarios designed to prepare us for bad news, so that when that news does finally arrive it doesn’t seem nearly as bad as it would otherwise have done. So is that what the Bank of England is up to with its deputy governor, Ben Broadbent, telling us that inflation next April could ‘comfortably exceed’ 5 per cent? It is reminiscent of the moment in July when the Bank’s departing chief economist, Andy Haldane, dropped in the suggestion that inflation by the end of 2021 could be closer to four percent than three percent. The MPC is behaving like a Chancellor

The big central banks have been insisting for months now that the rise in inflation is temporary, and will fade once the great awakening of the world economy starts to settle down. The Federal Reserve, Bank of England and the European Central Bank have looked on as inflation has overshot their forecasts. But when the opportunity to tame it with an interest rate hike approaches, the banks pass it up, reiterating instead that it is ‘transitory’ — the monetary equivalent of ‘it’ll be fine’. With inflation now at a 30-year high in the United States — 6.2 per cent — it’s starting to look like a pretty big bump. But should