Britain’s national debt is on course for £3 trillion this year. Servicing it costs £30 billion a year at 1% interest and £150 billion at 5%, near where long-dated gilts have recently been trading. That’s a number so big it almost becomes meaningless. So, let’s try another way: it’s about the yearly gross pay of […]
This week I was fortunate enough to sit down with the Rt Hon Liz Truss. We discussed the usual things you expect. The state of the UK economy, the Bank of England, the Civil Service, and to quote Truss, how ‘Power was taken from the elected and given to progressive bureaucrats and judges’. I must […]
The bond market has finally lost patience with Labour. The 10-year gilt yield this week is back above 5% – around 5.09% as I write – its highest since the 2008 financial crisis. The 30-year gilt has touched 5.81%, its highest since 1998. Labour’s credibility is being repriced in real time. And the omens are […]
After nearly two decades of weak growth, stagnant wages and stubbornly high inequality – alongside one of the worst productivity records in the developed world since the financial crisis – Britain’s central problem is how to get the economy growing again. We don’t build enough homes. We don’t generate enough cheap energy. We don’t invest […]
This week the IMF cut its forecast for UK growth by a hefty 0.5 percentage points to 0.8% for 2026, the sharpest downgrade of any G7 economy. The OECD last week went lower still, to 0.7%, leaving the Office for Budget Responsibility’s forecast of 1.1% looking increasingly optimistic. Britain cannot afford to persist with an […]
When oil prices rise, economists ask what it means for inflation. Politicians ask what it means for voters. Since the Iran conflict and the disruption in the Strait of Hormuz, that has become the more urgent question. This is no longer just a macro and monetary policy story. It is a cost-of-living story. And in […]
The latest surge in oil prices, following the US-Israeli confrontation with Iran, has revived a familiar warning about stagflation and recession, and if Britain may be about to relive the 1970s. That comparison is not absurd. But it is often badly misunderstood. The central lesson of the 1970s was not that oil prices rose. It […]
An unsettling look at the economic settlement that Britain now seems willing to accept can be found in this week’s latest fiscal forecast. By the end of the forecast period, borrowing will have decreased from 5.2% of GDP in 2024–2025 to about 1.6%. Public debt stabilises at roughly 95% of national income. At those levels, […]
Monetary policy errors are rarely obvious in real time. More often, they emerge slowly – the product of frameworks that persist beyond the conditions that once justified them. Britain now risks drifting into precisely such a moment. The Bank of England spent the better part of two years extinguishing the most severe inflation shock in […]
Britain’s economic debate rests on a dangerous assumption. Debt crises are things that happen elsewhere. Greece, perhaps. Argentina, certainly. But not the United Kingdom – a mature economy with its own currency, deep capital markets and centuries of institutional credibility. History offers little comfort to countries that think this way. Countries rarely enter fiscal crisis […]
For much of the decade before the Covid pandemic, Britain’s inflation problem was its absence. Prices rose too slowly. Policymakers fretted about deflation, secular stagnation and the limits of monetary policy. Interest rates hovered near zero. Quantitative easing was deployed not to restrain demand, but to stimulate it – often with disappointing results, unless you […]
This week’s extraordinary legal dispute in the US shouldn’t be written off as just an American drama. Federal Reserve Chair Jerome Powell has issued an unusually direct defence of central bank independence in response to grand jury subpoenas and criminal investigations connected to Donald Trump’s allies. The episode exposes a deeper fault line in modern […]
When Labour took office in July 2024, Britain’s unemployment rate stood at 4.2%. Today it is 5.1%, the highest level since early 2021 and rising in a way that should trouble any Chancellor, especially one who has produced two tax-raising Budgets in succession. Ministers say the labour market is simply normalising, but the pattern now […]
The Monetary Policy Committee (MPC) will announce its decision at noon today. A 25-basis-point cut to Bank Rate, taking it to 3.75%, is now fully priced in, following this week’s deteriorating unemployment data and better than expected inflation numbers. If it happens – as it should – it will be welcomed by many, including myself, […]
Only last week, when I wrote about the pre-Budget pantomime, it looked as though we had already seen every twist. Yet the Office for Budget Responsibility (OBR) still managed a final stumble, accidentally leaking its own forecasts shortly before the Chancellor was due to speak – an episode that said rather too much about the […]
There are sensible ways to prepare a Budget, and then there is whatever the Government has put the country through over the past fortnight. To call it confusion would be generous, because ‘omnishambles’ is far closer to the truth. With its slapstick reversals, sudden plot twists and those familiar choruses of ‘Oh no we won’t!’ […]
Not long ago, work was part of Britain’s identity. We got up early, joined the morning rush, grumbled about Mondays and did it all again the next day. It wasn’t always enjoyable, but it was expected – part of the rhythm of ordinary life. That rhythm is now breaking down, as more and more Britons […]
London’s super-prime property market has always been a reliable gauge of confidence among the wealthy. When optimism is high and money is made to feel welcome, capital flows in and property prices increase. When ministers start treating success like a sin, investment is withdrawn and transactions and property prices fall. According to Savills’ Prime Central […]
A year into this Labour Government, the Conservatives remain trapped in an identity crisis. The polls are grim, morale is lower still and every new policy announcement has seemed to only invite the same weary question: what does the party actually stand for? In that context, Kemi Badenoch’s first ever conference speech was always going […]
Ever since Karl Marx and Friedrich Engels published ‘The Communist Manifesto’, progressive taxation has been the dominant model. Britain is no exception, but what we ended up with is not a principled system of fairness, but a masterclass in bad design. Thresholds and tapers defy common sense, clawbacks ambush families and frozen allowances quietly drag […]
