This week’s Spring Statement included some big, bold announcements, with obvious voter appeal. But the windfall from higher-than-expected tax receipts and the downside risks to economic growth mean that the Chancellor could, and probably should, have done much more. It is worth repeating that the public finances are in better shape than anticipated. Government borrowing […]
Spare a thought for the staff of the Office for Budget Responsibility (OBR), beavering away on a new set of economic and fiscal forecasts for the Chancellor’s Spring Statement on March 23. The fallout from the Russian invasion of Ukraine has made an already difficult task almost impossible. It makes sense to present a range of […]
‘Chapeau’ to the French economy, which is being trumpeted by some as Europe’s star performer since the pandemic. But what, if anything, can we learn from this? First, some numbers. The French economy has indeed bounced back relatively quickly. GDP was 0.9% higher in the fourth quarter of last year compared to the same period […]
The publication of the first official GDP data for the whole of 2021 have revived a highly politicised debate about how well the UK is doing, compared to our peers in the G7. Part of me doesn’t really care, but there are some important points here. First, the claim that the UK was the fastest growing G7 […]
ITV’s Robert Peston has understandably made a lot of audit reports showing ‘£8.7 bn of losses on PPE [personal protective equipment] in government accounts’. There is plenty more ammunition here too for those claiming that there was a ‘pandemic of waste and fraud’, ‘contracts for mates’, and ‘Tory sleaze’. The reality, though, is a little […]
The case for scrapping the increase in National Insurance contributions (NICs) planned for April is now so overwhelming that it’s hard to find good arguments in favour of keeping it. I’ve seen a few, but they are easy to knock down. Nick MacPherson, formerly the top civil servant at the Treasury, has tweeted that ‘National Insurance […]
Most commentators were complacent about the risks of higher inflation in 2021 and seem determined not to be caught out again this year. But some of the rhetoric is now running well ahead of reality. Take the warnings that UK families are facing an ‘overnight cost of living catastrophe’. It is true that many are […]
It’s not often I agree with the International Monetary Fund (IMF), but their latest warnings on the risks of inaction from the Bank of England could not have been more timely. The jump in consumer price inflation to 5.1% in November has already taken it well above the figure of 4.5% that the Bank was predicting as recently as […]
If the latest rumours are correct, the UK government will soon announce new restrictions in response to the spread of the Omicron variant. Throughout the pandemic my instinct has been to give the policymakers and their advisors the benefit of the doubt. But clamping down now would make little sense. Starting with the economics, the […]
Here are some first thoughts on ‘Omicronomics’, or the economic impact of the new Covid restrictions announced for England over the weekend. The main short-term risk to the UK economy comes from the tightening of the self-isolation rules: contacts of those testing positive for the Omicron variant will have to stay at home for up […]
Most of the coverage of the latest UK GDP figures has been downbeat. Two headlines sum up the responses: ‘the best of the recovery is behind us’, and ‘the UK economy has reclaimed its status as the G7’s laggard’. ‘Stagflation’ is back on the agenda again too. I would rather focus on the positives, but let’s begin […]
Confidence in the UK economy has tumbled in the last few weeks, driven by fears of a cost of living crisis, reports of empty shelves, fuel shortages, rising taxes, interest rate hikes, and even a Christmas deprived of turkey or presents. The panic at the pumps shows that these fears can sometimes be self-fulfilling. It […]
The Treasury is keeping busy, but hopefully not too busy. On the same day as the Prime Minister unveiled the ‘health and social care levy’, the Chancellor revealed last week that we will only have to wait another 50 days for the Autumn Budget, due on October 27. The focus next month will probably be on […]
Today’s announcements on tax, health and social care are a triumph of political spin over economic substance. But worse than that, they are a missed opportunity for a fundamental rethink of the role of the state in looking after the elderly and vulnerable. The politics at least was clever. The package is clearly a big […]
Brexit is still as polarising as ever. Many Remainers have seized on the ongoing disruption to UK supply chains as proof that ‘Project Fear’ was right after all. At the other extreme, some Leavers have argued that the end of free movement is a ‘good thing’, because it will boost the pay of UK workers. […]
The Treasury will start to wind down the furlough scheme this week – and not a moment too soon. For a start, the support is relatively generous – and costly – and still due to last another three months. Under the Coronavirus Job Retention Scheme (CJRS), employees on furlough receive 80% of their normal wages […]
Here we go again. The Daily Telegraph is reporting that Treasury officials are “drawing up plans” for a pensions tax raid in the autumn to help pay for Covid. It might be more accurate to say that old plans are now being ‘dusted off’, but the quality of debate does not seem to have improved. […]
MPs will hopefully soon have the chance to vote on whether the UK should restore spending on foreign aid to the mandated level of 0.7% of GNI (gross national income). This is surely the right thing to do. First, the arguments in favour of cutting the target to 0.5% are weak. The Government’s case is […]
The latest data on the UK’s international trade (published on Wednesday) offered something for everyone. For some, they are further proof of the lasting damage that Brexit will do to our trade with the EU and therefore, by extension, to the UK economy. For others, the recovery in the UK’s exports to the EU confirms […]
Consumers, businesses, and investors are increasingly optimistic about the prospects for the UK economy, and independent forecasts are continually being revised up. Policymakers at the Treasury and Bank of England should now be reassessing their plans too. The consensus at the start of the year was that UK GDP would grow by around 4% in 2021, and […]
