Economy

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

For years it seemed as though China’s massively inflated property bubble would just keep on expanding, seemingly defying the laws of economics, as well as regular warnings of the dire consequences for the economy should it burst. Now that moment may have been reached, as the country’s biggest developer teeters on the brink of bankruptcy. Evergrande is the biggest debtor in China – and in the world. It owes an estimated US$300 billion to Chinese banks, suppliers and foreign investors, and is struggling to meet interest payments. Some $US84 million of bond interest is due this Thursday, but the company has run out of money. Stock markets across the world are falling as the implications become more clear. By one estimate Evergrande has taken deposits for

I’m hugely enjoying meeting the finalists for The Spectator’s Economic Innovator of the Year Awards. This year’s bumper entry was strong on paths to decarbonisation — as you’d expect for the new era of climate action — and on ventures rocket-boosted by the pandemic, whether designed to take pressure off the NHS or in the ‘edutech’ field of online learning. By contrast, ‘fintech’ and consumer apps were less prominent than in earlier years, reflecting changed priorities. And come to think of it, common to all the entrants I’ve talked to so far is that not one has said: ‘We couldn’t have done it without the help we’ve had from government.’

The pandemic continues to cause surprising events in the labour market — and challenges too, many of which were wholly unanticipated when the Covid crisis began. Today’s update from the Office for National Statistics on labour market numbers is case-in-point: the unemployment rate again, down to 4.6 per cent from May to July. Forecasts of nearly 12 per cent unemployment, once predicted by the Office for Budget Responsibility, are long in the past. The furlough scheme has starved off an unemployment surge and there’s good reason to think it’s been avoided altogether. Over one and a half million people were still on furlough at the end of July. But even

Private members’ bills don’t normally make for exciting reading. They give MPs and peers a chance to let off steam if they have a bee in their bonnet, and more importantly to lay down fairly cheap political markers. Most sink without trace, since the government through its control of the Commons legislative timetable has an effective veto. But some are worth a second look. One such is Lord Hendy’s Status of Workers Bill, which got its second reading in the Lords last Friday. Currently, businesses love the idea of designating as much of their payroll as possible as self-employed independent contractors rather than employees. And not surprisingly: it saves them

On BBC One’s Andrew Marr show Sajid Javid confirmed that plans for domestic vaccine passports in England were on the way out, even before they were formally brought in: ‘We should keep it in reserve,’ he said of the government’s plans to link vaccine status to entry into nightclubs, but ‘I’m pleased to say we will not be going ahead with plans for vaccine passports.’ Vaccine passports have been a roller-coaster policy for months now, with claims made by members of the Cabinet at the start of the year that they weren’t being considered: that nothing so ‘discriminatory’, in the words of vaccine minister Nadhim Zahawi, would be implemented. Since then,

The arrival of ‘freedom day’ on 19 July enabled people to return to concerts, festivals, and ditch social distancing, but these rediscovered freedoms did not revive the economy. The ONS said this morning that growth was just 0.1 per cent in July, far lower than the consensus forecast. It was particularly disappointing given the growth seen in the locked-down months of June (one per cent) and May (0.6 per cent). The Pingdemic – and concerns about the Delta variant – cancelled out any animal spirits around reopening. August’s GDP boost is going to need to be much stronger for the more bullish forecasts to pan out Nightclubs reopened and the entertainment

Late-breaking exam results: many of the City’s top fund managers have failed a vital test of ‘stewardship’ — defined for this purpose as ‘the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society’. That mouthful comes from the Financial Reporting Council’s UK Stewardship Code; asset management firms seeking to become ‘signatories’ to the code were asked to submit essays describing their own investment principles, highlighting their approach to hot-button ‘ESG’ (environmental, social and governance) issues. Out of 189 applicants, 64 failed to reach the pass mark, while some major firms chose not to

Perhaps it’s finally dawned on the government that they have an intergenerational inequality problem on their hands. The decision to suspend the pension triple-lock for one year to avoid an 8 per cent increase to the state pension would suggest so. Asset wealth is already excessively concentrated in the over-55s. To even this spendthrift government, a massive bump in pensions while the rest of the economy languishes is a step too far. But that’s exactly what happens every year anyway under the triple-lock. The policy means that even when the rest of the economy stagnates, pensioners receive a boost. It is a feature of the system, not a bug, which came into place

One of the most dubious and meaningless parts of today’s health and social care plan is the pledge that the new tax will be a ‘legally hypothecated levy’ – ring-fenced so that the money raised can only go to health and social care services.  It’s dubious in the same way that the Tory manifesto pledge not to raise taxes turned out not to be worth the paper it was printed on. And it’s meaningless because a government that wants to unlink the tax could just pass a law doing that – and no legal ring-fence can stop it. It’s also worth remembering that the ring-fence around health and social care is

It is a curious thing to exclude a vast group of generally quite well-heeled voters from funding a policy innovation that they will benefit from more than any other group. One might almost call it blatant favouritism. But Boris Johnson’s plan to pay for a big increase in resources going into social care long-term and the NHS short-term amounts to just that. By opting for a National Insurance increase to fund his proposals, the PM is ensuring that nobody over the state pension age of 66 will have to put their hands in their pockets. Neither will the extra financial burden fall on so-called ‘unearned’ income such as dividends on