Economy

We all needed a laugh, what with the pound tanking and inflation running away, my old pal Kwasi delivering a Budget, probably for a bet, like Milton Friedman’s last cheese-dream, and the threat of nuclear annihilation starting to seem like a welcome turn up for the books. Said laugh has just been obligingly provided by the Metropolitan Police. They have just, without broadcasting the fact, decided to enforce the speed limit with the tiniest bit more rigour – and as a result, they’ve nicked more than two and a half times as many people for speeding in the first six months of this year than they did in the last

New Chancellor Kwasi Kwarteng’s first ‘fiscal event’ was always going to be quite provocative and exciting. But in the end it went quite a lot further than expected. Far from pulling back when faced with the practicalities of being in office, Truss’s new administration did everything it had signalled, controversial or not, then threw in some even more controversial policies just for good measure. The centrepiece is the huge energy price package. The government estimates that this will cost £60 billion over the first six months. But since the policy involves capping wholesale prices and government subsidies to make up the difference, that £60 billion estimate is entirely subject to

How are markets responding to Kwasi Kwarteng’s mini-Budget? A sharp fall in the pound today has plenty of critics arguing that the tax-slashing announcements have already proved a failure. Sterling fell this afternoon to $1.09, bringing the currency to another 37-year low against the dollar. This is more than a 3 per cent dip in just one day. The euro took a hit too, but a smaller one at 1.5 per cent. It’s difficult to separate this new record low from today’s announcements – but also near impossible to draw direct correlation, as the pound and euro have both been in freefall against the dollar for weeks now. With the

Rising interest rates is a key pillar of Trussonomics. Liz Truss herself has always stopped short of saying this explicitly, pointing fingers instead at the Bank of England for its failure to curb spiralling inflation. But the economists advising her have made clear, in no uncertain terms, that they think interest rates have been too low for too long.  Right from the start of her leadership campaign, Truss was far more vocal about her criticisms of the Bank; a point made even clearer once she entered No. 10 and her Chancellor Kwasi Kwarteng set up bi-weekly meetings with the Bank’s governor Andrew Bailey. With this new pressure being applied on the

When Liz Truss entered the leadership race there was no such thing as ‘Trussonomics’. She began her campaign with no real expectation of winning and without any serious guiding philosophy. Rishi Sunak did her a great service by portraying her throughout the leadership campaign as a crazed tax-cutter, a disciple of Ronald Reagan. But in truth, her economic policy was nowhere near as coherent as Sunak made out. Truss just about scraped through the soundbite war of the debates, but without any real pro-growth, tax-cutting agenda. All she pledged to do during her campaign was to freeze forthcoming corporation tax rises and shave 1 per cent off National Insurance. This

The government will announce tomorrow that it will cover the costs of more than £1 in every £3 of gas consumed by businesses and households over the next six months. There has been no subsidy of a market price on this scale in British history. Estimates of the final bill for taxpayers range from £100 billion to £200 billion, or more than the annual cost of running the NHS – if the scheme for households lasts for two years, as promised, and the separate one for all businesses runs for six months, to be followed by a less ambitious business scheme for another 18 months. This is a subsidy of more