Economy

After months of speculation and handwringing, it has finally happened: Germany and the rest of Europe are now receiving no natural gas through Nord Stream 1. Aside from how the continent manages to survive this winter, Russia’s moves to shut off supply through its pipeline will have serious long-term ramifications. One of the most significant strategic relationships in the last half-century of European politics has been that between Germany and Russia over energy. That now looks to be over, with no clear prospect of it ever returning. As with before, Gazprom made technical excuses. This time, they claimed that an oil leak had led to Rostekhnadzor, the Russian state network

‘It’s fair to give wealthiest more money back – Truss’. That’s the headline on a BBC News story following Liz Truss’ interview with Laura Kuenssberg today, where she was asked about the merits of cutting National Insurance. Don’t worry if you missed the headline though. You’ll get plenty more chances to see it when Labour MPs repeat it over and over again, offering it as proof that the Tories are the party of the rich, a tag that Conservative leaders have sought to drop for the last two decades. So striking is the prospect of a would-be Tory leader clearly defending a policy that benefits the rich more than the poor,

Rishi Sunak presents an alarming picture of what happened during lockdown in last week’s Spectator interview – one echoed by lockdown sceptics who claim that Covid policy was a disaster, stoked by fear and based on questionable scientific advice. Worst of all, they cry, the trade-offs were not even discussed. But none of this is true – it is Covid revisionism. I know because I sat around the cabinet table as politicians, scientists, economists and epidemiologists agonised over the extent to which lockdown would devastate lives and livelihoods. It was not an easy decision for anyone. We locked down because we knew the cost of ‘letting Covid rip’ was far

There will be a run on sterling. The gilts market will be in freefall. And the FTSE will tumble as global investors take fright and sell off every form of British asset. It might take only a few days, or the government might stagger through until the end of September, but before long Liz Truss and her new Chancellor Kwasi Kwarteng will have been forced to call in the IMF to stabilise a collapsing economy. That is, at least, according to the former Chancellor Rishi Sunak. With just a few desperate days left in his doomer leadership campaign, he has declared his opponent’s tax and spending plans so wild and reckless

It is reported this morning that one of Liz Truss’s first acts as prime minister, assuming she wins the Conservative party leadership election, will be to grant new licences for North Sea oil and gas extraction. But will it be enough – and quick enough – to alleviate the energy crisis? There are still substantial known oil and gas reserves in the North Sea left to be exploited. According to a report produced by the Oil and Gas Authority last September, known reserves of oil and gas in the North Sea at the end of 2020 amounted to 4.4 billion barrels of oil equivalent (BOE). This is just a tenth of

A new poll about the NHS, the Sunday Times tells us, has discovered ‘a decline in support’ for the National Health Service. The story spoke of ‘wide dissatisfaction about the state of the health service’, under the headline: ‘Britain falls out of love with the NHS’. The figures from the poll itself tell a slightly different story. The headline finding was that three people in five are now not confident that they would receive timely treatment were they to fall ill tomorrow. But these three people in five aren’t necessarily saying they’ve ceased to approve of the NHS. It seems to me that they are simply affirming what they’ve read

The confirmation of the huge jump in the Ofgem cap on domestic energy bills in October, and forecasts of even worse to come, have fuelled more calls for prices to be frozen at current levels. This is not a completely daft idea, but it is not a good one either. There is no shortage of suggestions for how to solve the energy crisis. Labour has proposed a six-month bills freeze, financed by higher taxes on energy producers, the redirection of the £400 energy discount, and assumed (but largely mythical) savings on the debt interest bill due to lower RPI inflation. An alternative, being promoted by the energy suppliers, is to

Despite its name, Gers Day is not an annual celebration of the Ibrox side that makes up one half of Glasgow’s notorious Old Firm. If only it were that uncontentious. In fact, Gers stands for ‘Government Expenditure and Revenue Scotland’, the Scottish government’s yearly report on public finances. In a normal country, the publication of 76 pages of data tables and accountancy prose would go largely unremarked upon, so naturally in Scotland we have to turn it into another front in the independence wars. Because we really have nothing better to do. This year’s figures, like last year’s, reflect the unprecedented Treasury interventions during the Covid pandemic. However, they paint

In Europe it is handouts to help pay our energy bills – even for people who could easily afford to pay them. In the US, it is student debts being written off. With remarkable speed the West is emerging into a new age of big – no, make that huge – paternalistic government. Today, Joe Biden announced that graduates who earn less than $125,000 a year, and who live in a household whose joint income is less than $250,000, will have $20,000 worth of student debt written off. For those who work in the non-profit sector, the military, or federal or local government, the write-off will be 100 per cent.

Since June 2016 we have settled into a pattern. Whenever the pound plunges, it is followed by cries of ‘I told you so’. It is all the fault of Brexit and a result of international investors fleeing Britain and taking their money elsewhere. And when the euro plunges? We hardly hear a thing. Yet today, the euro has passed a milestone which ought not to be ignored: it has fallen below parity with the dollar for the first time since 2002. It is quite a tumble given that in 2008 it was trading at $1.5. Against the pound, the euro is now back to where it was in 2012, long

When last month’s headline inflation figure was released, showing a rise to 10.1 per cent on the year, a little bit of optimism broke through the general discourse of outrage and horror: despite hitting double digits, might inflation be close to its peak? The main source of this optimism came from falling oil prices, which recently have been on a downward trajectory. But that narrative is by no means the consensus. This morning, investment bank Citi reports its most recent inflation forecast – which it estimates will hit 18.6 per cent on the year in January. This is more than 5 percentage points higher than the Bank of England’s most

Rishi Sunak has joined Liz Truss in grumbling about solar panels in fields. This is all rather dismaying, and revealing. It suggests that Conservative leadership contenders – and the party faithful they’re appealing to – lack faith in the transformative power of markets and free enterprise. Those solar panels that Sunak and Truss deplore are nothing less than an economic miracle, delivered by private companies seeking profit. Anyone who proclaims themselves supporters of markets should be shouting from the rooftops about this miracle, since it shows how people and organisations freely allocating capital makes our world better, fast. Private enterprise works because the incentive to make a profit by selling

This week, the Institute for Fiscal Studies offered tough words for those hoping for tax cuts: with inflation taking its toll on both government and household finances, the next prime minister would be forced to prioritise the most vulnerable and debt-servicing payments. This would require more revenue for the Treasury, not less. As the Office for National Statistics publishes the latest public sector finance data for July, are these warnings too pessimistic – or already proving apt? Inflation continues to ramp up debt interest payments – a grim reality for any government which wants to spend money on delivering new and better services, not on money it’s already spent. Last