Money

Given how inflation has taken off and sent real incomes into steep decline it is remarkable that Britain is not already in recession. It seemed that we were heading that way – until the Office for National Statistics revised upwards economic growth in the second quarter of this year from minus 0.1 per cent to plus 0.2 per cent. The economy then shrank by 0.3 per cent in August. But the definition of a recession is two quarters of negative growth – so Britain cannot be classed as being in one until growth figures for the fourth quarter are published in January. But the S&P Global Purchasing Managers’ Index (PMI)

As an erstwhile Brexit-voting academic, I’m used to being at odds with those around me. But in feeling troubled at the news of Liz Truss’s resignation yesterday, it seems I’m now in a minority of one. Truss had to go, of course. Her failings have been so well documented they hardly need repeating. Her lack of political acumen was perhaps most shocking: Truss utterly failed to read the mood of the Conservative party, the nation and the financial markets on every single one of her 44 days in office. But still, I have a pang of regret that she is on her way out. Truss’s stilted performances failed to inspire

Liz Truss is almost exactly the leader the country is desperate for. Britain needs someone to take painful decisions and even alienate voters in order to get growth going. Given that the next election is probably lost anyway, there is a case to be made that Truss should serve as the sin-eater for Conservative policy, implementing necessary but unpopular actions before she’s deposed. Last night rumour had it that she was planning to break the triple lock on pensions, instead bringing in a below-inflation rise. Perhaps this was to be one of those unpopular but necessary policy decisions? Not a bit of it. At PMQs, she told the Commons: ‘I’ve been clear,

Is low unemployment causing us more problems than we realise? The suggestion might seem absurd, offensive even. It’s reminiscent of the days of Mrs Thatcher’s supposedly ‘cruel’ monetarism, when we had three million unemployed. Some on the fringes liked to argue that unemployment was good for the economy because it made people work harder, being fearful for their jobs. Mass redundancies would not, of course, help the economy now or at any other time. If a million people were to lose their jobs, as happened in the early 1980s, that would be a million households suffering a collapse in the spending power. As well as a human tragedy, it would

Jeremy Hunt set out at the start of the weekend with one goal in mind: that when the gilt markets reopened on Monday, the cost of government borrowing would not surge further. Ideally, it would start to fall. In this sense, it’s been a successful day for the new Chancellor. The Treasury’s early morning update that a major fiscal announcement was about to be announced saw gilt yields start to drop when markets opened at 8 a.m. After Hunt’s overhaul of the mini-Budget – including the surprising decision to suspend the 1p cut to the basic rate of tax ‘indefinitely’ – they fell even further. After starting the day at

After two major U-turns over last month’s mini-Budget and the sacking of a chancellor, what’s left of Liz Truss’s economic agenda? Parts of it remain intact. But it’s now shaping up to be significantly different from what the Prime Minister intended when she entered Downing Street. The key assumption behind Trussonomics as it was developed during the leadership race was that the markets would be delighted to lend to the government, on the cheap, to see through its tax-cutting, growth-stimulating agenda. That assumption was quickly killed off after former chancellor Kwasi Kwarteng sat down from presenting his mini-Budget, and the cost paid by governments to borrow began to soar. It

The mini-Budget was a spending spree. The ‘medium-term fiscal plan’ was meant to explain the funding. But what exactly is going to be in it?  Liz Truss and Kwasi Kwarteng were thought to have (finally) come to terms with the need to address the need for some restraint, after their mini-Budget led to market chaos which is yet to settle. Their fiscal statement – in other words, how they would fund their tax cuts – was moved forward by almost a month, to 31 October. Its contents were thought to include some major spending cuts, in a bid to convince markets that fiscal discipline still guides the Tory party. If there are

Speculation has been growing that the Bank of England might announce an extension of its emergency gilt-buying programme which is set to end on Friday. Despite the Treasury moving forward its ‘medium-term fiscal plan’ announcements from November to the end of this month, gilt yields have been rising yet again this week in the lead-up to the end of the scheme. It seemed likely that the Bank’s gilt-buying programme might be extended for another two weeks as a result, in order to buy time before the Chancellor Kwasi Kwarteng’s announcement on 31 October. But tonight Andrew Bailey put that speculation to bed. Speaking at the Institute of International Finance in Washington DC, the