Treasury

Although this week has seen a divergence of views in the Cabinet over Brexit (not to mention Labour’s continuing Brexit confusion) on everything from chlorinated chicken to freedom of movement, there is one aspect of the negotiations that all ministers can agree on: the need for a transitional agreement. Speaking on the Today programme, the Chancellor confirmed that ‘many things would look similar’ the day after Brexit. The new Cabinet consensus for an implementation period while the UK moves towards a new relationship with the EU is something Philip Hammond has been lobbying for for some time. The expectation in Whitehall is that Theresa May will give a speech in September

You might argue that the self-employed enjoy less security than the employed, so it’s fair they contribute less; you might argue that the ‘sharing economy’ is a nifty pocket-money source for hard-pressed families, and that tax grabs will swiftly kill it. But revenue-starved Chancellor Hammond will retort that all income and commerce, however novel in form, must be taxed unless specifically exempted, otherwise government can’t make ends meet: tax should keep pace with changing patterns of life and technology. Thus Microsoft founder Bill Gates recently proposed that if robots are replacing humans in business, then companies operating robots should pay income tax on their behalf. Back in 1991, Chancellor Norman

George Osborne was famous in Westminster when Chancellor for laying large ‘elephant traps’ for Labour using Treasury policy. He was also famous for telling everyone all about how the trap worked and where it was, before falling into it himself. When Philip Hammond came into the Treasury, it was largely accepted that the days of silly elephant traps were over. But this week the new Chancellor ended up locating one of the last of the Osborne elephant traps which had been lying dormant in the political jungle – and he located it by falling straight into it. The ‘tax lock’, which the Tories announced in the 2015 election campaign to

We’ve heard that Brexit could cost Britain billions in the form of a divorce bill from Brussels. But what is the price of staying in? That question is answered by the Daily Mail this morning which reveals Treasury estimates slipped out last week that the UK’s contribution to the EU will jump to £10.2bn in 2019 – up from £7.9bn this year. The numbers also show that if Britain is still in the EU by 2021-22, taxpayers will have to pay out £10.9bn to Brussels. For the Daily Mail this is proof that Brexit is the best course of action. ‘Doesn’t this revelation, slipped out by the Treasury, show precisely

The existence of the Laffer Curve can be proved by thought-experiment alone. If a government levies an income tax rate of 0 per cent it will raise zero revenue. If it levies a rate of 100 per cent it will also raise zero revenue, as no-one will bother to earn any money – or at least declare any earnings. Somewhere between those extremes lies an optimum point at which the tax-take reaches a maximum value. Trouble is, no-one really knows where the peak of the Laffer Curve lies for income tax, or for any other tax for that matter. George Osborne asserted that – at least for income tax in

In the run-up to the referendum, the Treasury warned that unemployment would rise by half-a-million. Today, this prophecy comes in for criticism in the papers following yesterday’s news that the number of Brits out of work had tumbled to an 11-year low. It’s not only Project Fear which gets a hard time in the editorials though. The moaning ‘anti-Brexit mob’ are also criticised – while the Guardian savages Boris Johnson for making a ‘fool of himself’. The Sun launches an attack on the moaning ‘anti-Brexit mob’ in its leader this morning, saying that it seems that the better the economic outlook since the referendum ‘the louder the caterwauling’ from those unhappy with the

So now we know. The recession that we were told would be ‘inevitable’ if we voted to leave the EU was not quite so inevitable after all. In fact, it hasn’t happened at all. The Office of National Statistics’ first estimate of economic growth for the third quarter has the economy growing by 0.5 per cent. Though this is just an early estimate and could well be revised – revision upwards or downwards of 0.1 to 0.2 per cent are perfectly normal – it is certainly not indicating a recession, which would be two quarters of negative growth. It is pretty much in line with how the economy was growing

Can someone please tell HM Treasury that the referendum is over? During that campaign, it made history by producing a claim that Brexit would make people £4,300 worse off per household. It was nonsense, debunked here at the time. It was not just a porkie, but a historic porkie: polls showed just 17 per cent believed this figure, around the same number that think Elvis is still alive. Even Sir Will Straw, head of the Remain campaign, admitted later that his case was actually damaged by this ridiculous campaign. The Treasury ought to be holding an inquiry into how such a wilfully misleading figure was eve produced by the civil service,

The Brexit bounce continues. HM Treasury has today released forecasts of the economists it follows, as it does every month. Last time, there was a flurry of downgrades and forecasts of an immediate recession. Now, these forecasts are being torn up by everyone, including by the FT (although you can bet the FT won’t report on the upgrades as eagerly as it did the downgrades). The average new forecast suggests GDP will grow by 1.8 per cent this year, far better than the 1.5 per cent forecast last month. This back to where the consensus was before the Brexit vote. The OECD, which had previously predicted “immediate” uncertainty after a

George Osborne has turned his back on ‘Project Fear’ after finally breaking his Brexit silence. The aim of his speech this morning was all about reassuring the financial markets before they opened. To help him do that he reeled off a couple of sound bites about how Britain was open for business, how it ‘will not be plain sailing’ but that it was a good job we’d ‘fixed the roof’. The Chancellor also said that whilst this ‘is not the outcome I wanted or that I threw everything into campaigning for’, ‘the people have spoken’ and we must all accept that result. But what was more interesting was what wasn’t

The Bank of England’s decision to keep interest rates pegged at 0.5 per cent won’t surprise anyone. What is more interesting, after today’s row involving Mark Carney, is how much the Bank had to say about the EU referendum. Brexiteers hoping Mark Carney and the BoE’s Monetary Policy Committee would keep quiet about next week’s vote will be disappointed. In its meeting minutes, the MPC gives it both barrels when warning about the dangers of Brexit. The MPC says a vote to leave would send sterling’s exchange rate tumbling. It goes on to add that: ‘As the Committee set out last month, the most significant risks to the MPC’s forecast