Economics newsletter
Could the fat jabs wreck your pension?
Fat jabs are perhaps the largest development in healthcare since statins. Weight-loss drugs – or GLP-1s, as they’re properly known – will reduce the number of people having heart attacks, developing diabetes or getting cancer, and will generally let people live longer. With a population that’s two-thirds overweight or obese, it’s no surprise that already three million British adults are on the jabs. That’s twice as many as last year and the number is expected to double again by the end of 2027, according to consultants at PwC. Reinsurers such as Swiss Re say that weight-loss drugs could decrease all-cause UK mortality by as much as 5 per cent over the next 20 years. A health miracle, then.
The madness of crowds is keeping markets afloat
‘I’m done with Trump,’ fumed a normally MAGA-supportive retail trader as he watched an investment that was particularly Hormuz-sensitive collapse. But, perhaps surprisingly, his frustration at the war is not shared more widely by stock pickers. Despite the geopolitical turmoil of the war in Iran, equities (shares in listed companies) have been on an upward romp for the past year. Since Donald Trump was inaugurated for the second time, the Standard and Poor’s 500 index is up 25 per cent. Stock markets almost everywhere have been hitting record high after record high. It doesn’t make much sense. This hasn’t been a good year for the world economy. The constant closing and reopening of the Strait of Hormuz sent oil prices skyward.
Why some small tradesmen are turning to bartering
Holly, a 25-year-old sign writer and muralist, recently spent a couple of days staying in a shepherd’s hut an hour from her home. She didn’t pay for it – well, not in the way you or I would. The owner had a gypsy caravan with doors that needed painting. Holly could do the job. An agreement was struck, no money changed hands, and both sides walked away feeling they’d got a fair deal. Holly is one of a growing number of small tradesmen who have quietly decided to opt out of the traditional cash economy – or at least keep one foot outside it. She has been ‘paid’ in chiropractor sessions, pizza and someone cutting her grass. When she painted the Christmas windows of her local café, the owner told her to pop in for a free lunch ‘for the next ten goes’.
How to make your children rich
‘I was gifted a Premium Bond of £1 for my first birthday from my grandma,’ says Janice. ‘That was in 1970 and I have never won a thing.’ If I had a penny for every time I heard this kind of comment, I’d be a darned sight richer than Janice. She is one of many people I’ve spoken to since I started reporting on the shocking administrative failures at National Savings & Investments. Around 34,000 families have been unable to trace their loved ones’ accounts after their deaths. The total amount owed comes to £367 million. The scandal prompted NS&I’s chief executive, Dax Harkins, to resign and the pensions minister, Torsten Bell, to make a contrite statement in the Commons.
John Healey’s nightmare first day as Chancellor
John Healey has been hit with a triple whammy on his first full day as Chancellor of the Exchequer. The Office for National Statistics (ONS) has just published the latest figures on jobs, public sector finances as well as an update on their troubled Labour Force Survey (LFS). There’s bad news, news that only looks good because it’s less bad than usual and truly disastrous news. First of the three is the jobs destruction – kicked off by the previous Chancellor’s £25 billion National Insurance tax raid and hikes to the minimum wage. This has continued with 85,000 more employees disappearing from payrolls compared with a year ago, with the unemployment rate falling only slightly to 4.9 per cent. But the jobs figures are really bad news when you split them out by age group.
Andy Burnham would be mad to introduce rent controls
Andy Burnham’s government could be entertaining to watch but disastrous for the country. Reports suggest that one of the options Burnham could announce to immediately tackle the cost of living is some form of rent control. If true, he’s already lost the plot. He must surely know that rent controls do not work. They may immediately stop rents climbing in the subset of properties whatever controls he announces are applied to, but beyond that the result will be entirely predictable: a collapse in rental supply as landlords sell up and flee the market; staggering rent hikes when the freeze comes to an end; and trapped tenants because new lease prices will shoot up as landlords attempt to recoup losses from elsewhere.
A land value tax would be disastrous
Earnings are taxed too highly, Andy Burnham has hinted, and wealth too little. I don’t hold much hope for a cut in income tax, but I think we can pencil in higher wealth taxes, on property especially. This could possibly take the form of a new Proportional Property Tax such as that proposed by the ground Fairer Share, which would replace council tax and stamp duty with an annual levy of 0.48 per cent of a property’s value (that percentage being chosen because in Fairer Share’s calculations it would raise the same revenue as stamp duty and council tax currently does). But there is also an intriguing possibility that Burnham could resort to an idea he has backed in the past: a land value tax.
Is Ed Miliband really changing his tune on North Sea oil?
I’m a little sceptical of reports that Ed Miliband is prepared to back down and accept new drilling for gas in the Jackdaw field in return for being made chancellor. Last time that Miliband was reported to be on the point of granting permission for new oil and gas licences in the North Sea it turned out not to be true. He dug in his heels, and a hapless Keir Starmer let him do so. Maybe Miliband’s ambition to be chancellor, and his desire to inflict a deeply left-wing fiscal policy on Britain, really does trump his net-zero zealotry But maybe Miliband’s ambition to be chancellor, and his desire to inflict a deeply left-wing fiscal policy on Britain, really does trump his net-zero zealotry.
Why is the UK’s tax system so taxing?
I noticed something very odd on my recent move to the UK from Australia. It wasn’t the heat wave. Or the revolving door of prime ministers. (We’re used to both.) Instead it was the massive, humming refrigerators located next to the entrances of apparently every cafe and grocery store in the UK, offering a bewildering array of freshly-packed ‘meal deals’. At first I assumed this must reflect the time-poor London luncher. Who has time to sit down and eat a meal when trying to navigate tube strikes on an e-bike? But then I checked my receipt. Ordering a refrigerated meal to take-away immediately knocked 20 per cent off the purchase price compared to dining-in.
For true Brits, air con is as foreign as a bidet
A quartet of news stories all point in the same troubling direction. First, easyJet is about to become the latest notable name to leave the London Stock Exchange, following last month’s takeover of Tate & Lyle by a US buyer. The FTSE 250-listed low-cost airline is keen to accept a £5.5 billion offer from Castlelake, a private equity firm that’s also – you’ve guessed it – from the US. Inherent volatility in the aviation business combined with the presence of founder Stelios Haji-Ioannou as a minority shareholder has made easyJet a turbulent long-haul flight for investors. The shares have rocketed since Castlelake came into the picture, so cashing out looks rational – but the predation of our public market by foreign bargain-hunters goes on and on.