Kate Andrews

The furlough scheme begins to wind down today, as employers will now pay 10 per cent of their staff’s salaries, while the government continues to stump up 70 per cent of their wages. Employees won’t notice a change to their income, which will still be 80 per cent of their monthly wage, with a cap of £2,500. The question, however, is to what extent employers feel the financial sting, and whether it leads them to scale back their workforce. The numbers on furlough have been coming down steadily since economic activity liberalised in April. According to official government estimates, May alone saw one million people come off the scheme, as indoor hospitality and more of the services industries were allowed to reopen. But around 2.

The Tories have a pension problem – and it’s not strictly financial. Over the coming weeks, the cost of pension promises is likely to be in the spotlight. The pensions ‘triple lock’, which the Prime Minister reportedly refuses to scrap, means that the state pension is upgraded each year in line with average earnings, the Consumer Price Index or by 2.5 per cent – whichever is higher. This year, it’s likely that earnings will be the highest of these figures by a long way. Here we encounter a problem: the triple lock was not designed with a pandemic in mind. The crazy world of 'Coronomics' has led to the biggest recession in 300 years, yet average wages increased quite dramatically; they are currently up 5.6 per cent on the year.

The UK economy continued to rebound in April, with this morning’s update from theOffice for National Statistics showing GDP grew 2.3 per cent — slightly better than the consensus prediction of 2.2 per cent. The reopening of non-essential shops and outdoor hospitality on 12 April contributed to the boost. GDP now sits 3.7 per cent below its pre-pandemic levels, the closest we’ve come to achieving full recovery. Forecasters are increasingly confident that we’ll be back to pre-pandemic levels in 2021, even possibly before Q4. Capital Economics says ‘early indicators suggest that GDP growth was strong in May as well,’ when more indoor activity opened and numbers on indoor and outdoor socialising relaxed further.

Calls to reform corporation tax are nothing new and don't just come from the left. The inefficient and bureaucratic nature of the tax has been highlighted by free-market advocates for years, as it becomes increasingly obvious that, in the age of multinationals and digital tech giants, the structure is no longer fit for purpose. Action is now being taken. This afternoon the advanced economies which form the G7 agreed a new structure for taxing big corporations. The historic deal will see a major shift in the way companies are taxed: away from the existing model in which they are taxed in accordance with where their product is created to a new system based on where they are operating.

Amidst all the explosive claims made by Dominic Cummings during today’s select committee hearing, one towards the beginning of the seven-hour session seemed rather unintentional. When asked by Rebecca Long-Bailey MP about what economic assessments were made when considering the first lockdown, Cummings responded that there was no straight-forward ‘document floating around’ which laid out the ‘economic costs’.

Two months ago The Spectator reported on what was keeping Rishi Sunak awake at night ahead of the Budget: an inflation resurgence that could damage Britain’s economic recovery as it comes out of the pandemic. He deliberately designed his March Budget with inflation in mind, trying to make the UK’s finances ‘Biden-proof’ if inflation or interest rates started to move, and the cost of servicing the country’s debt became remarkably more expensive.At the time, Sunak was a lone voice on the matter. His inflation fears put the decision to raise tax into perspective, but many remained critical of his rather cautious approach. Inflation seemed a strange focus as the conditions for major change appeared glaringly absent.

New growth figures were released this morning show that the economy contracted 1.5 per cent in Q1 this year and remains 8.7 per cent smaller than it was in Q4 2019 (the last quarter not to be impacted by the pandemic). Alongside this update, the Office for National Statistics also released its latest set of monthly figures, which saw GDP rise by 2.1 per cent in March — the biggest boost since August last year — taking the economy to 5.9 per cent below pre-pandemic levels. That GDP fell by just 1.5 per cent overall once again illustrates the extent to which businesses have developed a resilience to lockdowns. The first quarter of this year saw much economic activity either wildly distorted or banned outright.