Matthew Lynn

She may have been one of the most unpopular chancellors of modern times, widely mocked during her tenure in the Treasury for allegedly embellishing her CV and sobbing in the House of Commons before abruptly being dispatched to the backbenches by the new prime minister, Andy Burnham. But at least, according to the woman herself, it turns out we have Rachel Reeves all wrong. At a lecture at Harvard university yesterday, Reeves robustly defended her record. Of course, we all understand that she wants to salvage something from her short time in office. But is it perhaps a little too late to rescue her reputation?

The shift to the right across South America has been stopped. One of President Trump’s key regional allies has been defeated. The global left, and most of the center, has been celebrating the victory of President Lula over Flávio Bolsonaro in a closely fought election this weekend. There is just one problem. As the brutal sell-off of financial assets demonstrated, Brazil has also voted for economic chaos. That rarely ends well. The election may tip Brazil into a full-scale crisis While the left were toasting victory on Monday morning, investors were furiously dumping Brazilian equities and, more importantly, debt. On Monday the Bovespa – Brazil’s main stock market index – fell by over 15 percent.

It is starting to look very likely that the government will drop the complete ban on the sale of petrol cars after 2035 and ease up on the targets for the transition to battery-powered vehicles (EVs). The industry is not ready for it, the infrastructure does not seem to be in place, and it is all costing too much money. But will watering down government targets for how many EVs the industry sells actually solve any of these problems? The charging networks will need compensation, while it will take a lot of money to rebuild the domestic industry. In reality, Britain will still have to pay a high price for the doomed attempt to centrally plan the car market. It may just be a matter of time before the 2035 ban on the sale of new petrol cars is scrapped.

The Resolution Foundation will have to scrap its plans for higher capital gains tax, the Institute for Fiscal Studies will have to redraft the arguments for an exit tax, and the Fabian Society will have to stop thinking about ways to tax dividends more heavily. The left-wing think tanks may have been hoping for a Budget that would be packed with all their pet schemes for raising more revenue from ‘the rich’, but it seems they will be disappointed. Apparently the Chancellor John Healey is planning a ‘budget for entrepreneurs’. After the hammering entrepreneurs have taken over the last decade that would not be very hard – the trouble is it does not seem very likely.

Rachel Reeves made a great start – but now it looks as if her successor as Chancellor John Healey is determined to finish the job. With yet another tax raid reportedly being planned, the Treasury has clearly decided that family-owned businesses are an easy target as it struggles to balance the books ahead of next week’s Budget. Clearly, though, the Treasury seems not to know that family-owned businesses are critical to keeping the economy running. We would certainly miss them if they go. The Labour government has already dealt one blow to family-owned companies by imposing inheritance tax on them when they are passed from one generation to the next. The latest leaks ahead of the Budget suggest Healey wants to double down on that. But how?

When he presents his first Budget later this month, Chancellor John Healey won’t have many ‘bash the rich’ or ‘hammer big business’ levies to cheer up his backbenchers. A stiff rise in capital gains tax has been ruled out and the threshold for the mansion tax most probably won’t be lowered. It looks likely, however, that Healey will introduce an online tax crackdown. But is there a chance this could backfire? In the Budget, Healey is expected to announce that online marketplaces, such as Amazon, eBay and China’s Temu, will be forced to be responsible for collecting the VAT due on the products sold on their platforms. At the moment, lots of shell companies sell lots of stuff through the big web retailers, and then they are closed down again before any VAT has to be paid.

Twelve billion pounds a month, £3 billion a week, or £420 million a day. If we divide the latest estimate of the size of the ‘black hole’ in the public finances facing Chancellor John Healey by the time he has been in office, the shortfall is starting to grow at an alarming rate. It is very clear that there is no easy way out of the mess he has inherited from his predecessor Rachel Reeves. All Labour Chancellors seem run out of money eventually, but Healey appears to be getting there in record time.  With only a couple of weeks left until Healey's first Budget, the Institute for Fiscal Studies (IFS) has nothing but bad news for the Chancellor. Higher than expected inflation means the cost of welfare payments is rising rapidly.

If you have your eye on a shiny new Jaecoo 7, affectionately known as the ‘Temu Range Rover’, or a BYD Sealion or an MG4 then you probably need to scoot down to your local dealer as quickly as possible. The government is considering imposing tariffs on Chinese imports that could add 40 per cent or more to the cost. We all know why: the Chinese auto companies are taking the British car market by storm. But are tariffs enough to stop them in their tracks? In truth, it seems all we can do is learn the lessons from the electric vehicle fiasco and try not to repeat it.

The 5 percent barrier has long since been left behind. This week, the yield on 30-year American government bonds hit 5.6 percent, its highest level since way back in 2002, while the cost of ten-year borrowing rose to its highest level in 20 years. However hard the Treasury Secretary Scott Bessent tries to control it, the interest rate the American government has to pay to finance its vast deficit keeps on rising relentlessly. As it climbs towards 6 percent and perhaps even higher, surely we must soon see a change in the political debate. Three decades of financial complacency will be swept aside – and the politics of deficit reduction will be back.

We already know that Andy Burnham, with his talk of public ownership and ending ‘neoliberalism’, wants to take the county back to the 1970s. But now it turns out that his Chancellor John Healey plans to go one better: he wants to take us back to the 1950s. In his speech to the Labour party conference today he has pledged to put shipbuilding at the heart of his plans to reindustrialise the British economy. But is shipbuilding really the industry of the future? It at least made a change from ministers blathering on about AI or the opportunities in space. When he addressed the Labour party faithful in Liverpool, the Chancellor offered something that he clearly thinks will prove more substantial. He promised 'a new age of industrialisation'.

It was the kind of line that Robert De Niro would deliver perfectly in a gangster epic. “I am the house now,” the United States Treasury Secretary Scott Bessent declared confidently last week. “And you can bet against me if you want.” It was the most aggressive attempt yet by the most powerful financial official in the world to take on and tame the traders of Wall Street. With major interventions underway to control the yen-dollar exchange rate, and the yields on America’s $40 trillion national debt, Bessent’s message was clear. They will lose money if they dare to defy his will. Well, perhaps they will in the short term. With a background at the world’s most successful hedge fund, Bessent knows more about the market than most people. There is just one snag.

One of the sub-plots of the last twenty years has been the growth of “derangement syndromes.” It started with Bush Derangement Syndrome at the start of the century, morphed into the far more powerful Trump Derangement Syndrome, took a side trip to the other side of the Atlantic with Brexit Derangement Syndrome, and then turned into Tariff Derangement Syndrome. The basic symptoms are always the same. Some fairly minor, and probably not even very radical reforms, get reframed as an existential threat to the economy, democracy and even civilization itself. We are now seeing the latest example. Warsh Derangement Syndrome, named after the new Chairman of the Federal Reserve, Kevin Warsh – and for investors it is likely to prove the most expensive yet.