Matthew Lynn

It was easy to mock it as a piece of political grandstanding. On taking office, the Chancellor Rachel Reeves almost immediately discovered a ‘black hole’ in the public finances, and started warning of tax rises in the autumn. To many of her opponents, it looked like pure opportunism. And yet, now it turns out that she was right. The latest data on public finances show that the British government really is running out of cash. There is just one snag. Everything Reeves’s colleagues are doing will make that even worse, and her threatened tax rises won’t raise anything close to enough money to make the numbers add up.  The public sector borrowing figures published by the Office for National Statistics today made for dire reading. The government borrowed £3.

The rich are happy to pay more, the broadest shoulders should bear the heaviest burden, and the climate emergency means more money is urgently needed to save the planet. We keep being told that the better off are more than willing to contribute plenty to the government if only they were asked. Groups such as Patriotic Millionaires UK have campaigned for wealth levies, even projecting light shows reading 'Tax our wealth' onto the Bank of England to make their point. Meanwhile billionaires such as Sir Jim Ratcliffe and John Caudwell backed Labour at the last election, presumably comfortable with their plans to put up taxes for the better off. In reality, no one believes that giving more money to the government actually achieves anything And yet, here is something odd.

She didn’t have to slog around New Hampshire, there were no debates, and there were few opportunities for voters or journalists to ask Kamala Harris any questions. The Democratic nomination for President fell into her lap when it became painfully clear that Joe Biden was far too old and too unwell to run for a second term. That may turn out to be very lucky, at least for her. Later today (Friday), Harris will unveil her first new policy of the campaign. The trouble is this: it is completely idiotic. After a campaign that has so far been strong on vibes, and weak on anything that vaguely resembles a detailed plan for government, Harris will make what has been billed as the first major policy speech of her run for the presidency in Raleigh, North Carolina, today.

Growth is slowing down. The property market is wobbling. And the government is tightening its grip on every form of economic activity. Global investors have made a decision about China over the last few months. It may have one of the biggest markets in the world, but the risks are simply too high. Over the second quarter of this year, foreign investors pulled a record amount of money out of China. A total of $15 billion was taken out of the country, and if that continues for the rest of the year it will be the first time the total has turned negative since 1999. There is, however, one exception: Germany. In total, German companies invested €4.8 billion in China in the second quarter, almost double of what they invested in the first quarter, according to the Bundesbank.

The markets are tumbling. Investors are bailing out. And there are already fears that the plunge in equities is a sign that a recession is just around the corner in America. With a presidential election only a few months away, the Federal Reserve will come under intense pressure to bail out the market with a cut in interest rates as it has done so often over the last quarter of a century. So will central banks in the UK and the Euro-zone. This time around, though, it would be madness to cut rates: it will just make the asset bubble much worse.  The FTSE-100 has fallen sharply again this morning, and the brief rally experienced by the markets earlier this week has already run out of steam.

The bubble in artificial intelligence stocks has started to pop, two decades of easy money in Japan have finally started to come to an end, and (after hitting all-time highs) share values are being reassessed. There are plenty of plausible explanations for the sudden plunge in stock markets around the world over the last few days. And yet the big one is this: investors have started to worry that the global economy is heading into a recession, and they are surely right to do so.  The markets are often volatile.

It doesn’t buy anything anymore. It is not enough to put into a charity box, and it just takes up space in your pocket or a purse. On one level, it will save us all a lot of trouble when one penny and two penny coins finally become extinct. The Treasury has told the Royal Mint not to make any new ones this year; and although there are plenty behind a sofa somewhere, this means they could eventually vanish completely. We will miss them when they are gone.  Rachel Reeves, the new chancellor, is keener on increasing government budgets than reducing them. One cut that may well be made, however, is scrapping the smaller coins. Indeed, over the next few years, we may stop minting new coins completely.

Liz Kendall wants Britain to get back to work. The Work and Pensions Secretary has unveiled a target for the country to reach an 80 per cent employment rate. But hold on: that 'ambition', as the government is calling it, is completely unrealistic. Labour's plan to reverse the dire labour market and drive up Britain’s employment rate seems certain to fall short of its ambitious target. Spending on sickness and disability benefits is set to increase by £30 billion over the next five years Britain is the only country in the G7 whose employment rate has still not returned to pre-pandemic levels: 2.8 million people are out of work because of ill health or disability; one in eight young people are not in education, employment or work.

It might seem like smart politics. And it will reassure the markets. The legislation in the King’s Speech today to ensure all Budgets are assessed by the Office for Budget Responsibility (OBR) no doubt seems like a good idea right now. And yet, there is a catch. The incoming Labour government has now completed the job started by Gordon Brown as chancellor back in 1997, and completely outsourced economic policy to ‘independent experts’. At some point, it is going to regret that decision. It is not hard to understand why the powers of the OBR have been increased in the King’s Speech unveiled today.

A major new factory from one of the American tech giants perhaps? Or a new lab from one of the pharmaceutical giants? Or, best of all, a huge new green energy fund. The newly appointed Chancellor Rachel Reeves was probably hoping for some positive investment news for her first week in office, especially as she has decided, in an unprecedented move, to make ‘growth’ a ‘national mission’. Instead, one of the UK’s best businesses has cut almost a third of its UK workforce – and that will just be the start of the corporate exodus from Labour’s Britain. Dyson will argue that its decision to axe 1,000 jobs in the UK, announced today had nothing to do with the election of a new government. It had been planned for months. Well, perhaps.

Rishi Sunak's bags are probably packed. The plane tickets are booked. And no doubt he has found somewhere for the family to stay while they look for a permanent home. It is widely assumed that, having lost the election, Sunak will soon disappear to Silicon Valley as quickly as possible to restart his career. But hold on. Sure, it is easy to understand why Sunak would want to get as far away as possible from the car crash he has presided over. Yet after running one of the most spectacularly inept election campaigns in history, will the tech giants still want him?

If you didn’t have time to watch the presidential debate between Donald Trump and Joe Biden last night you could have just watched the share price of a little-known Chinese company called Wisesoft instead. Its Chinese name ‘Chuan Da Zhi Sheng’ sounds very like ‘Trump Wins Big’ in Mandarin, and local speculators piled in as it became clear just how catastrophically the incumbent had performed. In reality, that verdict is going to be repeated when Wall Street opens later today. Investors, though, have already made up their minds. Trump is going to win, and nothing can change that now.  The markets are already buying up all the assets that will benefit from a Trump victory in November It was probably the most painful TV debate any of us have ever watched.

Big business will be brought onside. The bond markets will be mollified. And there will be plenty of reassuring words about dealing with the budget deficit. With the first round of voting in France’s parliamentary elections set for this week, Marine Le Pen's Rassemblement National is preparing for government. This week it has set out a programme designed to keep investors, if not exactly happy, at least under control. There is just one catch. It is also a programme for stagnation – and that means France’s out-of-control debts are going to grow and grow.

When Paris overtook London as the continent’s largest stock market two years ago, it was widely seen as a significant milestone in Britain’s relative decline. It was a sign of the City of London’s weakness – and it was evidence that the UK’s departure from the European Union was slowly destroying its once powerful financial markets. But hold on. This week, London has reclaimed top spot. French president Emmanuel Macron’s high-risk gamble on a general election has already backfired, at least financially, and he has now gifted financial leadership back to London.  Thanks to France's president, the smart money is leaving Europe On Monday, the total value of all the equities quoted on the London market hit $3.18 trillion (£2.5 trillion), compared with $3.13 trillion (£2.

As Emmanuel Macron heads into a fraught election, France's president is repeatedly warning voters of the calamitous consequences of electing Marine Le Pen’s National Rally into government. In doing so, he is effectively weaponising the bond market. His allies point to what unfolded under Liz Truss's government. The message to voters is clear: don't even think about. The debt crisis is largely of Macron’s own making Throwing a ‘grenade’ at those considering backing National Rally might be smart politics, but it is very dangerous economics – and the consequences may be catastrophic for the country he leads. You can hardly blame Macron for panicking: his decision to call a snap general election last week does not appear to be working out very well.

It has impeccable green credentials. It is crucial to the country’s power grid. And it is one of the UK’s largest private companies. A floatation of Octopus Energy should have been just the kind of event that would give the London Stock Exchange a much needed boost. And yet it now emerges that it may well choose a rival market to list its shares. If that happens, it will accelerate the City’s decline into global irrelevance – and an incoming Labour government may well finish it off.  It is probably the worst news the London market could have had. The chief executive of the giant Octopus Energy, the largest electricity supplier in the UK, revealed today that the company might list elsewhere.