Matthew Lynn

It is possible that President Macon had some clever plan when he called a general election in the wake of catastrophic European election results last night. After all, he has a reputation for always being several moves ahead on the political chessboard. And yet one point is surely clear. France can’t afford a Le Pen government – and its election may well trigger a crisis in the French debt markets.  Le Pen, after all, is a high welfare, big state, economic nationalist It is, perhaps, not quite such a foregone result as Britain’s election a few days earlier. And yet after the second round of voting on 7 July, it looks almost certain that Marine Le Pen’s National Rally will emerge as the largest party in the French parliament, and will be able to form a government.

We don’t know much about what taxes she will impose. Nor do we have many clues as to how she will boost growth, or find the money to improve public services. Still, not to worry. It turns out that we can, at least according to her feed on X, trust the shadow chancellor Rachel Reeves to ‘run the economy’ for a very simple reason. She used to work at the Bank of England, and apparently they know about that kind of stuff over there. There is just one problem. In reality the Bank is not as brilliant as Reeves seems to think it is – and it is questionable, to put it mildly, if working for it really qualifies you for anything. For anyone wondering if the Labour government is likely to improve the UK’s dismal economic outlook, Reeves had some reassuring words this weekend.

It more than doubled its sales. It unveiled a new line of microchips. It promised to keep rolling out new products for the next few years. In the end, Nvidia, the chip manufacturer, delivered the kind of blockbuster results that traders and investors had been waiting for. Yesterday’s ‘Nvidia Day’ (as the company’s quarterly results days are now known on Wall Street) turned out to be better than even the most bullish investor could have hoped for. There is just one snag. The company is now powering the bull market. If anything goes wrong with its turbo-charged expansion, it will bring equities down with it. It’s great for the moment There was no question that it was an impressive set of figures.

Another day, another all time high. As the week closed, the FTSE 100 index hit 8,433 — the highest level it has ever reached — and this is turning into a regular occurrence. The FTSE has now hit 11 all-time-highs over the last month, and it is close to equalling the record set way back in 1984 of 12 all-time-highs within a single four-week period. Add in a mega-bid and better than expected growth figures and it may look as if the UK is booming again. Well, perhaps. In reality, however, all that is happening is that the FTSE 100 is finally recovering from two decades of miserable under-performance — and it would have to go a lot higher to break any real records.  The FTSE 100 would have to go a lot higher to break any real records.

Javier Milei was taking too many risks. Argentina’s president didn’t have enough political support. And his radical version of free market economics didn’t offer any solutions anyway, especially in a world where the state is more crucial than ever. When Milei won the presidency last year there were plenty of predictions that he would fare as well as Britain’s Liz Truss. And yet, there are signs the medicine is starting to work – and that will be globally significant.   Over the past couple of weeks, the data coming out of Argentina has been far better than anyone expected. This month, inflation is forecast to dip below 10 per cent – admittedly a month-on-month figure – compared with a high of close on 300 per cent earlier this year.

The share price is in freefall. Sales are sliding at an accelerating rate as customers lose interest. The Chinese are moving in, and the brand is tarnished. When Elon Musk unveils the quarterly results for Tesla later today, he will need to convince his shareholders he has a plan to turn the company around. The only trouble is, right now there is not much sign Musk has a clue what to do. Musk is a brilliant entrepreneur. There is no question of that. But he has also spread himself too thinly Tesla’s results this week are expected to be its worst in years. Sales have already fallen by 8 per cent in the first three months of this year, ending a decade of rapid expansion. Profit margins are getting squeezed.

It has finally happened. In trading on Tuesday afternoon, the UK’s FTSE 100 index finally closed in on an all-time high. It hit 8,015 points, itching above the previous record closing level of 8,014 set in February 2023 – even if it was still a whisker below the intra-day trading record of 8,043, also from February last year. With stock markets rising around the world, at some point this week or perhaps next, the FTSE 100 will be setting fresh records daily. We may even be treated to one of those self-congratulatory tweets the Prime Minister, Rishi Sunak, specialises in. The trouble is, there is nothing to celebrate. In reality, the FTSE has been a dismal disappointment. Nothing will change that soon.  With inflation, record highs are inevitable.

Mortgage rates will finally start to come down again. Consumers will have a little more money in their pockets. And companies will find it cheaper to invest. Today’s cut in interest rates was a much needed boost for the economy. Oh, but hold on. That was over in Switzerland, where the central bank this morning cut rates by 0.25 per cent. By contrast, the Bank of England has today kept them on hold. This raises the question of whether the Swiss or British central banks have a better record of managing monetary policy. If most people in the markets had to put money on it they would probably place a franc or two on Switzerland.  The Bank of England has blundered all over again – and the price for that will be a high one This may well prove to be just the beginning.

Growth will be turbo-charged, animal spirits will be unleashed, and foreign investment will flood back into Britain. Shadow chancellor Rachel Reeves is promising a Thatcher-style revival of the British economy if Labour wins power. But there's a problem with the pitch that she will deliver in her keynote Mais lecture on the economy today: a Labour government isn't going to deliver this promised growth. Reeves is setting herself up for failure.  Labour's proposals are painfully thin With at most only a few months left before she takes charge of the Treasury, as she inevitably will, Reeves is making it clear that she expects the UK to return to the 2.5 per cent annual rate of expansion that were normal in the 1980s and 1990s.