Matthew Lynn

Government borrowing is lower than had been forecast. The economy needs some form of a boost. And perhaps most of all there is an election within a few months. There are plenty of reasons why Chancellor Jeremy Hunt might want to cut taxes slightly in his spring Budget, and perhaps even once more by the autumn. But hold on. The International Monetary Fund (IMF) has just said it would be ‘fiscally irresponsible’. Well, perhaps. And yet, the IMF’s record on forecasting is very poor, and it is also very committed to a high-tax, big-state economic model. On that basis, Hunt should just ignore it, and cut taxes anyway.

Christine Lagarde, the president of the European Central Bank, has one of the most glittering CVs in European politics. The ex finance minister of France, and former managing director of the International Monetary Fund, earns £365,000 a year for running the show at the ECB. But is she any good? An internal poll of staff at the Bank, leaked to the press, suggests not. It found that more than half of employees rated her leadership of the organisation as either ‘poor’ or ‘very poor’. Her own people reckoned she put self-promotion ahead of the institution (‘Quelle surprise’ as they would say in her native country), pushed an irrelevant political agenda, and had little knowledge of the markets or the economy. 'Lagarde is generally reported as being an autocratic leader.

Why is Oxfam so concerned about the coming possibility of the world’s first trillionaire? The charity has this week released a report with an apocalyptic warning that one is likely within the next decade. Yet surely people only get that rich by making something that people want. That should be celebrated instead of condemned.  In a report published for the start of Davos, the annual event where very rich people gather at an expensive resort in Switzerland to worry about being rich, Oxfam said the world’s first trillionaire could come soon. Apparently, that showed we are entering a ‘decade of division’. ‘We have the top five billionaires, they have doubled their wealth’, said Oxfam’s executive director Amitabh Behar.

The charlatans had been exposed. Its flimsiness had been confirmed. And the bubble had finally burst. Rewind to just over a year ago, and with the collapse of the crypto exchange FTX and the arrest of its billionaire founder Sam Bankman-Fried it seemed as if the legions of skeptics of the digital currency Bitcoin had been proved completely right. But hold on. Over the last few months, its price has soared again. In reality, Bitcoin has made fools of its critics once again.  In the wake of the FTX scandal, Bitcoin, along with its digital imitators, seem headed for history’s dustbin. After all, the collapse seemed to confirm all the accusations levelled against it. It was over-hyped, fraudulent, and unreliable.

Well that was a surprise. At just 3.9 per cent, down from 4.7 per cent, the latest inflation figure published today came as a shock for many. The figures are far lower than the consensus forecasts, and even low enough to allow the Prime Minister Rishi Sunak to meet his forecast to halve the rate by the end of the year. But should we really be surprised that inflation has fallen so rapidly? Monetarists – who noticed that the money supply has been contracting since the start of the year – won't be taken aback by the inflation figures. They said all along that the flow of money is the key to inflation – and they've been proven right.

Critics of Argentina's president Javier Milei have already made up their minds: he is a lunatic and his plans will collapse on first contact with the real world. Argentina's money will run out and the economy will grind to a halt. To some commentators, he is a ‘hard-right’ ideologue who will crash the economy within weeks. They say he's like Liz Truss and Kwasi Kwarteng on roller-skates. If you listen to those attacking Milei, you'd be forgiven for thinking the man in charge in Buenos Aires will precipitate yet another economic calamity in a country which has been stumbling from one disaster to another for almost a hundred years. But hold on. It turns out that the markets don’t quite see it like that.

When Jeremy Hunt takes to his feet in the Commons this afternoon to deliver his Autumn Statement, he'll be trying to woo voters with some tax 'giveaways': VAT thresholds might be raised to help small businesses and the basic rate of National Insurance could be reduced for the rest of us. But hold on. Before the Chancellor gives anything back, both he and the Prime Minister Rishi Sunak need to do something far more important: they should apologise for all the tax rises the Tories have imposed. We don’t know the final figure yet, but it turns out that the Chancellor has around £13 billion to £15 billion of ‘headroom’, as the fiscal jargon has it, to cut taxes.

At least there will be some pandas. At his summit with President Biden this week, China’s President Xi pledged to send more cuddly bears to the US, the traditional Chinese way of cementing good relations with other countries. More importantly, there was a significant easing of tensions between the two largest economies in the world. Military communications will resume, reducing the chances of a catastrophic miscalculation between the two nations, controls on narcotics will be tightened up, and there will be a resumption of high-level diplomatic contacts. It remains to be seen if that sticks. But if it does, one point is surely clear. That could yield a huge ‘peace dividend’ for the global economy.

It runs a vast budget deficit. It keeps raising taxes way above its neighbour. It spends wildly, it is at war with its major industry, and its former leader has been arrested over an investigation into missing party funds. But, heck, never mind about that. Humza Yousaf, the leader of the Scottish National Party, has just decided the bond markets will now have the privilege of ignoring Switzerland and Norway for a few days and can lend a few billion to Scotland instead. There is just a small problem, however. Why would anyone want to lend money to Humza?  It was certainly an ambitious proposal. In his conference speech, Humza Yousaf announced plans to tap the bond markets directly.

The timing could hardly have been better. Other Labour leaders and shadow chancellors have had to make do with endorsements from the drummer in a 90s Britpop band, or a runner up for the Booker Prize. Rachel Reeves, however, rounded off her speech to the Labour party conference today with no one other than the former Governor of the Bank of England Mark Carney singing her praises. But hold on. Isn't Carney starting to abuse his position – and possibly the Bank's independence as well?  By taking sides so openly Carney is turning the Bank into a political body At least we know who Carney would be voting for if he happened to still be in the country. 'Rachel Reeves is a serious economist,' he told delegates at the conference in a video message.

There are lots of plausible explanations for Dame Sharon White’s failure at the department store and grocery chain John Lewis. The retail environment was too tough. Her predecessor expanded too quickly. During a cost–of-living crisis and with the shift to online shopping it was always going to be a very tough gig. Yet once you look a little deeper, the real explanation is this: the quango-cracy, of which she was a leading member, is useless at running a real business. With her early resignation today, Dame Sharon has, to her credit, recognised a fact that was already painfully obvious to everyone else. Put simply, she was not up to the task of turning around John Lewis, and it would be far better for someone with more experience of rescuing failing retailers to take over.

Bond yields are soaring. The cost of debt, and very soon mortgages, is rising. And the government is getting nervous about how it is going to borrow the next ten or twenty billion. This might sound like the opening of a one-year-on post-mortem of Liz Truss’s ill-fated mini-Budget (we have all been treated to those recently). But in fact, it is a description of what is happening right now across Europe. The eurozone is facing its Liz Truss moment, and the results are likely to be every bit as catastrophic.  Across Europe the bond markets are starting to look jittery. Over the last couple of days, the yield on ten-year Italian bonds has risen to 4.

The Office for Budget Responsibility (OBR) will have to sign off on any changes to taxation. It will need to run its slide rule over any spending plans. And it will be mandated to commission an independent panel of experts to approve the Chancellor’s lunch, checking it for nutritional standards, and competitive pricing.  Okay, it is possible that I made that last one up. But the rest are right: the Labour party has just promised to vastly increase the powers of the OBR, allowing it to scrutinise the government machine in minute detail. In effect, it will surrender control of its economic programme to the same grey bean-counters who have already failed Britain – and that will condemn the country to five more years of dismal stagnation.