Matthew Lynn

As New York’s wealthy elite weigh up the options under their new ‘democratic socialist’ Mayor Zohran Mamdani, many of them are now reported to be considering fleeing to London instead. But will it really offer them the safe harbour they are searching for? The truth is that under the Labour Chancellor Rachel Reeves and Mayor Sadiq Khan, Britain's capital has become an even worse place to be rich than the city they are looking to get out of.  There are plenty of reasons for American billionaires to feel nervous about the Mamdani regime. The new mayor has promised an extra 2 per cent tax on incomes above $1 million (£758,000) as well as higher corporate taxes to fund his plans for free buses and childcare. Of course, it remains to be seen whether he can make that happen.

After yet another dreadful week, the Chancellor Rachel Reeves must be praying the Bank of England helps her out by cutting interest rates tomorrow. It would reduce the huge amount of interest the government has to pay, it would put more money in people’s pockets, and it might even stimulate growth. The trouble is, the Bank’s governor, Andrew Bailey, can’t afford to bail Reeves out of the hole she has dug for herself. If the Bank does, it will be risking its independence. Even the City’s experts have no clear idea what the Bank will decide on interest rates this week. The markets have priced in a one in three chance of a cut, rising to a two in three chance of a cut by the end of the year.

Nigel Farage has shelved massive tax cuts in favour of slashing public spending in a bid to balance the books. The Reform leader said in a speech this morning that 'substantial tax cuts given the dire state of debt and our finances are not realistic at this current moment'. The ‘back-of-a-fag packet’ economics that characterised Reform’s election manifesto last year have been disposed of No doubt a fair few Reform supporters will be disappointed: it means that, if Farage wins power at the next election, the tax burden will remain at a post-war high for at least a couple of years. We won’t be hearing very much about the Laffer Curve during the election campaign. But make no mistake: Farage is right. Bold tax cutting would have turned a Reform administration into Liz Truss 2.

The British steel industry has been staggering from one crisis to another for the whole of this year. Half of the industry has fallen into effective state control, and what’s left is teetering on the edge of collapse. The government has finally come up with a plan to rescue it. In collaboration with the US and EU, it wants to create a ‘ring of steel’ protecting all the major Western industries from cheap Asian imports. It sounds simple enough, but there is just one catch. This plan won’t do anything to fix soaring domestic costs – and that is the real problem.  The government certainly needs to do something to help the steel industry.

As Nigel Farage prepares to abandon pledges of up to £90 billion in tax cuts, there will be plenty of people arguing that his Reform party is giving up on its free market, small state roots. Other critics may say this is proof that Reform is shifting further to the left and pandering to its new voters in the old Labour heartlands. A few critics may well even accuse it of joining the ‘uniparty’. Perhaps so. And yet, with its dominant lead in the polls, Reform also had to get rid of a set of policies that often gave the impression they had been scribbled on the back of a fag packet close to closing time. The crucial question will be whether it can come up with a credible plan for the economy instead.

Gold is in the middle of what looks like an unstoppable bull run. It has already punched through $4,000 an ounce. At the rate the price is rising, it may well go to $5,000 within a few weeks, and perhaps even $6,000 as the next year unfolds. There have been lots of different explanations for this, from the looming collapse of the dollar, to secret Chinese buying, to the conspiracy theories circulating on the wilder fringes of the internet, such a secret plot to re-establish the gold standard, or attempts to replace all the metal that is meant to be stored at Fort Knox, America’s official gold reserve, which apparently went missing decades ago. But the real explanation is very simple: it is the only way to hedge against soaring government debt.

He wasn’t able to announce the £300 off household energy bills that was promised during the election campaign. Nor could he unveil any massive new solar farms or wind turbines. Still, the Energy and Climate Change Secretary Ed Miliband did have one message to cheer the party faithful in his conference speech today: he is going to ban shale oil and gas for all time. 'Let's ban fracking and send the frackers packing,' he thundered. But can Miliband really do that and outlaw fracking forever? Only a fool would pretend that he can. Right now, there is a moratorium on extracting shale oil and gas in the UK, which could, in theory anyway, be lifted at any time by a new minister. With Reform pledging to lift it, and way ahead in the polls, that is no longer a far-flung prospect.

There are plenty of legitimate questions to be asked about the Trump-Blair peace plan for ending the conflict with Israel. Will Hamas ever agree to it? Will any peace deal hold? Will the wider Middle East get behind it? And will Sir Tony Blair ever be able to overcome the legacy of his earlier military adventures in the region to establish any kind of authority? But there is also another question that we must ask. If this peace does hold, can Trump and Blair turn Gaza into a cross between Dubai and Singapore – or is that completely deluded? All the immediate attention will, of course, be on whether this new deal actually ends the fighting. We will find out over the next few weeks.

It will at least give the cabbies something to genuinely complain about. Amid all the wheezes that Chancellor Rachel Reeves is plotting to fix the ‘black hole’ in the public finances, she is now considering a ‘taxi tax’. Ahead of November's Budget, it has been floated that VAT may well be applied on all cab rides. But this plan is likely to end up backfiring badly on Reeves – and the government more broadly.  According to reports this week, the Chancellor is likely to impose a blanket 20 per cent rate of VAT on all taxi rides. Right now, taxi firms outside of London do not have to charge VAT because drivers are classed as self-employed, and most don’t hit the £90,000 annual threshold at which the tax has to be levied.

Tesla does not look like a great investment right now. The competition from better and cheaper Chinese electric vehicles is savage and Elon Musk's outspoken political views have tarnished the brand, at least among the eco-conscious liberals who first adopted it. And yet, Musk has just spent $1 billion (£733 million) of his own money on its shares. His investment only makes sense as a bet on its robotics unit – but that is still very high risk for the company's pugnacious CEO.  No one could ever accuse Musk of not putting his money where his mouth is. While Tesla may be under more pressure than ever, yesterday he sank his own money into buying more shares to add to his existing 15 per cent stake in the company.

The pound is starting to slide. Gold is punching through record highs, and long-term gilt yields are hitting levels that have not been seen in thirty years. It is not a Liz Truss style crisis, at least not yet, although it is worth noting that the price the government has to pay to borrow money is way above the levels it reached when the former prime minister ‘crashed’ the economy. But it is starting to become painfully apparent that the Labour government is rapidly losing the confidence of the financial markets. It is yet another nervous week for the economy. The yield on 30-year gilts, the best long-term measure of the solvency of the British state, rose yet again on Tuesday morning, hitting 5.68 per cent, its highest level in 27 years.