Matthew Lynn

We will no doubt hear lots of familiar excuses if later this week, as seems increasingly likely, the British steel industry faces 50 per cent tariffs on its exports to the United States. There hasn’t been enough time. The White House has been too busy, and so has the Prime Minister. The trouble is, none of them make sense. And so when these tariffs kick in, the Labour government, which we might expect to defend a traditional heavy industry, will have abandoned steel to its fate.  When the 9 July deadline for the suspension of President Trump’s tariffs expires, we can expect chaos in the global trading system. The EU’s over-confident and arrogant negotiators have failed to reach a deal, leaving every exporter in the bloc facing huge tariffs from Thursday onwards.

The Chancellor Rachel Reeves was in far better form when she appeared again in public alongside the Prime Minister Sir Keir Starmer yesterday. The tears have been wiped away and she has a smile, even if a slightly forced one, back on her face. The reason is not hard to work out. She has started preparing the ground for another round of big tax rises in the autumn. And that is the one thing she is good at. Reeves is back in her comfort zone.  In the wake of the backbench rebellion that forced the government to abandon its welfare reforms, and with the U-turn on the winter fuel allowance, a ‘black hole’, as Reeves would no doubt describe it, has opened up in the government's finances.

When the Prime Minister Sir Keir Starmer gave his full backing to his Chancellor Rachel Reeves, the brief panic in the markets following her tearful performance in the House of Commons subsided. Gilt yields stopped rising, the pound clawed back some lost ground, and the markets recovered their nerve. It was easy to spin that as bond investors backing Reeves. But is that really true? The markets have seemingly already lost confidence in the Chancellor. They simply prefer stability to chaos, and they quite rightly fear that any of the plausible alternatives will prove even worse. Bond investors have already lost faith in the Chancellor 'She will be the Chancellor for a very long time to come,' said Starmer this morning.

It was already a bad enough week for the Prime Minister Sir Keir Starmer and the Chancellor Rachel Reeves, what with the collapse of their welfare reforms. But now news has leaked that AstraZeneca’s CEO Sir Pascal Soriot has reportedly discussed moving its listing from London to New York. There is nothing official yet, and no decision has been made. But for the boss of Britain’s most valuable listed company to even contemplate upping sticks spells trouble for the UK economy. It is not hard to blame him. Over-regulation has turned the London market into a relative backwater. Meanwhile, Wall Street has been booming. The business would be more highly valued on the other side of the Atlantic.

The economy has stagnated, foreign investment has collapsed, the non-doms have fled and the entrepreneurs are following them. Meanwhile, Labour backbenchers are clamouring for more spending. Not much has been going right for the Chancellor Rachel Reeves. But she has a grand new plan: increase taxes on saving. Reeves has been reduced to scrabbling around for money wherever she can find it Reeves is expected to announce later this month that the amount that can be put into a tax-free cash Isa every year will be slashed from the current £20,000 to as little as £4,000, and perhaps even less. The decision will be dressed up as encouraging saving in stocks and shares instead, which will help to boost growth. It is hard to imagine anyone will really believe that.

The machines are already smarter and better organised than humans. They never ask for a pay rise, and they don’t ask any awkward questions about the company’s environmental record. An artificial employee is, in many ways, the model employee. But is artificial intelligence really responsible for a recent fall in entry-level jobs, as new figures from Adzuna, the online jobs board, would have you believe? Or is the Chancellor Rachel Reeves as much to blame as the ChatGPT founder Sam Altman? It may be fashionable to blame AI, but it is wrong It is certainly looking like a tough year to graduate from university. According to figures from Adzuna, the number of entry-level and new graduate vacancies on offer has fallen by 32 per cent from three years ago.

Britain’s 12.9 million pensioners are better off financially than they have ever been, and certainly compared with the rest of the country. Their winter fuel allowance has been restored. The triple lock looks completely secure. And with the stock market close to record highs, any savings they have will be in a healthy state as well. There is just one snag. More of them are paying tax than ever before – and that is emblematic of a bloated welfare system that has become completely dysfunctional.  Another 420,000 people over the state pension age will have to pay some income tax in 2025-26, bringing the total to 8.7 million, according to the latest data from HMRC. It is not hard to work out why.

Rachel Reeves does not have many supporters left. The bond markets don’t think much of the Chancellor. Business groups have rubbished her policies, and so have many of the UK’s largest companies. Meanwhile, Labour backbenchers are furious about both the chaos over the winter fuel allowance and the cuts to the welfare budget. Now, it looks as if the Bank of England may have turned on her as well, if comments from the Bank's governor are anything to go on. We might expect Andrew Bailey to avoid any direct criticism of the Chancellor. After all, she is his boss. What's more, a public split between the UK’s two most important financial officials would be deeply damaging, especially given the vast amounts of money the UK has to borrow on the global markets every year.

We are not the fastest growing economy in the G7, even though the Labour party promised that we would be. We are not topping any tables for inward investment, and we have fallen to the bottom of the league for new companies listed on the stock market. Still, it is good to know that there is still one measure where the UK economy comfortably beats the rest of the world. We are now losing more millionaires than any rival nation. The exodus of wealth out of the UK, it appears, is accelerating – and very soon this is going to turn into a big problem for the Chancellor Rachel Reeves.  The UK was already one of the countries that the wealthy were fleeing. But according to a report out today by the advisers Henley & Partners, a record 16,500 millionaires will leave the UK in 2025.

We will hear plenty of familiar criticisms of the plan unveiled by Reform yesterday to bring non-doms, as wealthy foreigners who enjoy a special tax regime in the UK are known, back. It will make Britain a magnate for tax dodgers and money launderers. It will increase inequality. And the only jobs it creates will be as servants of the super-rich. In fact, however, the only problem with the Reform plan is that it doesn’t go far enough. The party should be a lot more ambitious as it prepares for a potential government.  It will certainly be a major change. After a decade over which all the political debate has been about how to impose higher taxes on the rich, Nigel Farage, the leader of Reform, will this week set out plans to bring them back.

One of Chancellor Rachel Reeves’s few big ideas for boosting growth was to persuade pension funds to invest more of their assets in Britain. But hold on. Today, we learned that Scottish Widows, one of the biggest funds, is dramatically reducing its exposure to this country – and it is quite right to do so. Over the last decade, the S&P 500 has delivered a total return of 235 per cent, compared with just 92 per cent for the FTSE 100 The fund managers at the Lloyds-owned Scottish Widows, which controls £72 billion of workplace pensions assets, clearly didn’t get the memo about how this was the moment to put more of their money in the UK.

As missiles fly across the Middle East as Israel and Iran embark on what could well become a wider regional conflict, you might expect turmoil in the financial markets. After all, if the beginning of a third world war doesn’t knock a few dollars off the Apple share price it is hard to know what would. But it turns out that investors, at least for now, appear indifferent. Investors, at least for now, appear indifferent Looking at a trading screen this morning you would probably think not much was going on in the world. The FTSE100 was up 30 points. Overnight, the Nikkei was up by 1.2 per cent; and when Wall Street opens it is expected to be up by a few points as well. Gold was down by 0.4 per cent, and oil by slightly under 1 per cent. It is all very meh.

This afternoon's spending review mostly consisted of rehashed announcements, and in fact Tory plans that had been quickly rebadged. But there was one commitment that stuck out. The Chancellor Rachel Reeves is planning to spend £39 billion – serious money even by the standards of an organisation as extravagant as the British state – on ‘affordable’ and ‘social’ housing. Following her announcement, the scaffolding will almost certainly be going up in Blackpool, the spades will be turning over the ground in Preston, and the cement mixers will be churning in Swindon. But there's just one problem: the UK doesn’t need more ‘affordable homes’ – it just needs more places for people to live.

When the fintech giant Wise floated its shares on the London Stock Exchange in 2021 it was widely seen as proof that the City still had a future as a centre for equity trading. This was London’s largest-ever tech listing: it was one of only a handful of new British companies with a global presence and it was hailed as the perfect example of how the London stock market could still be an effective home for growing businesses. Against that backdrop, its decision today to move its primary list to the United States is a crushing blow. Has Wise just killed the London stock market?