Matthew Lynn

Electricity bills are going up. Netflix is adding a couple of pounds a month to the price of a standard subscription, and council tax is going through the roof. Most of us are probably struggling with the cost of living. There is, however, one piece of good news: the sub four per cent mortgage is back. The only catch is that it won’t be around for long. Santander will this week start offering two- and five-year fixed rate mortgages at just 3.99 per cent, the first time any of the major lenders have been willing to lend money to homeowners for less than four per cent for several months. A price war may be about to break out, with the big lenders competing to offer better and better deals. Chancellor Rachel Reeves will no doubt be hoping that lasts.

They won't have liked the message or the messenger. With characteristic bluntness, the American vice president J. D. Vance tore into the European Union’s smothering regulation of artificial intelligence today.  Still, Europe’s leaders should listen. Vance happens to be absolutely right. When President Macron convened an AI summit in Paris this week, he was probably hoping for the usual platitudes from world leaders about ‘transformative technologies’ and ‘empowering change’ – along with a few billion euros for some data hubs in France. Unfortunately, no one told Vance how these things are meant to work. In his speech he spoke his mind, and tore into his hosts.

The wait is over. After six months in government, Chancellor Rachel Reeves has decided that today is the day to step forward and pull the big lever marked ‘growth’. In a widely-trailed speech, she has outlined all the different ways her government is going to get the economy moving again. There is just one snag. The lever isn’t attached to anything. In reality, Reeves doesn’t have a clue where growth comes from – and that means her big speech this morning won’t change anything.  Reeves has, at least, finally got round to detailing how she plans to make the UK the fastest-growing economy in the G7. Cynics might wonder why she has been keeping it all to herself for so long, and why she didn’t include any of the new measures in her Budget. Still, never mind.

Business confidence is falling. Companies are warning that profits will be lower than expected, and they are already planning to cut their output. The Chancellor Rachel Reeves might have hoped that this week would open with better news on the economy, especially as she is planning a major speech to relaunch her plan for growth on Wednesday. Instead, it has started with yet more bad news. In reality, a ‘Reeves recession’ is now a certainty – and the Chancellor won’t be able to escape the blame for that. The CBI reported today that British businesses are braced for a ‘significant fall’ in trading over the next few months.

You won’t be able to get a cup of coffee. Nor will you be able to pick up something from the patisserie or the pizza oven. A trip to Sainsbury’s was hardly the most exciting thing in the world, but it is about to get a little bit duller, with the grocery chain set to get rid of its last remaining cafes, as well as speciality counters. And the Labour government is to blame for that. Sainsbury’s had already closed its fresh meat, fish and deli counters, and announced this week that it was closing down the cafes and counters that used to be a regular feature of its stores as well, with the loss of 3,000 jobs. You can still trudge around and pick up some frozen pizza and washing powder, so long as you are happy to scan them yourself at the till, but that is about it.

As President Trump takes office later today, Keir Starmer has assembled his top team, tasking them with landing a trade deal with the United States. It’s a nice idea, sure, but he is not going to get a deal – and he will simply embarrass himself by very publicly failing.  The Prime Minister has put together a ‘mini-Cabinet’, made up of the Chancellor Rachel Reeves, the Foreign Secretary David Lammy, the Business Secretary Jonathan Reynolds and Jonathan Powell, with help from the UK’s incoming ambassador to Washington, Peter Mandelson. It would be hard to describe any committee that includes David Lammy as the ‘A-Team’, but still, Starmer is at least putting his most senior people on the case.  The need for a deal is clear.

If it was a Netflix mystery series, it would be the moment for the ‘big reveal’. After months of boasting about how she would make the UK the most competitive, dynamic, and indeed fastest growing economy in the G7 we finally have some idea of what Rachel Reeves is going to do to deregulate the UK. There is just one problem. She has opted for the worst possible way of loosening the rules – and Reeves will end up sparking an asset bubble.  After summoning regulators to Downing Street yesterday to tell her how to boost growth, some details have started to emerge of what Reeves is planning.

Perhaps you could gather a group of traffic wardens and ask them how to build a racetrack. Or get the leaders of the Salvation Army over to suggest some cool ideas for a cocktail bar. Think up any improbable brainstorming sessions, and it will still be hard to imagine anything more awkward than the gathering of regulators Chancellor Rachel Reeves summoned to Downing Street today to give her some ideas on growth. After all, that is her job, not theirs.  Just the concept of frog-marching regulators into the Chancellor’s office and demanding ‘growth ideas’ is ridiculous It hardly sounds like fun.

Bond yields are soaring to their highest levels in almost 30 years and sterling is sliding. The government’s economic strategy is facing its first real test, and where is the chancellor? So far Rachel Reeves has been silent, preparing for a jaunt to China. At some point she will have to address the markets – or risk turning a round of jitters into a full-blown crisis. Over the last few days, the markets have turned decisively on the UK. Yesterday, the yield on 10-year gilts hit its highest level since the financial crisis of 2008, while the yield on the 30-year gilt hit the highest level for 30 years. The UK is now paying more to service its debt than Greece, and very soon that will mean rising mortgage rates, and more companies going bankrupt.

When the British government spent £400 million on the satellite internet start-up OneWeb back in 2020, it was seen as precisely the kind of active, tech-led industrial strategy that could re-boot the British economy. There were hopes the deal would help secure a place for the UK at the heart of the emerging space economy. Then prime minister Boris Johnson saw it as a key part of launching ‘Galactic Britain’. But four years on, the taxpayer is on the hook for a £300 million paper loss after shares in OneWeb's parent company sank to a record low. The money poured into OneWeb has proved to be remarkably poor value Even by the standards of government investment, the money poured into OneWeb has proved to be remarkably poor value.