Michael Simmons

The Bank of England has just voted six-three to hold interest rates at 3.75 per cent, a decision that makes Britain’s central bank an outlier following rate hikes from both the European Central Bank and America’s Federal Reserve. It’s the sixth time in a row the Bank has voted to hold rates. The decision also comes in spite of yesterday’s news that inflation climbed further away from the Bank’s 2 per cent target, hitting 3.1 per cent in August, and the Monetary Policy Committee’s own forecast that rising energy prices will drive inflation above 4 per cent in the first few months of next year. In a letter to the chancellor, Andrew Bailey, the Bank’s governor, also warned energy bills are likely to rise 24 per cent in the winter.

Britain is heading head first towards another cost of living crisis. Figures released by the Office for National Statistics (ONS) show inflation rose to 3.1 per cent last year – up from 2.9 per cent the month before. ‘Sharp’ rises in petrol and diesel costs were the main driver, the ONS said, with air fares making a considerable contribution too. The Chancellor, John Healey, put the blame on global events, saying: ‘The war in the Middle East is impacting on inflation worldwide, not just here at home. In our bills, our weekly shop and at the petrol pumps.

Britain is in a wage spiral – though not a traditional one. Instead, job and wage growth is surging in the public sector while the private sector struggles. Unions put pressure on the government because of the cost of living, Labour grants pay rises, the cycle continues and a dwindling private sector picks up the bill. Figures just released by the Office for National Statistics (ONS) show that while private sector wage growth in the three months to July was flat at 2.9 per cent, it grew to 6.3 per cent in the public sector. Statisticians continue to insist that this is partly a ‘base effect’ whereby the timing of public sector pay rises occurred earlier than normal, but this explanation has been used for so long it is no longer credible.

There are lots of reasons to seriously worry about the economy at the moment. The price of oil is surging, bonds are slumping (meaning yields are up again) and interest rate hikes are possible.  So it’s a relief to see this morning's GDP figures, just published by the Office for National Statistics (ONS), show Britain’s economy grew by 0.4 per cent in July. Most forecasts had predicted there’d be no growth at all. Instead, strong growth in the services sector was enough to cancel out weaker figures in production and construction. Within services, the largest contributing industries were admin and support services with the ONS saying computer programming and consultancy too.

When Andrew Griffith was appointed shadow chancellor on Monday, Labour MPs made much merriment of his involvement in the Liz Truss mini-Budget. Just a day later, Lord O’Neill, Burnham’s economics adviser when he entered No. 10, was pointing out that not since ‘Liz Truss days’ have we seen gilt yields rise as much as they did yesterday. A global sell-off in bonds due to fears of resurgent inflation and interest rate hikes helped push Britain’s 10-year yield to its highest level since 2008. The 30-year – a good proxy for our country’s long-term viability as a going concern – shot up to 5.85 per cent – its highest since the late 1990s. Those rises continued when markets opened a few moments ago.

If the first job of a government is national security the second probably ought to be food security. Odd, then, that the SNP seems to be pursuing a policy of national starvation. During May’s Holyrood election, economists – as well as anyone with a brain – panned the governing party’s manifesto commitment to introduce price caps on essential foods sold in supermarkets. This was an unnecessary electoral stunt that no one in the party had any intention of actually delivering.  Today, the Scottish government has begun going through the motions of pretending they will try to implement the policy by announcing a consultation period and releasing the draft Food Price Cap (Scotland) Bill.

There’s good and bad news in the public finance figures, released by the Office for National Statistics this morning. July saw something of a borrowing splurge, with £1.8 billion needed from the markets to keep Britain afloat. That was up two-thirds on July last year and £2.3 billion above forecasts from the Office for Budget Responsibility, which had expected a surplus. But on a year-to-date basis, the borrowing figures were actually not that bad. Indeed, on the face of it, they make for fairly good news. In the financial year to July, overall borrowing has come in £6 billion lower than in the same period in 2025 – and only slightly above the OBR’s forecast.

This week, Andy Burnham, in an article about how much he loves buses, declared that he will lead a ‘cost of living government’. Yet costs are going up, as confirmed by figures released by the Office for National Statistics (ONS), which show that inflation increased to 2.9 per cent in July – up from 2.6 per cent the month before. The rise was driven mostly by the 13 per cent increase in the energy price cap, which saw gas prices increase at their fastest rate in nearly four years. Crude oil and petroleum prices fell for manufacturers but this was not enough to offset the energy costs faced by consumers.

Is the Burnham bounce about to fizzle out? This morning has seen the first shaky set of economic figures since his ascension to Mayor of Great Britain. Figures released by the Office for National Statistics (ONS) show 13,000 jobs disappearing in July, following a fall of 13,000 in June too. In total, just under 100,000 jobs have been lost in the last year and 188,000 have gone since the election. Even more worrying in today’s release, though, is the headline unemployment figure of 4.9 per cent. Though flat, many economists had expected it to plunge. They predicted that because the figure is made up of an average of the previous three months and a large reading in March was due to drop out today, almost certainly sending the headline rate down.

Prime Minister Andy Burnham and his Chancellor John Healey are not having a bad start. Sure, there’s trouble ahead: the Budget is going to be difficult, and Healey is going to have to find a way of making sure all the cheques his boss keeps writing can actually be cashed. But for now, the blitz of 6 a.m. announcements on the cost of living – no matter how trivial they are – appear to have worked and Burnham is experiencing a polling bounce. Britain’s economy has a terrible habit of performing relatively well in the first half of the year before slumping to a halt That good news continued this morning in the form of figures from the Office for National Statistics (ONS), which show that the economy grew by 0.4 per cent in the second quarter of the year – having grown 0.

Our supermarkets are showing remarkable restraint. The previous Chancellor and now the new one can’t resist slandering them. In an article for The Sunday Telegraph, John Healey writes that ‘we will be watching closely for any suggestions that customers are being taken for a ride at the pump or the till’. If there’s any evidence of British shoppers being ripped off then he assures readers that ‘our regulators have the powers to clamp down on it’. The truth is that supermarkets are a miraculous innovation whose praises are not sung enough Gee thanks, John. Trouble is, ‘price gouging’ is a made up, dishonest, dog whistle myth.

One of the first magazine cover pieces I wrote as economics editor was: ‘Go – Why the Rich Are Fleeing Britain’. It claimed that changes to the non-dom regime, first enacted by the Tories and made more strident by Rachel Reeves, were leading to a wealth exodus from the country. Worryingly for me, though, reading today’s Financial Times, it seems I may have been wrong. The pink sheet reports: ‘Data suggests fears of UK “non-dom” exodus overblown.’ Its story says that claims – such as mine – that tax changes meant non-domiciled taxpayers were going to leave en masse were overdone. Data from HMRC shows that only 0.5 per cent of them have upped sticks and left. In raw numbers, that’s 400 fewer non-doms than the year before.

If John Healey wants to succeed as Chancellor, he needs to get a grip on the Office for National Statistics (ONS).  I’ve written about the troubles and tribulations of our hapless Newport-based statistics office many times now, both in this newsletter and the magazine, and the problems keep coming. Its most high-profile failure of recent years has been the delivery of the Labour Force Survey (LFS). That’s the main source of our knowledge about Britain’s jobs market: unemployment, inactivity, redundancies etc etc.  During the pandemic, response rates to the survey collapsed and the integrity of the data it produced was diminished. That set off a chain of errors.