Michael Simmons

This afternoon, Keir Starmer recommitted to not raising income tax, VAT or employee National Insurance for the duration of this parliament. At the same time, he reiterated his support for Rachel Reeves’s ‘ironclad’ fiscal rules. Are both possible? Answering a question from GB News’s Chris Hope at a visit to the Jaguar Land Rover factory in the West Midlands the Prime Minister said: ‘We made that commitment in the manifesto and we were absolutely clear about it going into the Budget and the Spring Statement, and that is a commitment we’ve made and a commitment we will keep.

This week, Donald Trump steered the global economy away from the free trade era that has underpinned growth for decades. Within hours of his announcement of tariffs on what looked like a bookmakers board from Aintree, China had responded with its own: a 34 per cent tax on all US imports starting next Thursday. The markets were horrified. US stocks suffered their worst week since 2020, with the S&P 500 shedding over $5 trillion in value. Over the course of the week, the index fell just over nine per cent. For context: at this point after their election wins, the S&P was up 9 per cent for Obama’s second term, 10 per cent for Trump’s first, and 19 per cent under Biden. Under Trump 2.0, it’s now down 7 per cent. The fear of contagion is spreading.

Across the world, markets are plunging as they respond to the global tariffs Donald Trump unleashed from the White House rose garden last night – with the president’s top economist describing the falls as ‘short-term bumps’. The pound passed $1.30 for the first time in six months while stocks in Tokyo fell 4 per cent. On opening, the FTSE 100 fell nearly 2 per cent, despite the slightly more favourable 10 per cent levy we face compared to the 20 per cent Trump hit Europe with. How bad could these ‘bumps’ get for the US though? Trump returned to office promising tax cuts. But however he may spin his new protectionist tariffs, many are clear that in fact they are huge tax rises.

In just a few hours, Donald Trump is set to take his tariff war global. At 9 p.m. UK time (4 p.m. in Washington), the American President will unveil a sweeping set of trade tariffs, on what he’s dubbed ‘Liberation Day’. What exactly Trump plans to announce remains unclear, but reports suggest everything from global reciprocal tariffs to the enforcement of the 25 per cent duties originally aimed at Mexico and Canada could be on the table. As Katy Balls noted in today’s Lunchtime Espresso, any hopes in Whitehall of securing a UK exemption have all but evaporated. The focus has now shifted from lobbying to damage control, as the economic fallout begins to bite.

Britain’s economic outlook may have been skewed by bad data – and it could be costing billions. Wage data pored over by the Bank of England’s Monetary Policy Committee (MPC) is set to be revised in the coming weeks – and the implications could be serious. The nine economists who decide the country’s interest rates – currently at 4.5 per cent – have consistently said they want to see pay rises slow before they can be sure that the inflationary shock brought about by Covid has worked its way out of the system fully. But wage growth remains strong. Private sector wages have gone from below 5 per cent in early autumn last year to over 6 per cent in the latest release – meaning inflation-busting pay rises.

The Office for National Statistics (ONS) has just confirmed that the economy ‘grew’ by 0.1 per cent in the last three months of 2024. Its final estimate for the last quarter of last year confirms that Britain’s economy continues to float just above recession territory. The very modest growth in the final quarter was driven by the services sector, also 0.1 per cent, which outweighed a 0.3 per cent contraction in construction. On a per-head basis, GDP fell by 0.1 per cent. Each quarter from October 2023 to June last year had GDP growth revised upwards by 0.1 percentage points, with the ONS’s Chief Economist, Grant Fitzner, saying: ‘Today’s updated GDP estimates indicate that the economy grew slightly more strongly in the first half of the year’.

Tax rises are almost certainly coming, Britain’s leading fiscal think tank has said. Those taxes are most likely to fall on pensioners and the wealthy, according to Paul Johnson, director of the Institute for Fiscal Studies (IFS). ‘There is a good chance that economic and fiscal forecasts will deteriorate significantly between now and an autumn Budget. If so, she will need to come back for more, which will likely mean raising taxes even further,’ the IFS director said. The tax burden is already just a year away from reaching its highest level in history – beating levels not seen since 1948. Reeves continues to blame a ‘changing world’ for the economic woes we now face The Chancellor has returned her headroom against her ‘ironclad’ fiscal rules to £9.

There is perhaps no document more useful for understanding the state of the nation than the Office for Budget Responsibility’s ‘Economic and Fiscal Outlook’. The 180-page document, released as soon as the Chancellor sits down after a Budget or financial statement, can not only seal the fate of a government but also tell us where the country is heading. Today was no exception. The OBR’s outlook was filled with bombshell after bombshell. Here are five of the most shocking findings in the report: 1. The OBR’s housing forecasts suggest Labour is nowhere near to achieving its target of building 1.5 million new homes in this parliament – which Rachel Reeves already downgraded to 1.3 million today.

Five years ago this weekend, the nation was plunged into what was expected to be a three-week lockdown. Weeks turned into months and years, lives were upended, and society was reshaped. But with the Covid inquiry rumbling on and the threat of a new pandemic ever present, it is worth reflecting on what happened.  That’s what we did for today’s special episode of Spectator TV. We wanted to look back on the conversations our contributors were having at the time, so this morning's show starts with an episode from during the pandemic, hosted by Cindy Yu.

Rachel Reeves is having to borrow more and more money to keep Britain’s show on the road. Figures on the public finances, published this morning by the Office for National Statistics (ONS), show that in the financial year to February we borrowed over £132 billion. That is nearly £15 billion more than at the same point in the last financial year and is the fourth-highest borrowing period since records began in 1993. The Office for Budget Responsibility (OBR) had expected borrowing to total £128 billion for the whole financial year and, by this point, that forecast is already more than £20 billion short. The OBR's budgetary boffins will update that forecast today when they hand the Chancellor their final economic outlook ahead of the Spring Statement next week.

The Bank of England has held interest rates at 4.5 per cent. The Monetary Policy Committee (MPC) voted eight to one to hold the base rate at its current level after reducing it by 0.25 percentage points six weeks ago. Markets and pundits had expected the decision, despite figures last week revealing the economy had contracted slightly in January. The Bank shares the government’s alarm at the lack of growth, warning in its report last month that ‘GDP growth has been weaker than expected, and indicators of business and consumer confidence have declined’. However, its fears that inflation may creep back up again – which the Bank predicts will peak at 3.7 per cent this year – won the day.

In more bad news for Rachel Reeves as the Chancellor prepares for next week's Spring Statement, the OECD has downgraded Britain’s growth prospects. The organisation forecast the UK’s economy to grow 1.4 per cent this year and then just 1.2 per cent next year – compared with the 1.7 per cent and 1. 3 per cent that they’d previously estimated. In fairness, the whole world is seeing slower growth, according to the OECD’s estimates. America’s growth forecasts were also downgraded to 2.2 per cent this year, followed by 1.6 per cent in 2026 compared with the 2.4 per cent and 3.1 per cent that had originally been forecast.