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Rachel Reeves framed her Spring Statement around the insistence that Labour’s Plan for Change was already working, which meant that any changes she was having to make today had to be framed as small ‘adjustments’, rather than the sort of change of course that would allow the Conservatives to claim she was delivering an ‘emergency budget’.  She insisted that she was sticking to only one fiscal event a year, but the Chancellor did have to make a number of admissions in today’s speech, chief among them that the OBR had cut its growth forecast for the year from 2 per cent to 1 per cent. She said she was ‘not

Chancellor Rachel Reeves is seeking to trim £2 billion from the government’s £13 billion administration budget, with up to 50,000 jobs being cut in her Spring Statement. The Prime Minister Keir Starmer said the government was ‘looking across the board’ for savings. But do Reeves and Starmer really have the courage, and the political capital, to carry out such a purge? On paper, Labour’s task looks straightforward enough. Civil service numbers over the past 15 years have performed a bungee jump. Between 2010 and 2016, the coalition, followed by David Cameron’s majority Conservative government, succeeded in trimming civil service numbers from 492,000 to 384,000. Then they began to climb again,

Pursuing net zero is the ‘opportunity of the century’ which will create tens of thousands of well-paid green jobs and slash our energy bills. That is this Labour government’s official line, at least, as it was the last Tory government’s. Now we know, thanks to a leaked study, that is not quite how the Department for Business and Trade sees it. Rather, it seems, net zero threatens the recession of the century. The Macroeconomic Impacts of the Net Zero Transition, prepared by the Economic and Strategic Analysis team at the Department for Business and Trade in November 2023, warns that net zero targets could provoke an economic shock on the scale

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

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. The report’s

There are, as Rachel Reeves keeps telling us, some tough choices to be made. Whether she is personally tough enough to make them is another matter. It seems as if the government is already retreating on proposed plans to freeze Personal Independence Payments (PIP) in the Spring statement in ten days’ time. A putative backbench rebellion has grown in size to a level at which even a government with a majority of 160 cannot be sure of success. There were also rumoured threats of ministerial resignations. It shouldn’t really come as a surprise. Many Labour MPs have it in their heads that they were elected to protect the poor and

Growth has ground to a halt, manufacturing is collapsing, and the government is desperately scratching around for ways to save some money so it can balance the books. There is not much to make anyone feel optimistic about the state of the British economy right now. Except, that is, for the healthy performance of the UK’s traditional, mid-market retailers. Marks & Spencer and Tesco are both in rude health. Now, John Lewis, which has reported a rise in pre-tax profits of 73 per cent to £97 million, is the latest retailer to demonstrate its ability to bounce back.  After years of steep losses under the hapless leadership of the former

Markets are not enjoying Donald Trump’s tariffs. Some 125 days have passed since his second election victory and the S&P 500 is on a clear downward trajectory thanks to Trump’s tariff policies and other poor US economic data. After the same number of days following Biden’s election, the S&P was up 13 per cent; for Obama’s second term it was up nine per cent; and at the same point in Trump’s first presidency it was up 11 per cent. For Trump 2.0 it’s down 3 per cent from election day. Trump has summoned Wall Street bosses to the White House in an attempt to calm nerves, but while US equities

The plunge continues. It’s always a mug’s game trying to call the top of any market, but the plunge on Wall Street does feel as though it has got legs, so it is quite possible that we have indeed seen the peak for US equities.  Since last week the Nasdaq has moved into correction territory – jargon for a 10 per cent or more fall – and on Monday was off another 3 per cent. I rather like the expression ‘correction’ because it implies that the markets have simply made a bit of an error, a ‘terribly sorry, folks, but we all make mistakes, and give us a few weeks

China does not like tariffs, but big money in America likes them even less. If one thing has become clear amid the fog of the past week, it is that what will contain Donald Trump are the financial markets. China’s foreign minister, Wang Yi, attacked Trump on Friday for his imposition of tariffs, adding that major powers ‘should not bully the weak’. While people in Taiwan might find that latter comment a bit rich, his line on tariffs squares with the reaction on Wall Street. The markets do not like it. This week has seen the Nasdaq Composite index of high-technology companies move into a ‘correction’ – a 10 per

Germany has finally decided to join the party – but Europe may come to regret it. After two decades of limited borrowing and fiscal restraint, Europe’s biggest economy is finally joining the high-debt club. Incoming chancellor Friedrich Merz will borrow €800 billion (£670 million), and perhaps much more, to pay for extra spending on defence and infrastructure. Sure, Germany needs to spend more on its armed forces and on restructuring its economy. But it will also likely mean the euro-zone no longer has a single solvent member to anchor it. It is hard to see how this situation will end well for Europe. Merz is a centre-right, pro-business leader, but

It was reported over the weekend that the government has dropped ‘the right to switch off’ from its Employment Rights Bill. Such a right, it has been widely asserted, had appeared in Labour’s manifesto for last year’s general election, promising that employees would be granted a legal right to ignore their boss’s emails outside their contracted working hours. However, it was left out of the bill as originally published last autumn, and neither has it been introduced as an amendment. But it seems that we were not really paying attention. It is true that Angela Rayner, in an interview with the Financial Times in May, made the suggestion that the

Average gas and electricity bills will rise by £111 a year in April after the regulator Ofgem announced an increase to the energy price cap. The 6.4 per cent hike means the average dual-fuel household bill will hit £1,849 annually. The rise is more than anticipated, with analysts at Cornwall Insight predicting that bills would rise by just 5 per cent in April. Ofgem blamed inflation and ‘rising global wholesale prices’ for the bigger-than-expected increase. As a result, the cap will be £159 (nearly 10 per cent) higher than for the April to June period last year. The rise in energy prices is why the Bank of England recently forecast