Our politicians must wake up to the public debt effect
In a novel by C.P. Snow, a physicist turned author who served as science minister under Harold Wilson in the 1960s, the master of a Cambridge college says that “gratitude isn’t an emotion, but the expectation of gratitude is a very lively one.” The prime minister and her Chancellor may well be having exactly the […]
How Truss pays for her plan for energy prices is just as important as what she does
Our new prime minister already has a long list of detractors. Yet something many are failing to take notice of is how well she grasps the fundamental importance of generating economic growth. This is the central issue facing the economy and it will determine how, ultimately, we pay for an intervention in the energy market. […]
The mountain of debt cannot be ignored no matter how much the economy grows
Politicians and regulators are increasingly concerned about one phenomenon: buy-now-pay-later (BNPL). Nearly a year ago, the government agreed to regulate BNPL lenders, with an independent review chaired by City expert Christopher Woolard warning the sector represented a “significant potential consumer harm”. A Treasury consultation on BNPL only closed at the end of last year. It […]
Burnley and Asda are unlikely warnings of debt-driven troubles
It has been a week of mixed messages. Not just on the release from lockdown, but on the economy. The Bank of England indicated that banks have been given six months to prepare for negative interest rates. The Monetary Policy Committee was quick to clarify that this did not mean that they would necessarily cut […]
Get the Bank of England focused on the real economy
Economic policy is returning to its usual position of prominence. Fears of a major rise in unemployment are starting to worry the government more than fears around Covid-19. The chancellor’s imaginative schemes concerning furlough and other measures to protect jobs create potential problems elsewhere. So much money is being borrowed that the ratio of public […]
The unions stand on the precipice
Len McCluskey, the leader of the trade union Unite, probably did as much as anybody to ensure Boris Johnson’s massive electoral victory last December. A fervent supporter of Jeremy Corbyn, his grip on the Labour Party machine compelled Labour to fight the election with its most unpopular and inept leader in history. McCluskey is up […]
Looking out for the next financial crisis? Keep an eye on spiralling debt
Concerns are growing that another financial crisis is imminent. No less important a figure than Kenneth Rogoff wrote last week that “the next major financial crisis may come sooner than you think”. Rogoff, a former chief economist at the IMF, shot to fame with his 2008 book This Time Is Different, co-authored with his Harvard […]
Don’t believe the myths: Capitalism has performed well since the financial crisis
Ten years ago, the financial crisis began to grip the Western economies. During the course of 2007, GDP growth slowed markedly everywhere. By the end of 2008, output was in free fall. A key theme in economic commentary is the sluggishness of the subsequent recovery of the developed economies. The picture is not quite as […]
Government debt addiction means you can be sure of one thing: Stealth taxes will rise
Elections create uncertainty. But we can be sure of one thing. Regardless of the result, during the course of the next Parliament, stealth taxes will rise. This week, we have a sharp rise in speeding fines. Even doing between 31 and 40mph in a 30mph zone can now land you with a penalty of 50 […]
Britain’s debt dilemma: Not too high, not too low or the UK economy risks disaster
The Bank of England Financial Policy Committee (FPC) has signalled that it has become worried again about debt. Its specific focus is households. Consumer credit, for example, grew by 10 per cent during 2016, far faster than the economy as a whole. A lot of household debt is in the form of a mortgage, so there is […]