Comments threaten to worsen already tense relationship between senior ministers and civil servants
Kemi Badenoch has cast doubt on her department’s projections for how much the Asia-Pacific trade deal the UK government has signed will help economic growth.
The government announced overnight it had joined the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), which includes Australia and Japan, after two years of negotiations.
Continue reading...Hailed by Tory MPs as a Brexit benefit, CPTPP membership actually turns the UK into a willing pawn in Washington’s geopolitical game
Tory MPs hailed the UK’s entry last week into the Indo-Pacific trading bloc as a major step on the road to re-establishing Britain as a pioneer of free trade.
It was a coup for Rishi Sunak, said David Jones, the deputy chairman of the European Research Group of Tory Eurosceptics, who was excited to be aligned with “some of the most dynamic economies in the world”.
Continue reading...Recent banking turmoil fuels decision to delay offloading portions of its remaining 41% stake
A plan to whittle down the government’s stake in NatWest has been extended by another two years, after weeks of banking turmoil that hit the lender’s shares and temporarily fuelled fears over a fresh financial crisis.
UK Government Investments (UKGI), which manages the shares on behalf of the Treasury, said the scheme to strategically sell portions of the British taxpayer’s shareholding – following NatWest’s near-£46bn state bailout in 2008 – would now run until August 2025.
Continue reading...Rising rents and energy prices, as well as stagnant wages, lead many economists to predict the rate is yet to peak
By leaving its cash rate unchanged on Tuesday, the Reserve Bank of Australia is betting rate hikes since May have extinguished enough excess demand in the economy to send inflation on a downward trajectory.
Getting that wager wrong, though, could hurt if consumers and businesses figure borrowing costs have peaked and pile back into markets for everything from household goods to houses.
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Continue reading...Former chancellor fundamentally changed the UK economy during his six-year stint at the Treasury, and not much has changed since then
Enoch Powell famously said all political careers end in failure and that was certainly true of Nigel Lawson, whose death at 91 was announced on Monday. His six-year spell at the Treasury ended with the economy stricken by a classic British boom-bust cycle, which left unemployment at more than 3 million and record number of home repossessions.
That said, only a handful of chancellors have a lasting legacy when they leave office, and Lawson was one of them. Like Gordon Brown – another of the rare breed of politicians who made a difference – he had a clear idea of what he thought needed to be done to make the economy work more effectively and pursued his goals in a single-minded fashion.
Continue reading...Lesser politicians try to emulate Thatcher’s clever, contrarian chancellor. That’s risky in these very different times
In death this week at the age of 91, Nigel Lawson has been saluted by all wings of the Conservative party as a prophetic thinker and Tory exemplar for our times. Rishi Sunak led the way in this response, posting a photograph of himself as chancellor that showed one of his own first actions in the Treasury was to hang a portrait of Lawson on his wall.
There can be no disputing that, between 1983 and 1989, Lawson was an immensely significant and consequential Tory chancellor. Nor that, at his peak, he was one of the most influential ministerial figures of the Margaret Thatcher decade. He then wrote the most important memoir by any senior figure of those years. But it is a big mistake, and a destructively common one in the modern Tory party, to see him as a changeless icon for today.
Continue reading...Government has aggressively pursued sanctions despite its own 2020 report showing they are ineffective at getting people into jobs
Benefit sanctions slow down claimants’ progress into work and are likely to force them into taking lower-paying jobs that leave them hundreds of pounds a year worse off, according to an internal report that the government tried to suppress.
The findings of the Department for Work and Pensions (DWP) report echo a series of independent studies showing sanctions – in effect fines amounting to hundreds of pounds imposed on claimants for supposed infringements of benefit rules – are ineffective as a way of getting people into jobs or to work more hours.
Continue reading...Stephen Locke, Lawson’s former private secretary, on how rewarding it was to work for him, and Margaret Beckett on his divisive legacy.Plus letters from Mark Hebert, Valerie Gidlow and Greg Quiery
Thank you, Martin Kettle, for your thoughtful and incisive piece on Nigel Lawson’s legacy (A committed unbeliever: Nigel Lawson left the Tory party a complex, divisive legacy, 5 April). I was his private secretary in the early days of the Thatcher government, when he was financial secretary to the Treasury.
Although I disagree with many of the positions that Lawson subsequently espoused – especially on Europe and climate change scepticism – he was an immensely rewarding person to work for. He was a real slave driver and could be infuriating at times (not least to senior ministerial colleagues). But this was always for good reason. He worked very hard and was full of ideas, good at cultivating the best and brightest of officials, and expert at spotting dubious groupthink. He was also kind and often very funny.
Continue reading...To listen to the plaudits from the Conservative press after the death of Nigel Lawson at 91 last week one could be forgiven for wondering how many of the eulogists were aware that the great man’s chancellorship – from 1983 to 1989 – had ended in tears.
Believe it or not, despite many differences on economic policy, which I voiced in my columns, Lord Lawson and I were good friends.
Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 250 words to be considered for publication, email it to us at observer.letters@observer.co.uk
Continue reading...Sunak or Starmer will win votes – and most UK households will gain – if they replace the council tax
Rishi Sunak needs a gamechanger to have any hope of leading the Conservatives to victory at the next general election. Sir Keir Starmer could do with something to seal the deal with the British public.
The conventional wisdom is that there are no easy wins available to either the prime minister or the leader of the opposition in these straitened times. But the conventional wisdom is wrong. There is one policy that would be both popular and make economic sense, and that is reform of the UK’s property taxation.
Continue reading...It must open a debate about the issue of publicly generated money, writes ProfMary Mellor; plus letters from Joy Webb, John Hully and Kev Crocombe
Labour is failing to promote core Labour values such as equality and welfare (The Guardian view on Sir Keir Starmer: his party remains a mystery to voters, 4 April) because it is still wedded to the “handbag economics” of neoliberals such as the late Nigel Lawson. The view of the state as like a household, constrained by a shortage of money, bears no relation to the public monetary largesse of 21st-century states. Since the 1990s deflation crisis in Japan, the financial crisis of 2007-08 and the pandemic, central banks in key economies have been in full flow. However, this has mainly supported the financial sector and the market generally, rather than public welfare.
To open up this new agenda, fundamental questions need to be asked about the creation and circulation of money in the 21stcentury. Why is publicly generated money (QE) used to bolster the (financial) market rather than public services? Why can banks borrow from the central bank, when governments have to borrow from private finance? Why is that government debt, when bought back by the central bank using publicly generated QE, not then cancelled?
Continue reading...Global chief economist at Kroll will join the MPC as an external member on a three-year term from 5 July
The Treasury has appointed a financial markets expert to the Bank of England’s monetary policy committee, replacing the interest rate-setting panel’s most dovish member as it responds to the worst banking crisis since 2008.
Megan Greene, the global chief economist at Kroll, a US private investigations and financial advisory firm, will join the MPC as an external member on a three-year term starting on 5 July.
Continue reading...Forecast by Washington-based body puts at risk Rishi Sunak’s pledge to cut debt as share of GDP
Britain’s national debt will continue to climb over the next five years, putting at risk one of Rishi Sunak’s key pledges to voters, according to an International Monetary Fund study.
The IMF said the cost of subsidies to consumers faced with rocketing energy bills meant repair of the UK’s Covid-battered public finances was taking longer than in other developed countries.
Continue reading...Wave of public sector strikes and weak industrial output take toll, official figures show
Britain’s economy recorded growth of 0.0% in February as a wave of public sector strikes weighed on activity, offsetting a recovery in consumer spending despite the cost of living crisis.
The latest figures from the Office for National Statistics (ONS) showed the economy ground to a halt in February, falling below City expectations for a 0.1% month-on-month rise in gross domestic product (GDP), the total value added by the production of goods and services across the economy.
Continue reading...Number of working-age adults in work or job hunting is still lower than before pandemic, OECD figures show
Britain has emerged as the worst-performing country in the G7 for workforce participation since the Covid pandemic, after an exodus of half a million people amid record levels of long-term sickness.
Figures from the Organisation for Economic Co-operation and Development (OECD) show the UK’s labour force participation – the percentage of working-age adults either in work or job hunting – was 78.6% in the final three months of 2022, down from 79.5% in the same period at the end of 2019.
Continue reading...Government announces pay rise of between 4.5% and 5%, prompting warning of new wave of industrial action
Civil service unions in the UK have warned of a fresh wave of industrial action, after the government announced that pay rises would be limited to 4.5% to 5%, in a move dismissed by union leaders as “insulting”.
The two sides have been involved in talks in recent weeks but it is understood the increase was presented to them as non-negotiable.
Continue reading...British public has yet to comprehend scale of party’s economic ambitions, says business chief Jonathan Reynolds
The British public is yet to understand “the scale of Labour’s ambition on the economy”, one of Keir Starmer’s most senior shadow ministers has said, adding that the party needs to explain how it will be the most interventionist government for a generation.
Jonathan Reynolds, the shadow business secretary, said that the party had not yet fully communicated the “sum of its parts” in terms of how a series of technical policy fixes would translate into the ambitious transformation of the economy that the party will attempt to achieve.
Continue reading...Exclusive: Sir David Green suggests ‘prudence was thrown out the window’ as UK lost billions of pounds in pandemic business support
The former head of Britain’s financial crime prosecutor has said “red flags were ignored” in the rush to distribute taxpayer-funded emergency loans to businesses during the pandemic, and questioned whether fraud was taken seriously by the government.
Parliament’s spending watchdog estimates fraud and error were likely to have cost the UK government as much as £16bn across the various Covid loan schemes, including those for small businesses.
Continue reading...Trade groups say many firms had to renew contracts at market peak in ‘biggest mis-selling scandal since PPI’
More than 1m small businesses may be paying energy bills significantly above market rates after becoming trapped in long-term contracts fixed when prices reached a historical peak last year.
Trade groups representing businesses from metalworkers to convenience stores have joined forces to warn of a “perilous situation”.
Continue reading...PM urges Britain to prize numeracy, but critics say such talk counts for nothing without a funded plan
The UK possesses an inherent “anti-maths mindset” that is hampering efforts to improve numeracy, Rishi Sunak is to say as he relaunches his plan to make maths education until 18 compulsory.
In a speech to students, teachers and others in north London planned for Monday, the prime minister is expected to argue that a failure to consider numeracy as basic a skill as reading is costing the UK economy huge sums.
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