Back in June, a fortnight before the government’s landslide election victory, I warned in my weekly "Economics Agenda" column in the @Telegraph that "ghosts of the 1970s haunt Labour’s economic resurrection”.

Would-be Chancellor @RachelReevesMP claimed ahead of the election that her party could significantly increase government spending “without raising taxes on working people”.

Labour’s “pro-growth” policies would deliver the economic expansion needed to allow the government to take on more debt to fund lots of extra spending, we were told.

The Tories had, of course, already pushed the UK’s tax burden to 100pc of GDP – a 60-year high.

But the argument seemed to be that Reeves could jack up government borrowing even more because she “used to work at the Bank of England” and her name wasn’t Liz Truss @trussliz

Here's my column from six months ago

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telegraph.co.uk/business/2024/… Liz Truss was bundled out of office, of course, in October 2022, becoming the UK’s shortest-serving Prime Minister in history.

Measures in her “mini budget” were judged by practically the entire political and media establishment to have “crashed the economy” – not least given the subsequent sharp spike in government borrowing costs.

“That’s not true,” I wrote last June. “And claims it is risk sparking bond market turmoil and resulting economic chaos far worse than we saw in the autumn of 2022”.

I evoked “ghosts of the 1970s” in that June column because in 1976 Jim Callaghan’s Labour government pushed the UK economy off a cliff – with Britain enduring the ignominy of being rescued by the International Monetary Fund.

A generation of misguided and ideologically-driven industrial subsidies, soft-budget constraints and, above all, “spend to grow” hubris drove Britain into an insolvency cul-de-sac.

Financial markets – more specifically, the huge pension funds, insurance companies and other global institutional investors that lend governments money – had forced a fiscally incontinent Labour administration to go “cap in hand” to the IMF for a bailout.

“I’m not saying that will happen over the coming months,” I wrote last summer. “But the notion that it couldn’t because Truss and the Tories will be gone is reckless in the extreme”.

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This should be the season to be cheerful. But no amount of festive spirit can hide the fact the UK economy is in trouble.

I have no wish to be a grinch – Christmas is a time to be optimistic and to give thanks.

But the reality is that the British economy has stalled, inflation is rising and there are growing fears the current mild downturn could morph into a fully-blown crisis.

"Britain has developed a dangerous credibility gap in the markets"

My final @telegraph column of 2025

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telegraph.co.uk/business/2024/… Last week, the Bank of England’s monetary policy committee (MPC) warned that “most indicators of UK near-term activity have declined”, while highlighting that stubborn inflation will prevent any further cuts in interest rates anytime soon.

The MPC voted six-to-three to keep its benchmark rate at 4.75pc on Thursday, with a majority expressing concern that recent increases in wages and prices had “added to the risk of inflation persistence”.

Having previously predicted 0.3pc growth during the last three months of 2024, the Bank now points to zero growth during the final quarter.

That’s shocking, but hardly surprising. GDP fell by 0.1pc during both September and October.

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On the day that thousands of farmers protest in London, my most recent @Telegraph column on Labour’s plans to slap inheritance tax on family farms.

This policy is ill-thought through and deeply counter-productive – with a strong whiff of class prejudice.

The government needs to think again - and fast.

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telegraph.co.uk/business/2024/… Back in September 2000, British farmers, working together with truck drivers, brought the UK to the brink of collapse. Protesting at successive sharp rises in petrol and diesel prices, farmers and hauliers blockaded roads, fuel shipping terminals and oil refineries, putting huge pressure on Tony’s Blair’s “New Labour” government.

Blair declared an “NHS red alert”, invoking “emergency powers” to ensure essential fuel deliveries in a bid to sway public opinion. But many voters, equally sick of spiralling fuel costs, staunchly backed the farmers, even as slow-moving rows of tractors thwarted motorway traffic.

2/9

The battle over "net zero" has only just begun.

My latest weekly "Economic Agenda" column

The UK, and much of the Western world, faces huge enviro-industrial conflict over the coming years, which could shatter the "net zero" consensus and tear governments apart – particularly those on the left.

@Telegraph

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telegraph.co.uk/business/2024/… Scotland’s last remaining oil refinery – Grangemouth – is to shut, we learned last week, with the loss of 400 jobs.

The plant – co-owned by Sir Jim Ratcliffe’s Ineos – is closing due to the UK’s incoming ban on new petrol and diesel cars to hit net zero targets.

Grangemouth is a hugely important facility. It produces most of the petrol, diesel, heating oil and aviation fuel used in Scotland, northern England and Northern Ireland.

The closure, said Ineos, reflects lower fuel demand given the "ban on new petrol and diesel cars due to come into force".

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My election take - as outlined in my latest @Telegraph column.

Labour’s majority of 170 is, of course, historically large – and that is what has rightly dominated the post-election headlines.

Yet talk of the @Conservatives being wiped out, with the Lib Dems becoming the main opposition party, was so much campaign hyperbole.

Tony Blair’s first-term majority of 179 back in 1997 was bigger than that just won by Starmer. And as statistical nerds have been pointing out, Labour’s latest vote share was just 34pc – significantly less than the 40pc chalked up by @jeremycorbyn when he lost to @theresa_may in 2017 (while denying the Tories a Commons majority)

Labour’s huge majority today, and the enormous power that represents, was backed by just 20pc of eligible voters – that is, 34pc of the 60pc of the electorate who turned-out and cast their ballot. This is Starmer’s “loveless landslide”.

The @UKLabour leader is riding a wave of media positivity - for now. But this government's low popular support - despite that Commons majority - combined with serious economic challenges, means Labour's "honeymoon" is likely to be short.

And here's why ...

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telegraph.co.uk/business/2024/… Tony Blair came into office off the back of a 72pc national turnout in 1997, reflecting genuine enthusiasm for “New Labour”.

That's in stark contrast to last week's election – when so many of us stayed at home - or voted negatively, for our least-worst option.

Labour now boasts 412 seats, 63pc of all MPs in the new Parliament, having won little more than a third of votes cast. And while the Liberal Democrats have surged to 72 seats, 11pc of the new Parliament, on around 12pc of the vote, Reform chalked-up 14pc of the national vote share but got just 5 seats (less than 1pc of this Parliament).

So the Lib Dems are set, for the next five years, to control fourteen-times more Commons seats than a party which fundamentally opposes them on many issues and which beat them easily in terms of electoral support – by around 600,000 votes.

Starmer has floated the idea of lowering the voting age from eighteen to sixteen – a move likely to prove hugely controversial.

But the deeply “unrepresentative” nature of this Parliament means that, if constitutional upheaval is anyway afoot, there will be huge pressure – not least from Nigel Farage – for a move away from the vagaries of first-past-the-post and towards a more "proportionate" system.

2/7

Some thoughts on UK utility bills and "net zero" ....

From April, households using an average amount of energy will face an annual bill of £1,690 for their combined gas and electricity – down from £1,928 between January and March – after regulator Ofgem lowered the energy price cap last Friday.

This amounts to a saving of £238 a year for the typical household. But given the price cap is set on a quarterly basis (this newly-announced level is in place until the end of June), it makes more sense to think of an average saving of around £20 a month.

Despite this reduction, UK utility bills remain much higher than before Russia invaded Ukraine in February 2022 – even though wholesale gas prices are now considerably lower. UK utility bills are also very high by international standards.

Sky-high electricity prices - despite the relatively large share of "cheap renewables" in our energy mix – are hammering UK households and making many of our manufacturers less competitive.

My latest @Telegraph column argues that unless voters see renewables leading to cheaper, rather than more expensive energy bills, attempts to achieve "net zero 2050" - or any meaningful carbon reduction target - are likely to be politically derailed.



Thread 🧵 1/9telegraph.co.uk/business/2024/… During January, domestic end-user electricity prices were 40.73 c€/kWh (euro cents per kilowatt hour) in the UK – some 62pc above the EU average

The equivalent figures were 29.08 c€/kWh in France and just 22.04 c€/kWh in Spain.

In the US, while there is variation from state to state, average domestic electricity prices were just 16.27 c€/kWh last month - two-fifths UK levels.

This at least partly reflects America’s success in transforming itself from a major importer to a major exporter of energy - reflecting the impact of the fracking revolution on US oil and gas industry output.

Back in 2020, the last full year before signs of rising Russia/Ukraine tensions started spooking global energy markets, UK electricity prices averaged around 27.15 c€/kWh – a third lower than now.

Thread 🧵 2/9

Raising corporation tax from 19% to 25% in April makes no sense. @RishiSunak @Jeremy_Hunt need to change their minds.

The @OBR_UK should be a guide to policy, not a straitjacket. I explain why in my latest @Telegraph column, summarised below:

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telegraph.co.uk/business/2023/… Far from raising revenue, the upcoming 6ppt corporation tax hike will likely cost @hmtreasury money.

For many lockdown-ravaged firms, now facing soaring costs & sky-high energy bills, this huge tax hit will be the last straw.

They'll fold altogether...paying no tax at all

2/8

When ONS recently released new wage data, countless newspaper headlines & broadcast bulletins suggested public sector workers are paid less than rest of us - so deserve a particularly big wage rise.

But it's not true - as I write in @Telegraph 1/12 🧵

telegraph.co.uk/business/2022/… Public sector workers are paid MORE on average than private sector workers – and have been for decades.

The average weekly public sector wage in 2021 was £579, but just £536 in the private sector – with state workers’ wages around 8% higher. 2/12

I back free-at-point-of-use healthcare.

But despite efforts of frontline staff, NHS clinical outcomes compare very badly with other wealthy nations.

Voters are losing patience with this chronically inefficient organisation.

My @Telegraph latest 🧵 1/9

telegraph.co.uk/business/2022/… Cost-of-living squeeze won't ease soon. Global energy prices still high & "core" inflation (minus food/energy) is 6.2%

While CPI 9% higher, Producer Price Index is 18.6% up over last year - costs that will soon fed through

So inflation will get worse before it gets better

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