“Productivity isn’t everything, but in the long run it’s almost everything”. So said the economist Paul Krugman in his 1994 book, The Age of Diminishing Expectations.

“A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker,” argued Krugman.

And he’s right.

Productivity has stalled across the “advanced” nations over recent years. But the slump in output per hour worked has been most dramatic in Britain, particularly since the 2008 global financial crisis.

That’s why UK living standards have since fallen sharply, with lower income groups suffering most, making our politics more febrile and divided. Productivity really matters, as Krugman says.

The UK's lack of productivity growth is one of the significant factors seriously undermining our public finances, in turn creating the danger of a serious fiscal collapse.

@RachelReevesMP will be learning all about that when the Office for Budget Responsibility @OBR_UK finally publishes new more realistic productivity forecasts ahead of her budget on 26th November. Or, not so much more realistic as less unrealistic.

For years – this began under the Tories – pie-in-the-sky assumptions of an upcoming surge in UK productivity have flattered the outlook for our public finances – as this thread explains.

But while productivity growth across the private sector is extremely weak, public sector productivity is far, far worse – and has lately been going into reverse.

If we want to solve the UK's productivity problem, we need to start with the state ....

My latest @Telegraph "Economic Agenda" column

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telegraph.co.uk/business/2025/… Buoyant during the 1950s and 1960s, annual productivity grew less than 1pc during the 1970s – due to low investment, crumbling infrastructure and, too often, trade unions sabotaging new technology.

The music was good, but the economic dysfunction and falling living standards during the 70s are the stuff of legend.

Between 1994 and 2007, though, productivity grew by a buoyant 2pc a year, driven by information technology, better skills and more business-friendly tax and regulation. Again, the impact on wages and living standards was palpable, with most feeling better off and politics more consensual.

Since 2008, though, the OBR calculates productivity has risen only a paltry 0.1pc per annum. This has hit wages and profits, and consumer spending and investment, generating less growth. A more sluggish economy, in turn, has weakened tax receipts.

Other factors impact our economy – like wars, geo-politics and energy price shocks. But productivity is “almost everything”, as Krugman says, the impact of its growth or otherwise compounding each year, shaping our economic trajectory.

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This Bank of England bond-selling row is complicated. But, be in no doubt, how it's resolved will have a huge impact on the UK's public finances, broader politics, and the lives of millions of people.

The sums involved are vast. Yet almost everyone –including practically all our politicians and, I have to say, even some members of the Bank's own Monetary Policy Committee – seem to have filed this subject under "too difficult" and "too controversial".

All the more reason to try to understand it ...

The squabble over so-called "quantitative tightening" (QT) is about to reach a head – with Reform Deputy Leader @TiceRichard meeing @bankofengland Governor Andrew Bailey later this week.

The meeting is happening because Tice wrote Bailey an open letter about QT, citing a lot of credible research and demanding answers.

My latest @Telegraph column is an attempt to explain the basics of this QT debate and why it's important, to a broad audience.

I'm outlining what I wrote in yesterday's paper in this thread.

telegraph.co.uk/business/2025/…

🧵1/8 The Bank of England held interest rates at 4pc last Thursday. That was no surprise – after all, inflation was 3.8pc during the year to August, almost double the 4pc official target.

The Monetary Policy Committee (MPC) did, of course, lower rates from 4.25pc last month, with the July inflation figure also at 3.8pc. But that August cut is now widely seen as a mistake – as some of us warned at the time.

After the August rate reduction, gilt yields climbed, as large global investors bid up UK borrowing costs. That was a highly unusual response to lower policy rates – a flat rejection of the MPC’s collective view inflation would soon abate.

So it was reassuring Governor Andrew Bailey indicated last Thursday the Bank won’t hurry to cut rates again. The MPC minutes for this month rightly observed that “upside medium-term inflation risks remain prominent in the committee’s assessment of the outlook”.

🧵2/8

"Inflation rise takes the UK closer to debt-crisis cliff edge" – my latest @Telegraph column

Britain is heading for a very serious fiscal crisis – not unlike the 1976 fiasco which saw this country go "cap in hand" to the International Monetary Fund for a bail-out.

Government borrowing costs are now higher than they were in 1998 - but the national debt is some 3-times bigger as a share of GDP than it was back then.

That's why the government's debt interest bill is now so massive – twice what we spend on defence each year, more than we spend on schools.

PLUS: Over two-thirds of the money the government is borrowing each year is now being spent on interest payments on already outstanding debt.

AND: The UK's uniquely high share of "index-linked" debt – with interest payments that go up with RPI inflation – means that as inflation rises, our already crippling debt service costs rise even more.

The vast majority of our political and media class are either incapable of understanding the now brightly-flashing warning signs - signs I have outlined in the Telegraph and elsewhere many, many times – or are determined to ignore them if they do.

What I am saying isn't party political, nor about left and right or who has the right "values".

It's about trying to avert a major fiscal meltdown and related systemic crisis - which will cause huge economic and societal damage, and during which the least well off will suffer most.

Please read and share this thread

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telegraph.co.uk/business/2025/… Last Wednesday we learned that the UK’s consumer price index was 3.6pc higher in June than the same month in 2024 – well above expectations and significantly higher than the Bank of England’s 2pc inflation target. The broader retail price index rose even more, by 4.4pc.

Unemployment is also up, hitting 4.7pc during the three months to May, a four-year high.

And last week’s double dose of downbeat data came against a backdrop of broader economic weakness, of course, with GDP having shrunk in both April and May.

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A UK "wealth tax" will be entirely counter-productive - and will only further weaken our already extremely fragile public finances.

But with the left now firmly in control of the Labour party, and therefore the British government, a major shake-down of wealthy UK residents now strikes me as inevitable.

My latest "Economic Agenda" @Telegraph column

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telegraph.co.uk/business/2025/… Rachel Reeves’ tears during Prime Minister’s Questions last week pushed up the 10-year UK gilt yield from 4.51pc to 4.66pc in a matter of minutes.

Whatever the explanation for the Chancellor’s House of Commons meltdown, global investors weren’t impressed.

This surge in the gilt yield was significant – equivalent to a £1bn-plus increase in the annual interest bill on the UK’s £2,600bn stock of national debt

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Ahead of her Spending Statement on Wednesday, Chancellor Rachel Reeves faces a set of national accounts drenched in red ink.

But @Nigel_Farage's Reform party has a plan which, at a stroke, will apparently bring about a multi-billion-pound improvement, paving the way for higher public spending without more borrowing and even allowing for tax cuts.

Over the weekend, Reform’s Deputy Leader @TiceRichard wrote an explosive letter to @bankofengland Governor Andrew Bailey – as exclusively revealed in @Telegraph – accusing the UK’s central bank of “systemic misuse of taxpayers’ money...at a time when the nation’s accounts are already under very severe pressure”.

Tice's claim are NOT outlandish. I believe they should be taken seriously and openly debated – as do a range of widely-respected, politically agnostic economists, including two former Deputy Governors of the Bank of England.

My latest "Economic Agenda" column in @Telegraph

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telegraph.co.uk/business/2025/… Leading in several opinion polls, Reform's letter to the Bank of England amounts to a broadside against the financial establishment from a party that could feasible form the next government.

Richard Tice is now publicly claiming the Bank of England “is unnecessarily wasting tens of billions of pounds of taxpayers’ money, whilst enriching City institutions”.

The Reform Deputy Leader's letter to Bailey focusses on the merit of interest payments on balances held at the Bank of England resulting from the UK’s 15-year-long quantitative easing (QE) programme.

The detail behind these issues is understood by just a few – expert policymakers, specialist investors and a handful of perhaps overly-curious economic commentators (ahem!)

But Reform’s now boldly stated policy aim of effectively forcing the Bank of England to stop paying interest to commercial banks on QE reserves, resulting in potential savings of £35bn per year, is a legitimate subject for discussion.

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“There is no trade-off between economic growth and net zero.” So said Rachel Reeves back in January. Has the Chancellor since changed her tune?

Reeves now says that the UK’s “absolutely insane” environmental regulations have become a serious barrier to “essential infrastructure investments”, having gone “too far in one direction”.

Now Reeves is finally realising that not only are “net zero” policies unpopular, but that unless Labour performs a major policy U-turn soon, bringing down energy costs and significantly easing “net zero” regulations, the economic growth that her party – and the country – so desperately needs will be lost to the wind.

My latest @Telegraph column

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telegraph.co.uk/business/2025/… “We all love and want to preserve nature,” the Chancellor told fellow delegates at last week’s Spring Meeting of the International Monetary Fund in Washington DC.

“But we also want energy infrastructure to reduce the cost of energy and better transport infrastructure,” she observed. “Well-meaning regulations end up stopping good things from happening.”

Three months ago, Reeves told an audience gathered in a Siemens factory outside Oxford that she was “fixing the foundations of our economy” and “promoting stability in our public finances”. Since then, her own tax rises and profligacy have caused the UK economy to flatline, blowing an even bigger hole in our national accounts.

The government borrowed £152 billion during the year to March, we learnt last week, as high spending on welfare and public sector wage rises combined with weaker tax revenues, dented by sluggish growth and downbeat consumer and business sentiment.

Borrowing during 2024/25 was £15 billion more than forecast by the Office for Budget Responsibility just a month ago and a staggering £65 billion more than official estimates this time last year.

During last month’s Spring Statement, Reeves stressed she had taken “tough decisions” to “restore the full fiscal headroom to our public finances” – the vague notion that, in five years’ time, the UK’s national debt will be falling as a share of GDP, with a £10 billion safety buffer.

Those tortuously compiled plans have already been blown to smithereens – as a direct result of Reeves’s own tax and spend decisions.

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Is @realDonaldTrump bonkers? With the world’s two biggest economies locked in the worst trade war for decades, it’s a question commentators are asking on both sides of the Atlantic.

The straight answer is no - the US President isn’t bonkers. There is at some method in his madness – and it’s true that, for many years, global tariff patterns have been stacked against America.

Having said that, Trump’s unconventional and extremely punchy attempts to shock other powerful economies into levelling the trade playing field have clearly caused some panic on financial markets, forcing the White House if not into a U-turn then certainly a pause.

Even if Trump survives the political brickbats and rides out the financial storm, his plans may anyway come unstuck.

Having said that, they may not.

My latest "Economic Agenda" column @TheTelegraph

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telegraph.co.uk/business/2025/… The US President is trying to do nothing less than recast the entire global trading system at America’s behest – as happened in the mid-1940s under Franklin D. Roosevelt and again during the mid-1980s under Ronald Reagan.

In both cases, the US was then indisputably the world’s most powerful economy, with the commercial and military supremacy and sufficient moral authority to impose on the world a trading regime not just made in Washington but designed to promote US commercial, political and strategic interests.

These days, whoever is sitting in the White House, that may no longer be the case.

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Britain will be hit by Donald Trump’s “baseline” tariff of 10pc on our goods exports to the US. The UK has avoided the “reciprocal” levies which will see the European Union pay a 20pc export tax, with Japan facing a 26pc charge and China a massive 54pc.

But Britain still sent goods worth almost £60 billion to the US last year, not least automotives. One in eight cars built in the UK are sold in America – and they’re now caught in Trump’s across-the-board 25pc tariff on all foreign-made cars, threatening UK profits and jobs.

Relatively light as they are on Britain, Trump’s trade barriers will still harm an economy struggling to grow after the serious impact of Chancellor Rachel Reeves’s October budget – which imposed £40 billion of additional taxation each year and £30 billion more in annual government borrowing.

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My latest "Economic Agenda" @Telegraph column

telegraph.co.uk/business/2025/… While the Office for Budget Responsibility downgraded its GDP growth forecast for 2025/26 from 2pc to 1pc as Reeves delivered her Spring Statement on 26th March, the fiscal watchdog didn’t include the impact of Trump’s tariffs, which had yet to be announced.

A further official growth downgrade is now likely, at or even before Reeves’s budget statement this autumn, putting the Chancellor under enormous pressure from financial markets to impose more fiscal consolidation in the form of further tax rises and/or spending cuts.

Even before Trump’s tariffs, though, the UK was already on course for sluggish growth over the next few years, not least because of Labour policies that will crush business confidence.

🧵2/7

After last Wednesday’s Spring Statement, the UK is teetering on the edge of fiscal credibility, with government spending and borrowing running way ahead of recent expectations, tax receipts lower than forecast and an increasingly large national debt that is in danger of sparking financial instability – resulting in much broader economic and societal damage.

For all the fresh cries of “austerity”, Chancellor Rachel Reeves is set to raise public spending to £1,351 billion by 2029-30, some £219 billion more than during the current fiscal year – a sizeable real terms increase.

The government’s much-vaunted annual savings of £14 billion by the end of this parliament, partly from welfare reforms but also reliant on lower “departmental running costs” (fewer civil servants) amounts to barely 1pc of government expenditure – hardly a bold reform programme.

The question of whether Reeves's fiscal sums will ultimately add up - and whether the UK can escape its current fiscal predicament – depends heavily on the future path of GDP growth, of course.

But it also depends, perhaps even more crucially, on inflation – and the impact of inflation not just on growth, but also on the all-imporant gilts market.

And while inflation is down on the very latest figures, the medium- and long-term outlook when it comes to UK price pressures, is a very long way from rosy.

My latest @Telegraph "Economic Agenda" column

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👀For a lot more commentary on the Spring Statement see link in my X biog 👀

telegraph.co.uk/business/2025/… Labour's £14 billion cut in annual expenditure by 2029/30 – in part dependant on welfare reforms – represents less than a 1pc reduction in public spending. Overall government expenditure is in reality set to rise £219 billion over the same time – an increase of more than 19pc.

The enormous sums Britain already spends on health-related benefits will still increase very sharply between now and the end of this decade, from just under £50 billion to over £70 billion a year. Far from “cuts”, we’re talking about a minor slowdown in the rate of increase of a health-related benefits bill still spiralling upward.

And as for slashing our bloated public sector payroll, there are now over 548,000 civil servants – 22pc more than the 446,000 employed in 2019, before Covid-related lockdown.

So Labour’s “bold and decisive” plan to cut 10,000 taxpayer-funded staff amounts to less than a 2pc headcount reduction, leaving numbers still over a fifth higher than prior to Covid.

So much for the efficiency gains supposed to stem from email, artificial intelligence and – lest we forget – “working from home”. And even this paltry scaling-back will be so fiercely opposed by public sector unions backing countless senior Labour MPs that it may not materialise.

🧵2/7

👀For a lot more commentary on the Spring Statement see link in my X biog 👀

Some thoughts ahead of Rachel Reeves "Spring Statement" on Wednesday.

This House of Commons Statement will only last 20/30 minutes, and there won't be photos of the Chancellor holding up a red box outside Number 11 Downing Street.

But be in no doubt - tomorrow's set-piece is just as significant, economically and politically, as pretty much any full budget statement of recent years.

My latest "Economics Agenda" column in @Telegraph

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telegraph.co.uk/business/2025/… Back in October, after her party took office in July, Reeves unveiled the first Labour budget in fourteen years.

It was statist and punitive – upping government spending by a massive £70bn per annum during this Parliament, financed by £30bn of extra state borrowing and £40bn of additional taxation each year.

Last year’s total tax take was around £830bn – so Reeves has already hit the UK with a 5pc hike in taxes.

This hammered the economy, hitting both consumer and business confidence.

It is all very well be highly critical when you're in opposition. But Labour's incessant talking down of the economy during their first months in office, not least relentless claims about a fictitious "£22bn black hole" to justify tax rises that weren't in the party's election manifesto, did real damage.

Reeves's high-tax October budget then compounded that damage, knocking consumer and business confidence sideways.

🧵2/8

BMW is stalling plans to restart production of electric Minis at its factory in Oxford. The Cowley plant, an auto-building site since 1913 and the original home of Morris Motors, was bought by the German carmaker twenty years ago.

The future of this iconic manufacturing hub is now in doubt. And a big part of the reason is the over-zealous imposition by Labour of “net-zero” rules originally introduced by the Tories.

Britain's overly-punitive electric vehicle (EV) rules are pushing us towards an economic, political and societal disaster.

My latest weekly "Economic Agenda" column

@Telegraph @TeleBusiness

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telegraph.co.uk/business/2025/… BMW has halted a £600m overhaul of Cowley, it emerged last weekend, amidst slow demand for electric vehicles (EVs) and the UK’s ZEV (zero-emission vehicle) regulations – which are even more punitive than those operating across the European Union.

I’m astonished this move by BMW hasn’t attracted more attention.

It calls into question not only production at Cowley, a site employing well over three thousand people, but is a moment of truth for mass car-making in Britain per se – a sector providing upwards of a million jobs, and many more in related industries and activities.

The UK’s switch away from petrol and diesel cars and towards EVs has now descended into chaos.

Carmakers previously happy to take subsidies to facilitate the huge upheaval of shifting from internal combustion engines to battery-powered cars, now bemoan weak consumer demand for EVs and the extremely punitive fines manufacturers face as a result.

Either ministers get beyond virtue-signalling and ease net-zero rules, quickly and significantly, or what remains of UK car-making will be decimated, as production becomes economically unviable and the market is overwhelmed by a flood of heavily-subsidised Chinese-made EVs.

Heavily-subsidised Chinese-made EVs now account for 76pc of all EVs sold worldwide. Plus China controls 90pc of global production capacity of the rare earths and other metals used in EV batteries.

🧵2/5

An economic boom could be in the offing - the UK certainly needs one - if the government gets its policies right when it comes to Artificial Intelligence.

But the energy demands of this AI revolution are so high that, over the near-term at least, @Keir_Starmer will need to choose between a tech-driven growth-boost and his government's increasingly costly and growth-sapping "net zero" priorities.

My latest weekly "Economic Agenda" column

@Telegraph

🧵 1/10

telegraph.co.uk/business/2025/… Back in mid-January, as the full impact of Rachel Reeves’s tax-raising October budget began to hit home, consumer and business sentiment plunged.

Keir Starmer badly needed to a new growth narrative – to try to convince voters and investors the UK economy, having shrunk in two of the previous three months, would soon bounce back.

🧵2/10

My weekly "Economics Agenda" column in @Telegraph often focuses on the UK’s national accounts – with good reason.

Britain’s public finances are in a parlous state, teetering on the brink of systemic meltdown. I don't say this lightly.

In this week's column, I show that, even though our headline national debt figures are alarming, the underlying reality is even worse.

That's because the true scale of our national debt, the liabilities that the government - ie. taxpayers - face is much, much bigger than the numbers we hear discussed in Parliament and on our airwaves.

Serious financial analysts understand this - and the scale of our vast "off-balance sheet" liabilites is another reason why "gilt yields" have been rising.

In other words, the borrowing costs faced by governmment have been going up – along with the related debt interest bill which must be funded by higher taxes and/or even more borrowing.

In 2023/24, the government spent a jaw-dropping £107 billion on debt interest – almost 4pc of GDP, around 9pc of all government spending, roughly what the state spends on education !! This is insane - and deeply immoral - and that total is set to rise even more.

The danger is that the state's debts and related interest payments spiral out of control, causing a funding crisis and a market meltdown that does very serious economic and societal damage.

Again, I don't say this lightly - and, even though I'm an optimist by disposition, I certainly don't apologise for pointing out these bleak financial realities.

Read the rest of this thread to learn more ...

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telegraph.co.uk/business/2025/… In 1997, when Tony Blair took office, the economy was growing 4.9pc a year and the national debt was 36pc of GDP – low by historic standards. Growth continued at 3-4pc per annum for the rest of that Parliament – so a relatively small government debt pile remained manageable as a share of total output, allowing the state to borrow and spend more.

Keir Starmer’s incoming administration faced a different situation. Over the previous fourteen years, the Tories had overseen a decade of tough fiscal rhetoric during which the national debt actually ballooned, then a wildly over-stringent Covid lockdown which weakened our public finances even more.

As a result, Labour entered government last July with Britain in a high-debt-high-tax-low-growth doom loop – with growth at a historically paltry 1.1pc and national debt near 100pc of GDP, a 60-year high.

🧵2/6

Earlier today I spoke at @FarmersToAction rally - because I believe this government's proposed changes to inheritance tax (IHT) will seriously damage our farming sector, push up food price inflation, negatively impact the stewardshire and beauty of our countryside and undermine the UK's food security.

Plus, the IHT changes announced in Labour' s October budget will also do real harm to the UK's family-owned small and medium-sized enterprises (SMEs) - the backbone of the British economy, the health of which is vital to jobs and growth.

I believe the public in general will support Britain's small farmers once they understand more about how the removal of agricuiltural property relief (APR) and Labour's other IHT changes will destroy many family-run farms and SMEs more generally.

I agree that some investors have been using APR to buy land purely for speculative reasons, abusing the original purpose of this tax relief - and that practice should be curbed.

But in this thread I propose a policy solution to that problem which doesn't damage our small family-run farms, the future of which is so vital to our countryside and the UK economy more broadly.

🧵1/7 Back in September 2000, British farmers working together with truck drivers brought the UK almost to a standstiill. Sharp rises in petrol and diesel prices saw farmers and hauliers blockade roads, fuel terminals and refineries, putting huge pressure on Tony Blair’s New Labour government.

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

Even what was then a popular government suffered badly. As petrol stations closed and supermarkets began rationing, Labour’s poll-rating plunged from a ten-point lead to a five-point deficit in a single month.

Blair and then Chancellor Gordon Brown were forced to back down. They eased the tax burden on motorists including a freeze in fuel duty – the protesters’ main demand – policies ministers had previously dismissed as “impossible”.

For the autumn of 2000, read the Spring of 2025. I genuinely believe that if Britain’s farmers stage serious - and peaceful - protests about Labour’s deeply misguided IHT changes, then the broader public will back them.

Unless the Government changes its mind on these spiteful and counter-productive measure, I’d say we’re likely in for a rerun of September 2000, with even worse political fall-out for a Labour government that is already far less popular today than Tony Blair’s Labour was almost a quarter of a century ago.

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Rachel Reeves last week claimed that she is “fixing the foundations of the economy…creating the conditions for growth and investment”.

Yet in last October’s budget, with the tax burden already at a seventy-year high, the Chancellor raised taxes another £40bn per year – equivalent to putting 5p on the UK’s 20-pence-in-the-pound basic rate of income tax.

Reeves also said in her speech at Siemens in Oxfordshire, that: “There is no trade-off between economic growth and net zero”.

This is arrant nonsense.

A major example of how net-zero policies are curtailing growth, doing serious economic damage in fact, is the zero-emission-vehicle (ZEV) mandate, including the ban on new petrol and diesel cars by 2035.

ZEV rules, and the related fines, which are far more punitive in the UK than across the EU, are now systemmatically destroying the UK's car-making industry - a sector which employs upwards of a million people.

My latest weekly @Telegraph "Economic Agenda" column.

telegraph.co.uk/business/2025/…

🧵 1/7 Much of the historically huge £40bn annual tax rise in Reeves's October budget actually falls on business - not least the £25bn increase in employer national insurance contributions.

Union-friendly regulation in Labour’s employment bill will cost companies another £5bn per annum, with firms shelling-out for an inflation-busting rise in the minimum wage too.

Just the prospect of these measures ­– the tax rises and minimum wage increase start in April – has seen firms rapidly shed workers, with employment now falling at its fastest rate since the 2008 financial crisis.

Since the October budget, consumer and business sentiment have plunged, pushing Britain to the brink of recession.

🧵 2/7

“Is Labour’s economic plan working?”. That was what an audience member asked the panel, of which I was a member, on last week’s BBC Question Time.

"To be fair," I answered, Keir Starmer’s government come into office last July facing “a pretty ropey economic inheritance”.

"Yet actions since, especially Chancellor Rachel Reeves October budget, have made a bad situation far worse”.

My latest weekly "Economics Agenda" @Telegraph column.

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telegraph.co.uk/business/2025/… In 1997, when Tony Blair entered Downing Street, UK GDP was expanding at an annual rate of 4.9pc, with growth over the next few years often exceeding 3-4pc.

The national debt was just 36pc of GDP, very low by historic standards, with a buoyant economy keeping that debt pile manageable as a share of total output, with interest payments under control, allowing scope for the government to borrow and spend even more.

Starmer’s incoming administration faced a different situation. Yes, annualised growth of around 1.1pc in the middle of last year was, as the Tories often point out, “the fastest in the G7”. But the entire Western world, except the US, has long been in the post-lockdown doldrums.

Britain hasn’t managed 3pc growth – bang average during the Blair years – for over a decade. And government debt when Labour came in this time around was around 100pc of GDP, its highest level since the 1960s.

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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”.

🧵 2/5

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.

🧵2/7

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.

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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.

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