Money

Tuesday

12 Jul 2022
Susanne Mundschenk
Susanne Mundschenk
The problem with euro-dollar parity

The euro is nearly level with the dollar. It should not matter in theory, because of the relatively low share of the US in EU trade. But it does in practice. Some predict that the euro will fall below parity. There is a straightforward explanation for this: the war in Ukraine and unpredictable Russian gas supplies to Europe make the dollar a safe haven for investors. On top of this, US interest rates offer a higher return on investment. But it is not only the dollar. Looking at the broader picture, the European Central Bank's measure of the euro's real effective exchange rate against 42 partner countries confirms this trend towards a new historic low: really bad news comes from the combination of the euro's falling value, the energy crisis, and the return of inflation.

The problem with euro-dollar parity

Monday

11 Jul 2022
Ellen Pasternack
How to fix Britain’s childcare problem

Childcare in the UK is among the most expensive in Europe. A full-time nursery place for a child under five costs in the region of £14,000 per year; if there are multiple children, this easily rises to an amount that means women would be paying to go back to work after maternity leave. The result: if a couple can’t afford to support a family on a single income until children are school age, then quite likely they can’t afford to have a family at all. One typical reason given for these high costs is that regulations for the number of adults per child are more stringent than in many other countries, meaning more staff are needed to take care of the same number of children. Other European countries allow more children per staff member, and Denmark, Sweden, and Spain do not give any legal maximum.

How to fix Britain’s childcare problem

Saturday

9 Jul 2022
Fraser Nelson
Fraser Nelson
Are the Tories ready for a real contest?

Will this leadership contest provide a debate? The Tories got into this mess because have spent years asking who can bring them power, rather than what they stand for or who has the best ideas for the country. The leadership contest should come in two stages: first discussing what has gone wrong and then next who best to remedy. So far, this is my test for the candidates. Have they said anything that moves beyond platitude and cliche? Do they show any signs of being thoughtful? Do they recognise that there is a fight ahead, and that they are prepared for that fight? Sunak has done so, attacking ‘fairy tales’ offered by others – but hasn’t really elaborated on what difficult decisions he would take. Kemi Badenoch’s wildcard candidacy is on the basis that the party needs discussion – my guess is that she hasn’t really game planned this many moved ahead but I think she is right in that certain things need to be said.

Are the Tories ready for a real contest?

Friday

8 Jul 2022
Matthew Lynn
Matthew Lynn
If the EU disliked Boris, they’ll hate his successor

Three, five, or perhaps even ten whole minutes. In a more civilised, parallel universe, perhaps Europe's big wigs would have allowed a slightly more dignified period of silence following Boris Johnson’s resignation speech before cracking open the foie gras and champagne. In this one, however, the gloating started immediately.  'The departure of Boris Johnson opens a new page in relations with Britain,' wrote ex-chief Brexit negotiator Michel Barnier. 'Boris Johnson's reign ends in disgrace, just like his friend Donald Trump,' tweeted the former Brexit coordinator of the European parliament Guy Verhofstadt. No doubt we will see a lot more in that vein in the hours and days ahead. But hold on. As so often in the past, the Brussels elite is badly mis-reading British politics.

If the EU disliked Boris, they’ll hate his successor

Wednesday

6 Jul 2022
Kate Andrews
Kate Andrews
Rishi Sunak will be missed as Chancellor

We will never know the counterfactuals of the past few years. What if another MP had been made Chancellor when Sajid Javid resigned (the first time)? What if a green chancellor Rishi Sunak hadn’t had a pandemic to manage? While we can’t answer these questions, it’s hard to imagine any MP – certainly on the left, even on the right – taking fiscal responsibility as seriously as Sunak did when he had the permission of his party – and politicians the world over – to throw it out the window. I suspect it won’t take long for us to start missing the former Chancellor and the critical role he played in taming the Prime Minister’s spending habits.  Overseeing the public finances and financial support schemes throughout the pandemic made Sunak a household name, and also a subject of controversy, especially within right-wing circles.

Rishi Sunak will be missed as Chancellor

Tuesday

5 Jul 2022
Matthew Lynn
Matthew Lynn
Rishi Sunak won’t be missed as Chancellor

Rishi Sunak's resignation was, without question, a brave, honourable and dignified decision. By stepping away from the cabinet, the Chancellor Rishi Sunak may well have done enough to salvage his reputation among Conservative MPs and party members. Perhaps he might even have rescued what was once seen as a potentially meteoric career. But although he may be missed as a politician, one thing is clear: Sunak won’t be missed as Chancellor. In reality, he was a catastrophe in the role – and now that he has gone, his successor will have a chance to reverse his policies. Whether Sunak has penned a note for his successor quipping that the money is all gone remains to be seen. He undoubtedly should. The Chancellor leaves a worse legacy than perhaps any predecessor of modern times.

Rishi Sunak won’t be missed as Chancellor

Monday

4 Jul 2022
Susanne Mundschenk
Susanne Mundschenk
Turkey’s grain diplomacy

Recep Tayyip Erdogan is once again using Turkey's geopolitical position for his own ends, this time dictating grain shipments from Ukraine through the Black Sea. Turkish customs authorities detained a Russian cargo ship carrying Ukrainian wheat on Sunday, following a request of Kyiv. The Russian cargo ship Zhibek Zholy left the south-eastern port of Berdyansk over the weekend carrying 7,000 tons of grain, worth about £1.75 million. The Russian-appointed head of the occupied region had hailed it as the first commercial ship to leave a Ukrainian port after months of war. He said this would take desperately-needed supplies to friendly countries, according to Politico. The reality is, of course, that the shipment is a provocative move from Russia given it isn't Moscow's grain.

Turkey’s grain diplomacy

Thursday

30 Jun 2022
Kate Andrews
Kate Andrews
Britain avoids a recession – for now

The UK's economy grew by 0.8 per cent between January and March this year, according to this morning’s update from the Office for National Statistics. This means real GDP is now just 0.7 per cent above its pre-pandemic levels. On the face of it, it's fairly grim news. The spectacular growth originally forecast for this year, making up for lost time in lockdown, did not transpire in the first three months of the year. Signs of a weak economy are starting to show. While consumer spending was up by 0.6 per cent in the first quarter, business investment fell by the same amount, down 9.2 per cent overall from its pre-pandemic levels. Expectations were low for this data drop, and while it's clear that Britain's economy is stagnating, this is better than the alternative.

Britain avoids a recession – for now

Wednesday

29 Jun 2022
J. Meirion Thomas
Striking GPs need a reality check

GPs have voted to strike if some contract changes, including forcing practices to open on Saturdays, are not withdrawn. The doctor proposing the motion at the British Medical Association’s annual conference in Brighton urged her fellow medics to 'channel our inner Mick Lynch'. This analogy – and the meeting’s decision in favour of industrial action – tells us everything we need to know about the political leanings of the BMA who ought to be unbiased. It was particularly distasteful to invoke a comparison with the RMT’s rail strike which caused travel chaos and distress last week for NHS staff and their patients, among other innocent casualties. The main quarrel of the meeting was the demand by NHS England that GPs should provide a full service on Saturdays from 1 October.

Striking GPs need a reality check

Tuesday

28 Jun 2022
Matthew Lynn
Matthew Lynn
Macron’s Russian oil plan is bound to fail

It will drain Vladimir Putin of funds for his war machine. It will bring down inflation. And it might even be enough to stop the global economy from tipping into recession. As President Macron put forward his wheeze for solving the energy crisis this week, he no doubt had plenty of persuasive arguments. He appears to have brought the rest of the G7 on board for his plan for a global cap on the price of oil. There is just one problem. Like most price controls, it is not going to work. Indeed. It will only make the crisis worse. Of course, everyone can see where Macron is coming from. Ever since Russia invaded Ukraine, and embargos started to be placed on its energy, the price of oil has soared. From $74 a year ago it has risen to $117 a barrel and could go a lot higher still.

Macron’s Russian oil plan is bound to fail

Sunday

26 Jun 2022
Kate Andrews
Kate Andrews
Could a row over steel blow up the Tory party?

When Boris Johnson was campaigning for Brexit, he placed much importance on World Trade Organisation rules. The WTO, he’d argue, had an internationally-recognised free trade rule book - which was ready and waiting to be used as a substitute to the European Union system. This is why he could face some very difficult questions next week if he decides to extend tariffs on steel imports in a way that some think flout WTO rules. Last year the PM ignored advice from the independent Trade Remedies Authority – a trade watchdog which his government created post-Brexit – which wanted him to ditch some of the tariffs currently in place that, they said, weren’t making a meaningful difference anyway. But Johnson extended most of the tariffs, which expire at the end of this month.

Could a row over steel blow up the Tory party?

Saturday

25 Jun 2022
Fraser Nelson
Fraser Nelson
Where is the Boris agenda?

It's a common trap: a Prime Minister is asked whether he or she will fight the next election as leader. To which there are only two answers: to say 'yes,' or announce your resignation. But - here's the trap - saying 'yes' can be easily translated into Thatcher-style declaration that you want to "go on and on" - in Boris Johnson's case, the papers say he wants to last to the 2030s. Not a timescale he mentioned. But he did talk about a "third term" and is blaming his by-election defeats on voters not thinking enough about the future. ‘If you look at the by-elections, people were absolutely fed up about hearing about things that I had had stuffed up,’ he said. ‘An endless churn of stuff. What they wanted to hear was: what is this guy doing? I want to talk about our plan to help people with the cost of living, what we’re doing for a stronger economy, our plan for a stronger economy.

Where is the Boris agenda?

Thursday

23 Jun 2022
Julian Jessop
Of course we can afford to cut taxes

The latest data on the UK’s public finances have provided more ammunition for those arguing that the government cannot afford to cut taxes. However, the economic reality is far more nuanced – especially when it comes to interest payments. The bad news is that the government borrowed another £14 billion in May, £3.7 billion more than forecast by the Office for Budget Responsibility (OBR). This reflected both lower-than-expected tax receipts, despite the increase in National Insurance contributions, and higher spending, including £7.6 billion in debt interest costs. This means that the government has already borrowed £35.9 billion in the first two months of the new fiscal year, or £6.4 billion more than forecast.

Of course we can afford to cut taxes