As Hunt appears before the Treasury Committee for his Autumn Statement grilling he’ll have some grim reading from the Organisation of Economic Co-Operation and Development (OECD) under his arm. New forecasts today have the global economy performing better than expected – just not the UK. Britain’s 2023 growth is expected to sit at 0.5%, while the forecast for 2024 has been downgraded from 0.7% in the OECD’s September interim report to 0.6%. Growth in 2025 is predicted to pick up to only 1.2%. Meanwhile, expected inflation is uprated to the highest in the G7…
UK growth is coming in at well below the G20 and OECD average of 1.4%, and in 2024 only Argentina and sluggish Germany will perform worse. Recommendations include “reforming the costly triple lock uprating of state pensions” and considering the fact that “fiscal pressure on households and businesses has increased significantly” from stealth tax rises.The OECD is warning Sunak to”swiftly implementing planned supply-side reforms to boost potential growth“. Or face doom…
Bad news for fans of economic growth this week as the US-based Tax Foundation release their International Tax Competitiveness Index, which ranks 38 OECD countries on how pro-growth their tax systems are. The UK has dropped another 3 places from last year to reach 30th out of 38 in the rankings. Canada and Germany are well ahead at 15th and 18th places, as are the United States and Japan. The only silver lining – France and Italy are still below us…
The Tax Foundation’s analysis shows that the UK is competitive on cross-border tax rules but falls short on pretty much every other metric, with above-average top-rate income tax rates and the highest real property tax burden in the OECD. Sunak and Hunt’s corporation tax hike has pushed us down 17 places in that category. Tom Clougherty at the CPS notes that we’ve “gone from having the 4th lowest headline rate in the OECD to the 21st“. Hardly a prelude to growth…
Truss obviously had her Weetabix this morning. As the one year anniversary of her mini-Budget looms, the former PM unloaded a salvo of attacks on her critics, taking aim at the BBC, the civil service, former Bank of England Governor Mark Carney, the Labour Party, and even the anti-growth MPs on her own party’s benches. She’s got a book out in April for more details…
Much of the speech was the familiar Truss routine: she conceded that she was in rush to deliver change, and she not only wanted to “fatten the pig” but also rear and slaughter it on the same day. She added that “voters want to see change“, and the Tories’ widening polling deficit is the proof in the pudding. It is worth pointing out, as Fraser Nelson did last week, that whilst the adults are supposedly back in the room, the economy is no better…
This point is not lost on Liz, as she pointed out during the Q&A:
“I do want to challenge the phrase ‘crashed the economy’. The fact is that since I left office, both mortgage rates and gilt rates have gone higher than they were at the time of the mini-budget. I just think you are repeating a line to take from the Labour Party…”
She also called on the government once again to slash taxes across the board. Words likely to fall on the deaf ears of the Chancellor… whom she appointed.
Stick Sir Keir in a wig and a frock and you might be forgiven for thinking Liz Truss herself had turned up this morning to give the speech for him. Launching his plan to “secure the highest sustained growth in the G7“, here’s what Starmer promised Labour would deliver:
“A plan which represents the determination of my party to create more wealth, lead Britain out of its low wage, high tax, doom-loop.”
Which sounds a lot like the words of free market economist Julian Jessop, who just last week said:
“The UK is in a doom loop of a rising tax burden, a weaker economy and deteriorating public finances. These latest stats will only encourage the OBR and the government to double down on this doom loop by drawing the wrong conclusions from dubious data. If the Treasury takes the OBR’s grim forecast for economic growth as gospel and refuses to cut taxes, the doom loop will continue.”
Alas Starmer plans to increase spending, substantially. Which means as sure as night follows day, taxes will rise even more. Given Guido thought he noticed someone who looked a lot like Torsten Bell lurking aound the stage this morning, the odds of the Treasury paying less attention to the OBR under Sir Keir are pretty slim…
Read Starmer’s speech in full below:
Those wondering why Conservative backbenchers so often find themselves opposing pro-growth policies may well be in luck. In a recent Substack post, Professor Ben Ansell has run an MRP model to find levels of housebuilding support, which can then be mapped by constituency. In news that might only surprise Liz Truss, the main strongholds of the anti-growth coalition are the Conservative shires. Co-conspirators can see for themselves on this map, where housebuilding support is represented by constituency size.
Housebuilding support is concentrated in cities, Scotland and the red-wall – all the areas currently voting Labour. Ansell’s research also includes a warning for pro-growth Conservatives. Amongst voters currently not intending to vote at the next election, house support is far more alike to Conservatives – i.e. the swing voters most in reach for the Conservatives are NIMBYs.
The NIMBYist seats in the country, in order of support for house building are:
- Wyre and Preston North – 16%
- Louth and Horncastle – 18%
- Christchurch – 20%
- Mid Derbyshire – 20%
- Castle Point – 20%
The most YIMBY Tory seat is Kensington, occupied by Felicity Buchan, which has 53.2% support for housebuilding. Meanwhile, Dianne Abbott holds that honour for Labour – the most YIMBY seat in the country with 66%. Guido is counting on them to lead the charge for growth…
Tom Tugendhat got the band together last night in Smith Square, where he was guest of honour for WPI’s drinks. His introduction came from WPI co-founder Nick Faith, who helped run Tom’s leadership campaign and pointed out their last speaker was one Elizabeth Truss. Despite Tom telling Guido in advance he wasn’t planning on making any news, eyebrows were certainly raised on two occasions. Not least telling the congregation the night ahead of Jeremy Hunt’s fiscal statement that “I know growth is no longer fashionable”…
His speech concluded, however, with a Mystic Meg prediction that surely warrants Tom putting his money where his mouth is:
“When I look at the budget… or indeed other things coming forward, I’m genuinely very, very positive. We’re beginning to see the end of the unreal era… I have to say I’m enormously positive about the UK… enormously positive about the Conservative Party. I think the reality is going to bring home to roost the truth that the Conservative Party is the natural party of government for a very good reason and so I think the polls may not show it today, I think we’re going to win in two years time, and I think we’re going to win well.”
Guido will hold off asking Tom for tomorrow’s lottery numbers…
