Julian Jessop
CapX
United Kingdom
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Past articles by Julian:
The OBR's borrowing miss shows the danger of relying too much on 'official' forecasts
It is always good to begin with some ‘good news’. The UK government recorded an unexpectedly large budget surplus in January, with revenues exceeding spending by £5.4bn. This was £5.0bn better than forecast by the Office for Budget Responsibility (OBR). It would be daft to focus on just one month’s figures, but this continues a […] → Read More
Given its track record, we really shouldn't take the IMF's forecast seriously
The IMF’s relatively gloomy forecasts for the UK economy in 2023 should be taken with a fistful of salt. For a start, the organisation’s track record here is poor and some of the assumptions – especially about energy prices and interest rates – already look out of date. The differences between the numbers for the UK and […] → Read More
Inflation is coming down – but it's nothing to do with the Government
There was little to cheer in the latest UK inflation data and nothing at all of any value in the Chancellor’s response. Indeed, Jeremy Hunt’s ‘coffee cup explainer’ (which you can watch on social media here) was both naff and nonsensical. There is at least some good news. The headline rate of inflation has peaked in […] → Read More
UK manufacturing is struggling, but we shouldn't give in to gloom
The quarterly ‘Manufacturing Outlook’ survey from Make UK (formerly the Engineering Employers’ Federation) is one of the better examples of its kind. It has clearly been written up by some serious economists, which I obviously think is a ‘good thing’. Nonetheless, the headlines appear to paint an overly gloomy picture of the prospects for the […] → Read More
Jeremy Hunt has allowed the pendulum to swing too far to self-defeating austerity
Prime Minister Rishi Sunak, centre left, and Chancellor of the Exchequer Jeremy Hunt, centre right, after he delivered his Autumn Statement (Photo: UK Parliament) → Read More
Is Liz Truss really to blame for £30 billion of austerity?
Sunday’s Observer led with the dramatic headline ‘Revealed: the £30bn cost of Liz Truss’s disastrous mini-budget’. Apparently, the former PM is responsible for half of the estimated £60bn fiscal hole that Jeremy Hunt intends to fill on Thursday with tax increases and spending cuts. But if you are suspicious about this claim, then you are […] → Read More
Are tax rises inevitable?
If you believe the smoke signals from the Treasury – and you probably should – the Budget on 17 November will have to include big increases in tax in order to plug a ‘black hole’ in the public finances. But is it inevitable that taxes will have to rise and, if so, what’s the best way to […] → Read More
Rishi Sunak is great for political stability, but the economy is about to get a lot worse
The new Prime Minister’s credibility has been enhanced by his warnings of what might have gone wrong if his predecessor lost the confidence of the markets (Photo: REUTERS/Henry Nicholls) → Read More
Freezing energy bills could be cold comfort for the economy
The first big policy announcement from Liz Truss is likely to be a freeze on energy bills. This is an extraordinary turnaround from the early campaign promises of no more ‘handouts’. I dislike the idea too, but we are where we are. So can we say anything constructive about it? Based on media reports, the […] → Read More
Labour's energy plan may be smart politics, but it has some serious economic flaws
Keir Starmer has now set out Labour’s plan to address what it calls the ‘Tory cost of living crisis’. The plan is not too bad, but it’s not great either. The main plank is a freeze on energy bills over the winter, keeping the annual cap on the average default tariff at £1,971 until the end of […] → Read More
Is Liz Truss on the right track on ‘Covid debt’?
Liz Truss has pledged to put Covid debt on a ‘longer-term footing’ as part of her bid to become the next Prime Minister. The details are sketchy, but the proposal seems to be to extend the maturity of £311 billion of pandemic-related borrowing to lock in low interest rates, and to slow the pace of […] → Read More
Is the OBR right to warn the new Chancellor against tax cuts?
On Thursday the Office for Budget Responsibility (OBR), the Government’s independent fiscal watchdog, published its latest annual report on the long-term sustainability of the public finances and the fiscal risks facing the UK. This made for grim reading, as these reports always do. But this time, the report has been widely interpreted as a warning against […] → Read More
The latest inflation data shouldn't let the Bank of England off the hook
Perhaps this says a lot about the mess we are in, but May’s UK inflation data were almost a relief. Some are even arguing that they ease the pressure on the Bank of England’s Monetary Policy Committee (MPC) to raise interest rates more aggressively. The bad news is that the headline CPI measure hit a new 40-year […] → Read More
The trials and tribulations of a four-day week
This week has marked the start of a six-month UK trial of a four-day working week. Employees at around 70 businesses will receive 100% of their usual pay in return for just 80% of their usual hours. This concept is (of course!) hugely popular with the general public, and has been lapped up in the media. […] → Read More
It's nonsense to blame Brexit for the cost of living crisis
So it’s official: the UK is teetering on the brink of another recession. If you believe some of the commentary, this is mainly the fault of an uncaring Tory government, or Brexit, or both. The reality is that the problems are just as acute in the rest of Europe. The suffering of others is, of […] → Read More
No, BP’s latest results don’t justify a windfall tax
BP’s first quarter results have predictably fuelled more calls for a ‘one-off’ windfall tax on the profits of North Sea oil and gas companies. But the numbers actually illustrate some of the arguments against rather neatly. For a start, BP reported a huge loss of $20.4bn (£16.3 bn) in the first quarter, due to the writedown of […] → Read More
It's the money supply, stupid
The experience of the last couple of years has demonstrated, once again, that if you continue to pump huge amounts of practically free money into economies which are already running close to capacity, the result is likely to be much higher inflation. Indeed, the further rise in the UK CPI measure, to 7% in March, is […] → Read More
No, debt interest doesn't cost more than defence
This week’s Spring Statement included some big, bold announcements, with obvious voter appeal. But the windfall from higher-than-expected tax receipts and the downside risks to economic growth mean that the Chancellor could, and probably should, have done much more. It is worth repeating that the public finances are in better shape than anticipated. Government borrowing […] → Read More
Rishi Sunak's Spring Statement plans could turn a temporary squeeze into a full-blown recession
Doing more now could actually secure a stronger economic recovery → Read More
It's too soon to write off the UK's economic recovery
Spare a thought for the staff of the Office for Budget Responsibility (OBR), beavering away on a new set of economic and fiscal forecasts for the Chancellor’s Spring Statement on March 23. The fallout from the Russian invasion of Ukraine has made an already difficult task almost impossible. It makes sense to present a range of […] → Read More