Economy

The recession has made Britain’s banks less competitive and they should be broken up, concludes the Treasury Select Committee. As the banking system spiralled towards oblivion in 2008, the market became more concentrated. ‘The financial crisis has resulted in significant consolidation of the UK retail market. Well known firms such as HBOS, Alliance & Leicester and Bradford and Bingley have either exited the market or merged with rival firms. A large number of building societies have merged, undermining the diversity of provision in the sector. Whilst these ‘rescues’ were necessary in order to preserve financial stability, the consequence has been to reduce competition and choice in the market.’ Each merger

To disguise the radical nature of reform, one need only make it boring. And here Chris Grayling has succeeded spectacularly. Today he has announced further details on the ‘Work Programme’ and the ‘Benefit Migration’, which sound like the type of well-intentioned but doomed reforms that ministers tried over the Labour years. The welfare state has incubated the very ‘giant evils’ it was designed to eradicate. There are, scandalously, 2.6 million on incapacity benefit right now – a category which ensures they don’t count in unemployment figures. Brown didn’t care much, but Grayling is taking this head-on. In tests on 1,700 IB claimants in Burnley and Aberdeen, it was found that

Whether revolutions devour their own children often depends on the ability of a post-revolutionary government to deliver political freedom, jobs and services. Egypt is no different. If the economy opens up, then the country’s transition to democracy is likely to continue. If not, then anything can happen. So, which will it be? The stock exchange has reopened and is doing better than many expected. The government is bullish about growth, but it is hard to see where it will come from. Tourists, who account for a major part of the economy, are staying at home. Hotels are empty and BA is cancelling flights due to lack of passengers. The uncertainty

If I was a betting man, I’d fancy wagering that if the economy is growing at a decent clip again by next year’s Budget, Osborne will abolish the 50p rate then. His announcement of a review of how much revenue it actually brings in, strikes me as a move to pave the way for its abolition. This review is, if it is using dynamic models, likely to conclude that the rate is bringing in no, or minimal, revenue and that a lower rate would produce more. This would give Osborne the political cover to reduce the rate. But, as with so much else, this is dependent on growth returning to

The February inflation figures spell more bad news for living standards in the UK. With average weekly earnings growth standing at just 2.2 per cent, millions of workers continue to get poorer in real terms. However, differences in the make-up of typical “shopping baskets” mean that the spending implications of inflation vary by income group. Since 2007, inflation has been driven primarily by increases in food and fuel prices. Given that such staples account for a larger share of weekly expenditure among lower income households than among higher income ones, the impact is felt more acutely in the lower half of the income distribution. The below chart details the impact

You may have heard of UK Uncut? They’re certainly good at attracting attention: forcing their way into Barclay’s bank the other week and managing to close a branch of TopShop temporarily.   But what they have in noise they lack in substance. New research by the Institute of Economic Affairs exposes how the ‘grassroots movement’ want Vodafone to pay tax in the UK on the profits it makes in Germany. It’s a reasonable principle – taxing companies based on where they are domiciled is fine. But they also want Boots, a Swiss company, to pay tax in the UK on the profits it makes selling items to Britons, from British shops.