Matthew Lynn | The Spectator columnists & writers

This time it was surely all over. As inflation started to rise towards a 40-year high, as central banks started raising interest rates for the first time in more than a decade, and as the monetary printing presses finally stopped running, the crypto-currencies crashed. What a crash it was. Bitcoin, the best-known crypto, fell all the way from $61,000 last November to less than $19,000 in June, a spectacular drop of more than two thirds. Ethereum, Solana and other, frailer ‘coins’ – as well as the even flimsier digital collectors’ items known as NFTs – all tanked. This appeared finally to confirm what the doubters had said all along. Cryptocurrencies were nothing more than the latest in a long line of speculative manias: a 21st-century version of the Dutch Tulip Bubble of the 1630s.

Crypto keeps bouncing back

This time it was surely all over. As inflation started to rise towards a 40-year high, as central banks started raising interest rates for the first time in more than a decade, and as the monetary printing presses finally stopped running, the cryptocurrencies crashed. What a crash it was. Bitcoin, the best-known crypto, fell all the way from $61,000 last November to less than $19,000 in June, a spectacular drop of more than two thirds. Ethereum, Solana and other, frailer ‘coins’ – as well as the even flimsier digital collectors’ items known as NFTs – all tanked. This appeared finally to confirm what the doubters had said all along. Cryptocurrencies were nothing more than the latest in a long line of speculative manias: a 21st-century version of the Dutch Tulip Bubble of the 1630s.

Team Rishi is losing the plot on taxes

It would be an ‘electoral suicide note’. It would condemn the party to ‘the impotent oblivion of opposition’. And it would push petrol prices up to eight quid a litre, and mean the electricity grid would have to be turned off at eight every evening to preserve power. Okay, okay, I made the last two up. But to be honest Dominic Raab might as well have thrown them into today’s attack on Liz Truss’s fairly modest plans for cancelling some of Rishi Sunak’s planned tax increases – along with a few more dire predictions as well. In truth, Team Rishi is increasingly losing the plot on taxes – and the hysterical tone of the attacks only serve to illustrate that. For someone who was once discussed as possible chancellor, Domic Raab does not seem to have a very steady grasp of economics.

Liz Truss stiffened the Bank of England’s resolve on inflation

It turns out there is nothing like getting your homework marked by a tough new teacher to make everyone concentrate a little harder. Over the last couple of weeks of her campaign to lead the Conservative party, Liz Truss has made one point again and again. The Bank of England has been far too relaxed about inflation. And, surprise surprise, it has suddenly got a lot tougher. Today the Bank raised interest rates by half a percentage point, the largest single move in almost thirty years. Rates are now at the highest level in almost two decades. There was no great mystery about why. Inflation is already running at 9 per cent and, shockingly, the Bank predicted today that it would hit 13 per cent before it peaked. Optimistic forecasts that rising prices were merely temporary, triggered by the war in Ukraine, and would soon be back under control, have been blown away.

Only one tax cut can save Rishi Sunak

Rishi Sunak's promises on tax are lacklustre. He's announced a fiddly one-off tax break on energy that will last for just a year which hardly anyone will notice due to inflation. There's also income tax cuts up to seven years in the future, even though he is hardly likely to be Prime Minister by then (and he seldom keeps any promises on taxation for more than a few hours anyway). Sunak’s promises and u-turns on taxes are making him look inconsistent at best, and a cynical opportunist at worst. The Tory members are right to regard his words with suspicion. But there is one tax cut that could still win the membership over: abolishing inheritance tax. Inheritance tax is such an obvious target for abolition that it's astonishing that none of the Tory leadership candidates have seized on it yet.

Rishi Sunak’s energy bill u-turn is too little, too late

A tweak to the landfill tax perhaps? A minor adjustment to the airport levy? Rishi Sunak no doubt stayed up late into the night sifting through all the most minor tax cuts he could offer before re-launching his campaign with a dramatic u-turn. In the end, he plumped for axing VAT on energy bills, promising to scrap it for a year. Sunak's campaign insist it will save the average household an estimated £160 as prices go up. The trouble is, it is too little, too late: if Sunak wanted to cut taxes he needed something far bigger and bolder. Sunak's announcement is a sign of desperation. The Conservative party’s members look to have already chosen their next prime minister. Liz Truss is not way ahead in the polls because she is a fantastic speaker (she isn’t) or because she connects with ordinary people (she doesn’t).

Don’t blame Brexit for the Dover chaos

Queues stretching back for several hours. Children going crazy in the back seat. Cars breaking down in the heat, and holidays thrown into chaos by delays at the terminal. Anyone who imagined that they were making their lives easier by avoiding the airports and driving to continental Europe this summer will have had a nasty surprise. The ferries are just as bad, with a major incident declared at Dover as cars were snarled up in long jams. And yet, at the risk of disappointing hard core Remainers, that turns out to have nothing to do with Brexit – and a lot to do with French incompetence. It would be easy to blame our departure from the European Union for the chaos at Dover this weekend. After all, were we not warned that leaving would make traveling to Europe a lot harder? We would be right at the back of the queue with the Bolivians and the Aussies.

Is the eurozone about to plunge into a recession?

A reforming prime minister has been ousted by a fractious, divided parliament. The central bank is raising interest rates to try and stem inflation that is running out of control. Everyone is being urged to use as little electricity as possible as officials scramble around to secure enough energy, and the currency is crumbling as the economy turns down. It would, in fairness, be a reasonable description of a chaotic and struggling Brexit Britain. As it happens, however, it is a summary of the EU and the euro-zone as it stumbles towards its next crisis. It is turning into a terrible summer for the eurozone. The eurozone's purchasing managers' index (PMI) has slumped from 52.0 in June to 49.4 in July, suggesting the bloc could be on the brink of a recession.

Soaring inflation could tank Rishi Sunak’s Tory leadership bid

Wages are rising. The economy is growing. The stock market is on the way up, and exports are booming. As he prepares for a long summer trying to persuade the membership of the Conservative party to make him prime minister, Rishi Sunak probably wishes he could be transported to some parallel universe where he could boast about his record as Chancellor. The trouble is, he is stuck with this one: and the news is relentlessly bad. This morning, inflation was up yet again, hitting a 40-year-high of 9.4 per cent. Yesterday, it was real wages falling sharply, as workers' income failed to keep up with rising prices. Over the next six weeks, as Sunak is out on the hustings hustling for votes, it is only going to get worse and worse.

How Sunak can save his stumbling campaign

He has the widest support among MPs. He easily beats any other candidate with the voters, and is the only one consistently ahead of Sir Kier Starmer in the polls. He has experience, a fluent manner on TV, and as his slick campaign has reminded everyone, he is the most professional campaigner among the politicians left in the race. Against an often underwhelming, inexperienced group of rivals, the former Chancellor Rishi Sunak should be a certainty to become leader of the Conservative party, and so Prime Minister, by the autumn. There is just one catch: his stubborn attachment to raising corporation tax – when in truth, ditching that policy would be the one sure way of rescuing his stumbling campaign. The Tory leadership contest has so far been dominated by promises of tax cuts, more tax cuts, and, er, a few more tax cuts on top of that.

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.

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.

German industry is grinding to a halt

The Soviet Union had only just collapsed. John Major was still a relatively fresh-faced Prime Minister. And the internet consisted of a few desktop computers linking together a handful of laboratories. The world was a very different place when Germany last posted a trade deficit way back in 1991. But on Monday, the country recorded that imports outstripped exports for more than 30 years. True, other countries are recording huge deficits, not least the UK. For Germany, though, it matters more. Its entire economy has been built around creating an industrial machine that dominates global markets. That machine is now grinding to a halt.By the standards of Britain, the United States, or indeed France, the €1 billion deficit that Germany announced today might seem like a mere accounting error.

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.

Inflation is a social evil, so why don’t our leaders care?

It was a ‘destroyer of society’, a ‘tax on ordinary people’s savings’ and a threat to social order. You don’t have to spend very long browsing the history books to find thumping quotes from Ronald Reagan or Margaret Thatcher denouncing rising prices as an evil that had to be defeated. And today? Even with prices in the UK now rising at 9.1 per cent, the fastest for 40 years, there are just a few mumbled apologies, coupled with some evasive excuses. That is not good enough. If we are going to defeat inflation all over again, it will take some leadership. We learned today that inflation has nudged up again, this time well past the 9 per cent barrier. The Bank of England is already forecasting it might go above 11 per cent, and given how cloudy its crystal ball is – only a few months ago it was arguing inflation was just a blip – it might well climb a lot higher than that.

The eurozone crisis is back

Stock markets are crashing. Bond yields are soaring. And the cryptos are evaporating. There is so much going on in the financial markets right now it would be hard to miss the most significant event. The eurozone crisis, which almost broke apart the single currency back in 2011 and 2012, is back. And this time around, there is no very obvious way of fixing it. With inflation soaring across the world, the era of plentiful printed money coming to an end and interest rates starting to rise, every kind of financial market is in turmoil. Investors are adjusting to a new set of circumstances, and doing so very quickly. So far, only a few traders who spend their days glued to Bloomberg terminals have paid very much attention.

Why Biden’s inflation plan will fail

It sounded impressive at the time. On the last day of May, a whole ten days ago, president Biden laid out a three-part plan for bringing inflation back under control. It consisted of making sure the Federal Reserve was allowed to do whatever it took to control prices, releasing oil and gas reserves to try to bring down the soaring costs of energy, and fixing supply chains to try to make industry and retailing more competitive. ‘I have made tackling inflation my top economic priority,’ he announced grandly. To listen to the rhetoric from the White House, you might think that this was an issue that could be fixed with a few tweaks to public policy, after which the President could happily go back to taxing and spending on an unprecedented scale.

Things are about to get even worse for Boris Johnson

A round of tax cuts? A splurge of infrastructure spending? Or perhaps a whizzy way of subsidising housing? Boris Johnson could even decide to forgive student debts, and hand out a massive Christmas bonus for pensioners, craftily dressed up as a cost-of-living rebate. There are no doubt lots of such ideas being kicked around in Downing Street today to relaunch the Johnson premiership and save Boris's skin after a huge rebellion by Tory backbenchers. But here’s the problem for the PM: the economy is about to turn toxic. The dismal reality is that Boris isn’t going to be able to spend his way out of this scrape. Instead Johnson will have to come up with something else – that doesn't cost much money – to relaunch his premiership if he is to do anything more than limp on for a few more months until he is finally replaced.

We’ll all pay the price for Rishi Sunak’s handouts

A £400 rebate on electricity bills. A cash handout to the poorest households. And a windfall tax on the energy companies that generate the power to keep the lights switched on to try and pay for it all. Chancellor Rishi Sunak was back to doing what he likes to do best today: handing out vast quantities of free money, while making the UK a less and less attractive place for businesses to operate. It was billed as a fix for the ‘cost of living’ crisis. Yet very soon it will become clear it was nothing of the sort. After all, you can’t tax your way out of inflation; taking the approach Sunak has opted for will only make things worse. By the standards of the Johnson administration, the Chancellor's statement was an achievement of sorts.

Andrew Bailey is floundering in the face of soaring inflation

Prices are rising at the fastest pace for 40 years. Real wages are falling rapidly. The cost of servicing the government's vast debts is escalating, and companies are struggling to keep up with the rising price of raw materials. Still, not to worry. Fortunately, a quarter of a century ago Gordon Brown wisely decided to hand over management of inflation to a supremely competent group of expert technocrats, so that we could have stable prices and steady growth forever - or indeed an ‘end to boom’n’bust’ as Brown would have inevitably put it. Oh, but hold on. It turns out it is not quite going to plan. In fact, while the Bank of England and its increasingly hapless governor Andrew Bailey may not be wholly responsible for the rise in inflation it has started to become painfully clear that he is floundering in the face of it.

The tech bloodbath won’t last forever

To paraphrase the American senator famously talking about government spending, a trillion dollars here or there and very soon you are talking about serious money. Over the last week, a massive $1 trillion has been wiped off the value of the major American technology companies, and, if measured since the start of the year, the carnage is far worse. But is it all as bad as it seems? Sure, some of the excesses of lockdown are being trimmed, and rising interest rates are starting to hurt some wildly over-valued companies. But nevertheless, tech is still where the growth is. And in reality the bloodbath will soon be over. It has been a terrible week for investors in tech. Since last Wednesday, Apple has lost $220 billion in value.

After 25 years it’s time to finally break with New Labour economics

The state would be prioritised over everything else. Taxes would be constantly, if stealthily, raised. Spending would be reclassified as investment, and shifted off the balance sheet wherever possible. And macro stability would be out-sourced to the Bank of England, while the Treasury would take total control of domestic policy. A quarter of a century ago this weekend, as New Labour was swept into power in a landslide election victory, Gordon Brown, then a relatively fresh-faced Chancellor, completely overhauled economic policy. In a whirlwind week, he put in place the most far-reaching reforms in a generation. And yet, 25 years on, that consensus is still in place. Twelve years of Conservative rule, either alone or in the coalition, has barely shifted it.

The Biden Bust is here

A wave of government spending would reboot the economy. Fairer taxes would pay for restored infrastructure. Skills would be improved, productivity raised, and new digital champions would emerge. When Joe Biden was elected, he promised the most radical programme of economic reform since Franklin Roosevelt's New Deal in the 1930s, and, to his army of cheerleaders at least, the American economy was about to be completely transformed. But hold on. Only a year into his term, the reality is very different from the promises. In reality, the Biden Bust has arrived. The US GDP figures released today was genuinely shocking. Instead of a modest slowdown in growth that was forecast, output is now shrinking in absolute terms.

A football regulator is bad news for the beautiful game

It will stop shady oligarchs and brutal autocracies buying up clubs simply to whitewash their reputations. It will ensure financial stability and fair play between the teams. And it will protect local fans, many of whom have been standing on windswept terraces for years, from seeing their teams turned into mere units of anonymous global corporations. In the wake of the Super League fiasco, and the sanctioning of Chelsea owner Roman Abramovich, it is not hard to understand why the government has today announced the creation of an Independent Football Regulator with sweeping power to oversee the national game. But hold on. Like all regulators, while it is no doubt well intended, it will have unforeseen consequences.

Inflation is the real lockdown scandal

No. 10 was an endless series of parties. The Chancellor was more interested in socializing than sorting out the economy. And the Prime Minister was imposing rules on everyone else that he cavalierly ignored himself. It remains to be seen whether Boris Johnson and Rishi Sunak can survive the fines handed out for breaking the lockdown rules and the public anger over their behaviour. And yet, in reality, there is a far larger lockdown scandal and one that will cause far more lasting political damage: inflation. The ‘partygate’ scandal, and its fallout, has distracted attention from yet another sobering set of inflation statistics. Today we learned that prices are now rising at an annual rate of 7 per cent, up from 6.

Rishi Sunak’s NFT gimmick is a step too far

We had got used to the expensive trainers. The carefully curated hoodies were just about acceptable. The Twitter feed was starting to grate on people’s nerves, and so were the stage-managed photo ops, such as filling up a borrowed Kia Rio at Sainsbury’s right after cutting fuel duty, but they were part of the package. But the Chancellor Rishi Sunak may finally have come up with a gimmick too far with the launch of the Treasury’s very own digital token. The Chancellor, between figuring out how to control inflation, pay for public services and reboot the economy found some time this week to launch the British government’s first NFT. For anyone who is not familiar with them, which admittedly is probably most people, Non-Fungible Tokens, to give them their full name, are unique digital assets, created to trade anything that can be collected.

Can Elon Musk save Twitter?

Teslas will be permanently trending. So perhaps will space rockets. Petrol cars will be quietly forgotten about. And if you get enough likes and followers perhaps you might win a place on the planned space colony on Mars. With the news that Elon Musk, the founder of Tesla, and one of the richest men in the world, has today taken a 9.2 per cent stake in Twitter there will be lots of jokes about how he might change the social media site. But by far the most significant one is this. He could shift it to the libertarian right. That really would be significant. Twitter shares soared by 25 per cent in early trading on Wall Street today as news broke that Musk had bought a huge slice of the company’s shares. So far, he insists that the stake is merely ‘passive’.

Is Biden trying to crash the economy?

A war is raging in Ukraine. Inflation has risen to a 30-year high and may have started to spiral out of control. The country is on the brink of recession, and a gaffe-prone leadership is under increasing fire. You could be forgiven for thinking that President Biden has more than enough problems right now. But he is about to make his already miserable term in the White House a whole lot worse. How? By adding a stock market crash, and the destruction of America’s best companies, to the already worryingly long list of self-inflicted disasters. This week, Biden is set to unveil a ‘billionaire's tax’ targeted at the country’s super-rich. The President, and his small group of revolutionary economic advisers, have already had two or three goes at squeezing some more money out of the likes of Jeff Bezos and Elon Musk.

China’s zero Covid strategy is a threat to the global economy

Aside from deterring a few tourists, and people filming fantasy epics, closing down New Zealand during the Covid pandemic didn’t make much difference to the global economy. Neither, come to think of it, did Mark Drakeford’s determination to keep Wales free from Covid-19, and even Australia’s dedication to closing itself down didn’t matter that much as long as the mines stayed open. For most of the last two years ‘zero Covid’ policies have mainly affected the people unfortunate enough to live under them and those trapped from returning home. But China? That is something different. And right now Beijing’s almost certainly doomed attempt to crush the virus is as much of a threat to the global economy as the war in Ukraine.

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