Breaking the doom-loop
Plus: The energy price cap mayhem
In today’s newsletter:
How can we deliver Britain from stagnation to prosperity?
What is NetZero actually doing to energy bills?
Former Obama Administrator: Is Liberalism Dead?
Why we must defeat socialism
And so, a long summer of protests over small boats and speculation over tax rises comes to an end, making way for... a long autumn of protests over small boats and speculation about tax rises. The Westminster wheel rolls on relentlessly, but is there something different in the air this time around?
It is no secret that something is going to have to give in the Chancellor's plans for the coming budget. Having come away from her first major fiscal moment promising to never return with such tax rises again, things have only gotten worse. The fiscal black hole is, by some reports, as high as £50bn, while borrowing costs continue to escalate.
Is now the time that a beleaguered government grips the fundamental problems of the British economy, delivers the hard-but-true message to their voters and back benchers about what needs to be done, and embarks on a radical reforming programme to strip back the bloated state and unshackle us from the restraints holding back our growth?
Unlikely, obviously. The government seems to have pretty much entirely ceded control of their fiscal policy to their backbenches despite having a generational majority in parliament, and remain committed to their promise to not tax working people (even though they've already broken it). They have backed themselves into the corner of managed decline. Businesses, landlords, savers and investors beware - you're in their sights.
How do we stop this? In the immediate term, keep pointing out the obvious. There is no clear way out of our economic doom loop of high taxes, higher spending, zero growth on current trajectory, but we can't take it lying down. We must keep highlighting the scale of our problems until someone in power sits up and takes notice.
In the longer term, we need to do the hard work to find the evidence base, create the policies, and move the climate of opinion in the direction of the ideas that will turn this ship around.
Fortunately, that's very much the plan for us here on Lord North Street. Expect to hear plenty from us over Autumn, Winter and into 2026 on how to deliver Britain from stagnation to prosperity.
Callum Price
Director of Communications
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IEA Podcast: Director of Communications Callum Price is joined by Executive Director Tom Clougherty and Managing Editor Daniel Freeman to discuss gilt yields, Trump’s shift towards state capitalism, and the fiscal doom-loop — IEA YouTube
Energy Mayhem
Why are Britain’s energy bills so high?, Economics Fellow Julian Jessop, Spectator TV
Wind farms hike bills, Energy Analyst Andy Mayer appeared on TalkTV to discuss Net Zero and the energy price cap, TalkTV
Wind farms to blame for rising energy bills, Energy Analyst Andy Mayer was quoted in The Telegraph
Andy Mayer, energy analyst at the Institute of Economic Affairs, said: “The strangest aspect of the Government’s ‘£300 off energy bills’ claims for net zero in electricity generation by 2030 is that it persists despite being obviously impossible.”
Price cap to ease inflation, say economists, Economics Fellow Julian Jessop was quoted in The Telegraph
Julian Jessop of the Institute of Economic Affairs said this means the annual rate of energy inflation will still fall sharply…
…this is at least less than the 10% increase in October 2024, so the annual rate of energy inflation will still fall sharply when this kicks in...
News and Views
Free Markets, Liberty and why we must defeat Socialism, Head of Media Reem Ibrahim was interviewed by Peter McCormack, YouTube
Desperate Rachel Reeves turns to controversial hard-Left tax-and-spend zealot to help write budget that will clobber Middle England to fill Labour's £50bn black hole, Economics Fellow Julian Jessop, This Is Money
Julian Jessop, of the free market Institute for Economic Affairs, pointed out that the Government’s borrowing costs rose following reports of Mr Bell’s new role. He added: ‘Bond markets not thrilled about Torsten Bell having a bigger say in the Budget, presumably because this makes spending cuts even less likely.’
Former Obama Administrator: Is Liberalism Dead?, Executive Director Tom Clougherty interviews former Obama administration official Professor Cass Sunstein, IEA YouTube
Warning FRANCE now faces IMF bailout - just days after Britain tipped to suffer same fate, Economics Fellow Julian Jessop quoted in GB News
Julian Jessop jabbed: "Typical of the French, trying to steal a march on the Brits..."
He added: "I think this is just French politicking - 'pass our Budget or we'll have to call in the IMF' - but it's still another handy reminder that the UK is not the only country facing a fiscal crisis."
Zombie Knives Don't Kill People, but Banning Them Kills Liberty, Head of Media Reem Ibrahim, Reason
A sensible approach to tackling knife crime would include removing the incentive for criminal gangs to battle over drug markets. Instead, the government is doing the opposite: passing legislation that will eventually make tobacco illegal, introducing an entirely new front in the war on drugs, and creating a fresh income stream for violent gangs.
Head of Media Reem Ibrahim appeared on Channel 5’s the Jeremy Vine Show, Channel 5
This week, Head of Media Reem Ibrahim delivered a Media & Communications workshop to the European Students for Liberty Top Leadership retreat in Germany.
High-status opinions vs luxury beliefs: the economics of the “Great Awokening”
In April 2014, I wrote an article on the economics of woke. I did not use that word yet: I still used the now quaint-sounding term “political correctness”, which has since largely fallen out of use. But I predicted that what we now call “woke” was going to get a lot worse.
INVITATION: Fixing welfare - is it Time for a New Approach?
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INVITATION: British Conservatism, Winston Churchill, and the Second World War
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Callum. I have to say, and I take no joy from saying it, your premise that by NOT making cuts and having a ‘bloated state’ is stopping ‘growth’ is absurd.
That view is as old as the hills Callum. It’s the very knee jerk reaction that has been regurgitated for decades.
If you and the IEA are to be serious about ‘growth’ then I appeal to you to look in the other direction.
Our state can be managed better, for sure. Can it be reduced by streamlining the economic framework yes. Are we being led by dimwits yes, and have been for decades!
But, if you honestly think we can grow our economy by NOT having schools crumbling, hospitals crumbling, roads crumbling, police crumbling, and more unemployment and more poverty or a benefits system that doesn’t benefit or s pension system that pays half of a minimum wage then I’m sorry Callum and all at the IEA I think you are deluding yourselves.
Unless you see that you will never reach the right conclusions.
Cuts have been made for decades. Underfunding has been the reality for decades. Tax hikes to cover their and our costs has been the mantra for decades. It’s been happening for decades. Borrowing has had to be the ‘plug’ of choice for decades and now we are do deep in debt that we are beginning to realise that, the cost of that debt is unsustainable to the point we can’t even pay the interest on that debt without further borrowing!
I know you all see this. It’s not really a secret that just a think tank will understand. Not anymore.
Everyone sees it! You don’t have to sell it to us. It’s as clear as daylight.
But, your voice that says cutting an already broken public sector or government expenditure is no longer plausible. I assert, It’s not ‘socialism’ or the ‘devils thinking’ that sees we need to ‘stop’ cutting. It’s the people that are saying it. Ask anyone if they want good hospitals, pensions, roads, services etc they will all say yes!
I think there is a confrontation of views because the IEA want to have the right to say, their view is correct because the IEA is NOT socialist. That’s weaponising a view that doesent stack up if anyone was saying it in the political spectrum.
Cutting costs doesn’t on its own give you ‘growth’. It just takes money from one side of the balance sheet and place it in the other.
Any accountant can do that! That’s not special or new nor is it good enough for government or leadership. I blame Thatcher for this phenomenon. She always treated her job by treating our economy like a household budget. How stupid. You can’t run an economy on such blinkered and narrow minded two dimensional thinking.
Our economy has a limited snd finite amount of money. If you adopt a two dimensional, double sided bookkeeping, money in and money out view of our economy then you get a blinkered and narrow minded view of it!
And I’m sorry to say Callum, you in turn are still adopting the same blinkered snd narrow minded view of our economy. But with the added view that NOT cutting is somehow a ‘socialist’ view. It’s not. Ask anyone?
Our economy is stagnant. It’s not stagnant because we haven’t done enough cutting! And more cutting will automatically give us growth and a non stagnant economy. The cost is the cost. You can’t keep expecting the cost to be less. Or get people to work twice as hard for half the money. Or put up with crumbling infrastructure because that’s an household budget view of an economy?
No.
The problem our economy we have is the same accrued the western world. Our capitalist economy allows money to be hoarded. Away and outside our grasp.
It’s not difficult to understand, is it?
It’s not party political to see imbalance!