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Inflation fell in the year to February, driven by cheaper women's clothing. 
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Chancellor will announce plans to fund 18,000 social homes before fraught spring statement on Wednesday
Graham Watson's insight:
An additional extra in the Spring Statement designed as the headline suggests to "sweeten the pill" of the spending cuts: building affordable housing. The government are planning to spend £2bn on social housing, something that successive governments should have been doing for years.
We discussed this as a Department last week and one colleague, taught by Sir Patrick Minford no less, was adamant that the way to grow the UK economy was simply to embark on extensive housebuilding. I'm not sure what Sir Patrick would make of his Damascene conversion to such a Keynesian approach.
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Editorial: The spring statement casts austerity as unavoidable, but Labour is clinging to economic myths while ignoring the tools of power
Graham Watson's insight:
The Guardian editorial pulls no punches arguing that the Spring Statement is going to be a 'choice'. It seems as though that choice is to maintain the fiscal rules ahead of maintaining benefit spending.
It's clear that this isn't going to garner much support from Labour traditionalists but is it the right thing to do?
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The Spring Statement is "not a Budget", but the chancellor is facing major tax and spending challenges.
Graham Watson's insight:
Faisal Islam notes the mood music coming from the Treasury and the insistence that Wednesday's Spring Statement definitely isn't a budget. However, it's significant in as much as it indicates the direction of travel and as such will be an event of interest.
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After the welfare cuts backlash the chancellor is being warned about how she wields the scalpel in her spring statement
Graham Watson's insight:
Heather Stewart's piece in today's Guardian paints a stark picture of the choice facing the Chancellor: break manifesto pledges on tax or preside over a period where poverty and inequality seem likely to rise as a result of spending cuts, something that seems to go against Labour's principles.
It seems as though the latter is going to be the case, although the fiscal inheritance that the previous government passed on is going to be something that's largely overlooked, I suspect.
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The chancellor lacks room to manoeuvre before her spring statement thanks to the cost of debt interest payments
Graham Watson's insight:
A nice bit of recent economic history in the Guardian looking at what's happened to bond yields in the recent past and explaining why this has rather limited the Chancellor's room for manoeuvre prior to this week's Spring Statement.
In summary, the higher cost of borrowing has almost eliminated any so-called fiscal headroom and left her with a tough decision - either raise taxes or cut government spending, and it seems that the latter's going to be the option chosen to maintain the government's fiscal credibility.
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Chancellor has very little headroom within her fiscal rules but is keen to keep Office for Budget Responsibility on side
Graham Watson's insight:
Richard Partington looks at the role of the Office for Budget Responsibility in helping formulate fiscal policy and how this is going to feed in to next week's Spring Statement. There's clarity, in recognising that the notion of impregnable fiscal rules is illusory and that previous Chancellors, notably George Osborne, have almost continuously revised them over time.
However, it's a great article in that it gives a flavour of the mechanics of policymaking, with the OBR giving an initial assessment, the Treasury then suggesting which policy measures it's going to announce and the OBR then reconsidering their likely effect. Well worth a read, not just to get on top of the current situation but to get a flavour of the realities of fiscal policy.
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The latest figures for the UK economy add pressure on Chancellor Rachel Reeves ahead of her Spring Statement next week.
Graham Watson's insight:
Government borrowing for last month came in at £10.7bn for February, nearly £4bn more than the OBR had forecast.
The reason that this is being seen as so significant is because it will impact next week's Spring Statement, and potentially reduce the ability of the government to meet its own fiscal rules. However, it seems that the government are already committed to making significant spending cuts but even then this is going to make the conduct of fiscal policy more difficult.
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More than 12,800 stores shut in 2024, down on 2023, but extra costs expected to take toll this year, study suggests
Graham Watson's insight:
The rate at which shops shut is a good proxy for the level of economic activity and the suggestion that the last Budget's tax changes are going to see more shops shutting this year than last is probably a true reflection of the state of the economy.
From a Microeconomic perspective, you should be able to draw what's happening to costs and revenues, from a Macroeconomic perspective, you might want to think about the multiplier effect.
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Unemployment remains level in January, but has risen over the past six months
Graham Watson's insight:
Some context for today's MPC interest rate decision: although the economy appears to be weakening, pay growth for the last three months remains high at 5.8% including bonuses, meaning that real pay is up around 3%. Indeed, the past three year have seen pay growth of above 4%, and that 4% figure is something that, historically, has been associated with inflationary pressure.
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Official figures come after controversial plans to cut sickness and disability benefits were announced this week.
Graham Watson's insight:
Wowsers! over 20% of the nation's adults aren't even looking for work - and thus are economically inactive. You might think about the macroeconomic implications of this for the main macroeconomic variables but also for the public finances. And are there likely to be any externalities associated with such a high level of inactivity. It's worth a bit of thought, if only because at some point it's going to appear in an A-Level/IB question.
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How Personal Independence Payments (Pip) and other health-related benefits could change under government plans.
Graham Watson's insight:
A quick explainer of all the changes to benefits that were outlined this afternoon - and an even quicker summary of them. Some benefits were frozen, eligibility for incapacity benefits were reduced and the government are trying to incentivise people to work.
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Items added and removed from the basket of goods used to calculate inflation give an insight into current fashions.
Graham Watson's insight:
Hurrah! The annual revision of the ONS consumer bundle is here - which will require me to update my notes - noting which items are in - yoga mats and VR headsets - and which are out - local newspaper adverts, minced turkey, and DVD rentals, reflecting consumer spending patterns. It's done so that the consumer bundle reflects what consumers are actually buying, and in economies where it's not keep up-to-date to this degree, their measures of inflation are likely to be unreliable.
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The chancellor is set to expand cuts to benefits after being told the reforms would save less than planned.
Graham Watson's insight:
The Spring Statement later: expect 'scoops' later. It seems as though it's going to be a day where the opportunity cost of increased defence spending is going to be cuts to welfare.
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Reeves-watchers are still divided over whether her tough approach is pragmatic or the result of deeply seated beliefs
Graham Watson's insight:
This longer Guardian piece offers an assessment of the Chancellor's performance: is she a fiscal 'hawk' and inclined towards austerity and fiscal prudence or is she simply having to play the cards that she's been dealt.
An interesting debate: I think that there's plenty to be said about the latter and that's often overlooked. It will be interesting to see the Conservative response to tomorrow's Spring Statement - obviously they will oppose it at every turn, but the reality is that the Chancellor's fiscal inheritance was awful and that this has played a major part in determining policymaking, and, that the external environment has also dramatically changed. However, as the editorial in today's Guardian also makes clear, tomorrow will also be a policy choice.
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Most feel financial secure but think UK’s economy is worsening, as chancellor plans welfare cuts in spring statement
Graham Watson's insight:
More evidence of the push-me, pull-me nature of the current economy is the latest spending figures from KMPG data, which suggest that UK consumers are cutting back on spending as a result of lower confidence in the future prospects for the economy. And that's going to have implications for economic growth.
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Services companies say order books increased for first time this year as they hope to avoid Trump tariffs
Graham Watson's insight:
It seems as though economic activity is picking up, counter-intuitively as a result of President Trump's tariffs, as firms look to produce goods quicker than might have otherwise been the case.
If it signals an increase in economic growth, then this will be welcomed by the Treasury but it's probably too late to affect the content of the Spring Statement.
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What are the economic constraints that will underpin the chancellor’s spring statement – and why does she see them as vital?
Graham Watson's insight:
Philip Inman looks at the policy environment surrounding the Spring Statement and the impact of the fiscal rules on the likely course of action. He also asks whether or not the commitment to adhering to the fiscal rules is a good thing, and looks at the role of the Office for Budgetary Responsibility in policymaking.
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Despite the decision to hold at 4.5%, businesses and households can take a confident view of the UK’s prospects
Graham Watson's insight:
Philip Inman on yesterday's decision to hold interest rates at 4.5%, effectively suggesting that "There's nothing to see here, officer" and that the long-term prospects for the economy are brighter. There's almost a sense of him promising the mythical "green shoots of recovery", in response to the prospect of future interest rate cuts, although he rightly notes the continued uncertainty, not least because of policymaking on the other side of the Atlantic.
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Chancellor may see data as vindication for spending cuts but some analysts say more radical action will be needed
Graham Watson's insight:
The Guardian take on today's news regarding public finances and how it might simultaneous help make the government's case for spending cuts but it may also push a government closer to having to contemplate tax increases. And once again, it calls into question the commitment to the fiscal rules.
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Rate-setting committee also points to mounting global uncertainty as it pauses its cycle of reductions
Graham Watson's insight:
Some of the deliberations of the Monetary Policy Committee are apparent in the latest MPC minutes, with a trade-off being struck between the relatively strong performance of the labour market as regards real pay growth and evidence that firms are pausing hiring plans given current uncertainty. As a result, as expected, the Bank decided to hold interest rates at 4.5% today.
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Labour MPs uneasy as chancellor prepares even deeper reductions that economists say will harm key services
Graham Watson's insight:
And here's the controversy - with an appropriately striking headline - "biggest UK spending cuts since austerity". It seems as though the Spring Statement is going to ask the country to swallow some harsh medicine, with a range of spending cuts likely.
No doubt this will be controversial and there's already debate about whether the government should be cutting spending or relaxing its fiscal rules. From my perspective, it seems as though the political imperative means that the government were always going to side with the former, not wishing to break manifesto pledges and give the Opposition an easy win. So in this case, does this mean that politics is going to trump economics? Yes.
However, you might also think about the likely macroeconomic effects of this? Not good in the short-term. However, for those of you with short memories, you might wonder whether what is going to be portrayed as an "act of economic vandalism" by some marks any change in policy direction. Certainly the last Conservative Budget was an act of sabotage designed to create an environment where such cuts were necessary, irrespective of who won the election. So I'd ask you to temper your criticism on that basis.
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No change to the Bank rate is expected when policymakers make their announcement at noon.
Graham Watson's insight:
The Bank of England announce another interest rate decision today, and the consensus is that there will be no change in interest rates, with the bank trying to balance the need to control inflation, currently above target at 3%, with concerns that the economy is weakening.
All part of the trade-off between economic growth and inflation under certain conditions.
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Thinktank’s warning follow reports that Labour is considering cuts to budget of company it set up to drive renewable power
Graham Watson's insight:
The manifesto pledge to create a world leader in green power, in the nationalised GB Energy, looks likely to fall short of its lofty ambitions according to the Institute for Public Policy Research (IPPR). The argue that without full funding - or £8.3bn - the pledge to own a portfolio capable of meeting 5% of the country's energy needs and driving down bills by £300 by the end of the decade, and enhancing the economy's energy security, is unlikely to be met.
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Tata boss Rajesh Nair says US customers are looking for other suppliers as 25% tariffs take effect.
Graham Watson's insight:
It seems as though the US tariff on steel could have resulted in the worst of all possible worlds, according to Tata Steel UK's Rajesh Nair. He's concerned that potential customers are worried about the prospects of a trade war and aren't buying British steel.
However, simultaneously. other steel manufacturers are diverting steel once intended for US markets to Britain and lowering the price of steel, making UK-made steel uncompetitive as a result.
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Inflation's down to 2.8% from 3% the previous month; it seems that cheaper clothing has been largely responsible for this.
However, the bigger picture is that it's still above target and likely to be stickier given the international trade environment.