Three key economic indicators loom large but none offer great hope for the Conservatives’ survival

Tory MPs have been busy this past week and probably not found the time to watch Shardlake , the adaptation of CJ Sansom’s book set during the dissolution of the monasteries in the 1530s, but once the dust has settled from last week’s elections they might want to take a look.

This was a turbulent period. Having forced through his own version of Brexit through the break with Rome, Henry VIII then in effect nationalised the assets of religious houses dotted around England, Wales and Ireland. It was a seminal moment in the development of British capitalism and the nation state.

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The business and trade secretary played into the ideological tosh that the wonders of the Industrial Revolution were funded by beer brewers and sheep farmers

Britain ran an empire for centuries that at its peak 100 years ago occupied just under a quarter of the world’s land area. Yet if you believe “ Imperial Measurement ”, a report released last week from the rightwing Institute of Economic Affairs (IEA), the net economic impact of this vast empire on Britain was negligible, even negative.

If you thought the empire profoundly shaped our industry, trade and financial institutions, with slavery an inherent part of the equation, helped turbocharge the Industrial Revolution and underwrote what was the world’s greatest navy for 150 years, think again. The contribution of the transatlantic trade in enslaved people to our economy was trumped by domestic brewing and sheep farming, opines the IEA. The tax “burden” of defending this barely profitable empire was not worth the candle. Instead, it was free-market economics that unleashed British economic growth – a truth that must be restated before Marxists and reparation-seeking ex-colonies start controlling the narrative.

Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 250 words to be considered for publication, email it to us at observer.letters@observer.co.uk

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Reticence over the seizure of Russian state assets in Europe betrays a fatal underestimation of the threat Moscow poses

Europe has plotted an elegant decline that suits the needs of its ageing population, and the Ukraine war cannot be allowed to interfere with that plan.

That is how it seems when EU countries consider circumventing the financial rulebook to offer Ukraine what it needs to overcome waves of drones and break the deadlock on its eastern front.

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The UK is expected to come out of recession, but it would be wise not to expect a reduction any time soon

It would come as a shock to most economists if the Bank of England opted to cut interest rates at its policy meeting this week.

Financial markets, which were baying for a cut last May, are these days betting that August or possibly September will be the point at which the Bank starts to lower interest rates from their current level of 5.25% .

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UK’s growth will be least in G7 by 2025, OECD expects, as low business investment and multiple pressures bear down

• UK will be worst performer in G7 next year, OECD forecasts

A lack of skilled workers in the country is pushing up UK wages. The dearth of affordable housing has seen landlords put up rent by 9% in a single year, weighing on inflation. New costs and controls at the border after Brexit are creating headaches for exporting companies. This cocktail of pressures on the UK economy has prompted analysts from the Organisation for Economic Cooperation and Development (OECD) to undercut the UK’s own national forecasts for growth. By 2025, the Paris-based thinktank says, UK growth will be below that of any advanced economy in the G7.

The OECD has pencilled in a boost to GDP of just 0.4% in 2024, a lower rate than any G7 member apart from Germany. By 2025, the UK slips to the back, with just 1% growth compared with an average of 1.5% in the euro area. Up to now, the government could at least rely on Germany to own the title of sick man of Europe, after some updates to the national statistics showed the UK recovered more quickly from the pandemic and Brexit than was previously thought.

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As the fortunes of the super-rich soar, a proposed annual levy of 2% could offer a corrective – and they will fight it tooth and nail

The idea is simple. There are about 3,000 billionaires in the world and in recent years they have been getting richer and richer. Demands on hard-up governments from ageing populations and the drive to achieve net zero are growing all the time. Rather than expect voters already struggling to make ends meet to pay more, how about a wealth tax on Jeff Bezos, Elon Musk and their like?

This is an idea that has obvious attractions. As Joe Biden has pointed out , US billionaires make their money in ways that are often taxed at lower rates than the ordinary wage income of American workers. Overwhelmingly, their wealth comes from the rising value of their assets, and they use tax loopholes and legal accounting moves to minimise the tax they pay. Wealthy Americans pay an average tax rate on their incomes of just 8%. Biden thinks they should be paying a minimum of 25%.

Larry Elliott is the Guardian’s economics editor

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Global forecast contrasts with downbeat assessment for a British economy constrained by high interest rates, price rises and staff shortages

The UK’s economic outlook has worsened this year as high interest rates and the lingering effects of last year’s surge in inflation take a bigger toll on growth than previously expected, according to the Organisation for Economic Cooperation and Development (OECD).

In a downbeat assessment of the potential for the economy to expand in 2024, the Paris-based thinktank downgraded its forecast for UK growth this year from last November’s forecast of 0.7% to 0.4% .

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Rolling coverage of the latest economic and financial news

• US Federal Reserve holds interest rates steady as inflation ticks up

Energy giant Shell has beaten City expectations this morning by reporting adjusted earnings of $7.7bn for the first quarter of 2024.

S hell’s earnings were lower than a year ago – it made a bumper $9.6bn in Q1 2023 – but well above analyst predictions of $6.5bn.

“Shell delivered another quarter of strong operational and financial performance, demonstrating our continued focus on delivering more value with less emissions,”

“Shell continuing to rake in huge sums of money shows us that huge polluter profits were not a one-off but are the twisted reality of an energy system that benefits climate-wrecking companies to the cost of everyone else.”

“Companies like Shell saw record profits while the energy crisis dragged millions of families into poverty through unaffordable energy bills. Meanwhile fossil fuel giants fought hard against paying more tax.

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Big economies such as the US must change fiscal policy as the realities of debt and inflation bite

For more than a decade, numerous economists – primarily but not exclusively on the left – have argued that the potential benefits of using debt to finance government spending far outweigh any associated costs. The notion that advanced economies could suffer from debt overhang was widely dismissed, and dissenting voices were often ridiculed. Even the International Monetary Fund, traditionally a stalwart advocate of fiscal prudence, began to support high levels of debt-financed stimulus.

The tide has turned over the past two years, as this type of magical thinking collided with the harsh realities of high inflation and the return to normal long-term real interest rates. A recent reassessment by three senior IMF economists underscores this remarkable shift. The authors project that the advanced economies’ average debt-to-income ratio will rise to 120% of GDP by 2028, owing to their declining long-term growth prospects. They also note that with elevated borrowing costs becoming the “new normal”, developed countries must “gradually and credibly rebuild fiscal buffers and ensure the sustainability of their sovereign debt”.

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