What a year 2024 has been.
A massive election – well, two massive elections on each side of the Atlantic, and more elsewhere on the planet – followed by changes of government and numerous economic milestones along the way. So let’s recall some of the highlights of the year, in graphic form.
We start with the overall economic picture. Growth. This time last year, the UK was (unbeknownst to us at the time) actually in recession. The news was only confirmed in the spring of this year, but for two successive quarters in the second half of last year, economic growth fell.
What happened next is just as intriguing: a rapid rebound as gross domestic product grew more than expected in the first two quarters of the year. Since then, it has decreased significantlycausing some consternation within the Treasury.
Indeed, an initial estimate of 0.1 percent growth in the third quarter of 2024 has been revised downward to zero growth – stagnation.
Yet interest rates are finally falling. They were cut in august for the first time since the cost of living crisis, and are expected to fall further next year. However, the scale of the expected cuts is now considerably less than before the budget. For what? Because the government plans to borrow and spend a lot more next year.
It wasn’t the only policy in the budget. Alongside these increases in borrowing and spending, the Chancellor Rachel Reeves decided to introduce significant tax increases – first and foremost a sharp increase in taxes. employers’ social contributions.
And even if Labor insists this won’t show on your payslip – and therefore doesn’t break its pre-election pledge – we will, as a nation, pay a lot more tax as a result. Indeed, the tax burden, the total amount of taxes borne by the population as a percentage of GDP, has now reached its highest level ever recorded. It is worth saying that this contrasts sharply with the numerical measures presented by Labor in their manifesto.
*There were two general elections in 1974 – in February and October
This brings us to the election itself – an election in which Labor experienced an extraordinary landslidewinning over 400 seats for the first time since the glory days of Tony Blair. This is a huge comeback for the party, after such a drubbing in 2019. There are, however, some important caveats to note.
Chief among them is the fact that the party won the smallest vote share of any winning party in the modern era. This is not a landslide victory in terms of overall popular support.
Among the issues that resonated this year, before and after the elections, was that of migration. This time last year, data suggested that net migration to the UK had peaked at just over 750,000 people.
But last month, new data led to a shocking revision. In fact, the Interior Ministry had both underestimated the number of people entering the country and overestimated the number of people leaving. The result was a new figure: in fact, In the year before last summer, 906,000 more people entered than left. Not just a new record – a completely mind-boggling figure.
The vast majority of this migration was not made up of the much talked about “small boats”, but of legal migrations, more or less equally distributed between work and studies. This was to some extent a consequence of the post-Covid rebound and, even more so, changes in government policy following the entry into force of post-Brexit migration rules.
Another issue that emerged throughout the year was something else: leaks from the UK sanctions regime with Russia. While government ministers like to boast that this is the toughest regime on Russia in history, our analysis has revealed that sanctioned British products are regularly shipped to Russia via its neighbors in the Caucasus and Central Asia.
In a series of investigationswe followed the operation of this carousel to car tradewhich are sent to countries like Azerbaijan before being transported to the Caucasus and entering Russia via Georgia and other routes. But that same carousel is likely used for equipment like drone parts and radar equipment. We know it is sent to Russian neighbors. We know it ends on the battlefield. This data tells a dark story about the reality of the sanctions regime and helps illustrate how Russia continues to keep its forces armed and equipped with Western components.