CapX, London (2025)

17/12/2025

Will France need to be bailed out under the latest of the European Central Bank’s (ECB) damage limitation devices, the magically named Transmission Protection Instrument? France’s minority government under embattled Prime Minister Sébastien Lecornu has finally succeeded in passing a social security budget – by including a provision temporarily suspending President Emmanuel Macron’s flagship pension reform – but negotiations will now begin on Friday on a draft state budget bill, which needs to pass by the deadline of December 31.

A fiscal collision between France and Germany, the two biggest economies in the euro area, looks well-nigh inevitable in the next 18 months. France is preparing for a presidential election in (or before) April 2027 that could well bring a far-right leader into the Elysée Palace. This would represent a grave test for cohesion between France and Germany, a partnership that has been a cornerstone of European integration for 70 years.

✍️David Marsh

A fiscal collision between France and Germany looks inevitable

17/12/2025

Donald Trump’s political future is uncertain, but the dissatisfaction as well as a peculiar ideological mélange that he defined is not going to go away regardless of what happens to the man himself. Individuals certainly matter in history, but deep economic and political currents and subcurrents matter at least as much. After four years of Trump’s first presidency, policies that, in the beginning, appeared unusual have been adopted by the rest of the body politic. They remained, and were even developed, post-Trump I. Thus the new political and economic order is already here. Trump’s second administration is continuing along the same path, and even accelerating the change.

✍️Branko Milanovic argues that a new 'ideological package' is spreading across the West: national market liberalism

The invisible hand is giving way to 'businessman’ economics

16/12/2025

‘This is not my party’, George Will said when he left the Republican Party in 2016. Commentators often emphasise that Donald Trump destroyed the Democratic Party; as Niall Ferguson put it, ‘he destroyed the Democratic Party as we know it’. But the price of that destruction was the essence of American conservatism.

Figures like Elon Musk repeat the line, ‘we didn’t leave the Democratic Party; the Democratic Party left us’. But the same is true on the other side. Yes, Democrats have moved Left – but under Trump, Republicanism moved nowhere, at least not in a conservative direction. As George Will has long argued, populism is antithetical to American conservatism precisely because ‘populism means the direct translation of majority passion into governance’.

American conservatism, by its nature, seeks to slow public opinion, refine it and limit the direct translation of public emotion into power. It is a philosophy of constraint – of institutional buffers, separation of powers and suspicion of over-pragmatism and political emotion. Trump bulldozed these restraints, and for conservatives like me, it is unclear how, or when, the party can recover them. He has never been a fan of institutional limits on his power.

One of the most irritating claims made by Trump’s supporters is that he proved you can ‘just do things’ in politics. What they miss is that the whole point of the modern state is that you cannot simply ‘do things’. In Venezuela, Maduro can just do things. In Russia, Putin can just do things. But in any modern liberal democracy, power is constrained – and that is not a weakness but a strength.

✍️Mani Basharzad

The President is no fan of institutional limits on his power

16/12/2025

Labour’s claim to be a working-class party is entirely historic. The professional classes have moved Left, and this ties in well with the other chunk of Labour’s electoral coalition, those dependent on the state, as there is nothing the cosmopolitan class likes more than dishing out other people’s money to ‘the less fortunate’.

State dependency isn’t a by-product of Labour policies, it is core to their electoral strategy. Dependency on the state means dependency on Labour come election time. The Budget was an unashamed push towards more dependency. Labour know working people are no longer part of their electoral coalition and act accordingly.

Even if the rapid rehabilitation of their ‘working-class heroine’ Angela Rayner pays off, it will not change this. Probably more than any other Labour figure, Rayner represents their something-for-nothing inclinations. Her working-class background would likely be window dressing for a leftward shift designed more to stem the tide of the cosmopolitan classes to the Greens.

So, let’s avoid the trap that assumes ‘working class’ voters are Left economically and Right socially. If we have confidence that Conservative values can deliver for ordinary working Brits, then let’s show them by making Britain work for working people.

✍️Clark Vasey

The Employment Rights Bill is about appeasing unions, not benefiting workers

15/12/2025

Rachel Reeves cannot remain as Chancellor of the Exchequer. What makes her unfit for office is not that she has raised tax, swollen the welfare budget or set the country on the path to economic ruin. It is that she has done all this in open contempt for the letter and the spirit of the promises on which she was elected.

A Labour Party that sold itself as anti-Corbynite, that stressed its technocratic credentials, that swore blind that it would raise only three smallish taxes, has ended up inflicting the highest taxes on us in our peacetime history and lying about why.

Lying is not a word to use lightly. All parties put spin on their policies, seeking to place themselves in the best possible light. All politicians quote figures selectively – as, to be fair, do most non-politicians.

Deliberately lying about the state of the economy when you are Chancellor of the Exchequer is different.

✍️Dan Hannan

This was more than spin: this was lying about the state of the economy

15/12/2025

Is China an enemy state? This is a question ministers struggle to answer as Beijing breaks treaties, sanctions our MPs and puts Muslims in concentration camps. If any other country did this it would bring outrage. China gets away with it because they are also our fifth-largest trading partner, a major investor and one of the world’s two superpowers.

Nowhere does this contradiction bite harder than in climate policy. The UK has set itself ambitious goals: a decarbonised power system by 2030, Net Zero by 2050. But meeting those goals means building vast amounts of clean energy infrastructure, and much of that depends on China. Solar panels, wind components, batteries and critical minerals all flow from Chinese supply chains. There is unease in government about this dependency, but also quiet recognition that Net Zero cannot be delivered without it.

China is both the cause of and the solution to many of the climate’s problems. Understanding that paradox, our reliance on a rival, our dependence on its success and the risks and rewards that come with it, is essential if Britain is to reach Net Zero without losing its economic footing along the way.

✍️Michael Hill

If Britain wants to lead by example, we need a relentless focus on cheap power

15/12/2025

It’s the last Nimby Watch of 2025. The taste of snow is in the air (probably). Santa is coming soon. How will we mark the occasion? With a trip to Potter's Bar.

There’s a plan with lots of affordable homes, local amenities, that’s literally yards from the M25. It’s in a council that needs homes and has no plan to deliver them. They’ve been given legal advice that they should accept the plan, and their professional planning officials recommended it. And then… they said no.

✍️ James Ball signs off for the year by calling out the grinches at Hertsmere Borough Council, who are defending a patch of the grey belt against the menace of 900 homes and a primary school.

Local councillors are prioritising low-quality grey belt land over people

12/12/2025

This week, the Government announced a multi-million-pound boost for apprenticeships in an attempt to improve young people’s life chances with a smoother transition from school into education, work and training.

It’s a well-intentioned move, in spite of tart-but-accurate criticisms that ministers are splashing taxpayers’ cash to undo the job-destroying effects of Government decisions which push up employer national insurance costs and raise an increasingly expensive minimum wage. But there are over 900,000 under-24s who aren’t in education, employment or training (NEETs) and the numbers have risen sharply (by over 250,000) since the pandemic. So, sadly, the problem is far too big and deep-rooted to be solved by a few more apprenticeship places.

There are three fundamental problems which push British students in the wrong direction, shoehorning them into courses and jobs which don’t suit them, limiting their life chances and making Britain’s economy less competitive as a result.

The first is that, while many British university degrees are valuable, internationally-renowned qualifications, others leave students with unfulfilling jobs and significant debts when they graduate. At the same time, many apprenticeships and further education courses create better job prospects and life chances at a fraction of the cost of a university degree. The snobbish assumption that academic courses are automatically better isn’t just out of date, it’s often an expensive waste of talent and lives as well.

Next is the way we treat students who leave school without going on to further or higher education. Some schools have high-quality careers advisers that help leavers find jobs where they build the experience and knowledge they will need to succeed without tertiary education qualifications. But many schools don’t, making their alumni more likely to be jobless, or in poorly-paid, insecure employment instead.

✍️John Penrose

A snobbish divide between apprenticeships and university degrees is holding young people back

11/12/2025

Partly because of the obvious multiplication of our problems and division of resources, British schoolkids have made an astute calculation.

Unlike millennials (not to mention boomers), younger cohorts know they are going to get the square root of bu**er all in help from the state. As such, there is a huge appetite to learn maths and harder sciences too.

I hope that I am one of the last generations of Britons who can laugh off being rubbish at maths. Thanks to the efforts of many, and amid the doom and gloom Labour's Britain, millions are coming to see the beauty of numbers and the harmony between them.

✍️James Price

Our failing state is creating a generation of amazingly capable young people

10/12/2025

Rents go up and up and up. That is how most young people view their lot in the property market, particularly in London. A steady, year-on-year increase in rent eats up any increases in wages they earn and more. If you look at the statistics over the past few years, they’re right to think this.

A student who graduated in 2022 and moved to London will have seen their rent increase by around 28% over the past three years.

A 60-year-old running a firm with a London office would notice that his net effective rent is nearly as low now as it was back in 1990, 35 years ago. In contrast, 1990 residential rents in London were around £620 a month; a quarter of what they are today.

Office rents have risen 15% in nominal terms over 35 years. Accounting for inflation, that’s a real terms fall of two-thirds. This isn’t even a consequence of COVID: if our 60-year-old CEO signed the lease in 2019, he’d be paying less than in 1990 in effective terms.

So, this raises the question. Why have the rents for offices stayed flat while residential rents increased so much?

✍️Edward Donovan

Why rents for offices stayed flat while residential rents increased so much?

10/12/2025

The Government rightly calls Cambridge crucial to the UK’s growth mission. Our unique mix of world-class academia, research and development, entrepreneurship and deep expertise in life sciences, advanced manufacturing and agri-tech, among others, cannot be taken for granted. If we stand still, others won’t. Global competition moves fast and at a time when productivity and growth are central national challenges, we cannot afford complacency.

We know exactly what Cambridgeshire's local economy needs to thrive: better transport, more space for business, more homes, and the water and energy capacity to support expansion. If we close those gaps, our region will reap the benefits, attracting investment, growing businesses and driving up productivity and wages for local people.

✍️Paul Bristow

Cambridgeshire could be the fastest growing local economy outside London

09/12/2025

Defence procurement is back in the headlines as Secretary of State for Defence John Healey contemplates cancelling the £6 billion Ajax programme. Ajax is the UK’s single biggest order for an armoured vehicle in over 20 years and has been a disaster from start to finish. The programme is running eight years behind schedule, and trials in both 2020–2021 and this year have reportedly left soldiers with life-changing injuries.

Nobody set out to create a bad defence procurement system. But there are government reports stretching back as far as the Seventies pointing out the same set of mistakes: projects that take on unnecessary technology risk, undue optimism about timelines and poor cost control.

There are important changes that the Government can make to this system. Yet procurement reform is not enough. There remains a significant gap between the UK’s strategic ambitions and the resources it has to meet them. Embracing all these ambitions risks the UK being present everywhere at the expense of being resourced anywhere.

✍️Alex Chalmers

The MOD took an Israeli drone and created a vehicle that struggles to take off

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