Category Archives: Economics

Treasury targeting inheritance tax reforms to help plug UK deficit

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Exclusive: Chancellor also looking at tweaks to capital gains tax to try to bridge £40bn-plus spending gap before budget

The Treasury is looking at ways to raise more money from inheritance tax amid growing pressure on the country’s finances ahead of the autumn budget, sources have told the Guardian.

Officials have been tasked with examining whether tightening rules on the gifting of money and assets could be one way of addressing a gap between revenue and spending that is estimated to reach more than £40bn.

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Freddo bar creator would be ‘rolling in his grave’ at its price today, daughter says

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Harry Melbourne’s froggy treat that cost 10p in its 1990s heyday sells for about 30p or even up to £1 now

The creator of the Freddo chocolate bar would be rolling in his grave if he could see the prices being charged for a treat that cost 10p back in its 1990s heyday, his daughter has said.

Leonie Wadin said she once waited impatiently for her father, Harry Melbourne, to come home with boxes of Freddos, but has now vowed never to buy another one.

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UK firms’ hiring intentions remain at record low amid rising employment costs

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Economic uncertainty also a factor as bosses ‘stuck in limbo’ and drop in recruitment hits young people hardest

Hiring intentions among Britain’s businesses remain at a record low as they grapple with rising employment costs and worry about the economic outlook, with young people hit hardest by the drop in recruitment.

Three separate surveys issued on Monday painted a gloomy picture on hiring activity, pay and business confidence, with claims that bosses were “stuck in limbo” and waiting for greater clarity in the autumn budget.

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Starmer declines to rule out election pledge-breaking tax rises in budget after claim Treasury must fill £40bn deficit – as it happened

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Prime minister defends government’s handling of economy but will not give assurances over not raising income tax, employee NI or VAT

Ed Davey, the Liberal Democrat leader, has urged Keir Starmer to call Donald Trump to encourage him to use his influence to block Israel’s plans for a “full occupation” of Gaza.

In a statement, Davey said:

[Israeli PM Benjamin] Netanyahu’s latest proposals for the occupation of all of Gaza are utterly horrifying.

If realised, they will only wreak yet more destruction on Gazans - while gravely endangering the lives of the hostages still held in Hamas’ captivity.

I see NIESR is talking today about a £41.2bn hole in the UK public finances

Two things are newsworthy:

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Trump steps up attacks on Fed’s independence amid interest rates row

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US president called on top Fed officials to seize control from chair Jerome Powell if he fails to cut interest rates

Donald Trump called on top Federal Reserve officials to seize control from its chair, Jerome Powell, if he fails to cut interest rates, stepping up his extraordinary attacks on the central bank’s independence.

The US president called Powell “a stubborn MORON” in a series of critical social media posts on Friday, days after the Fed held rates steady for the fifth consecutive time.

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US adds just 73,000 jobs in July amid pressure from trade war and ‘increasing signs of fragility’ in labor market

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July jobs growth slowed amid rising signs that Trump’s tariffs are weighing on trade, prices and hiring

The US economy added 73,000 jobs in July, far lower than expected, amid ongoing concerns with Donald Trump’s escalating trade war.

Forecasters surveyed by Bloomberg had predicted the July jobs report would show a drop in added jobs to around 109,000. The unemployment rate rose to 4.2% from 4.1% in June.

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Starmer and Reeves should consider wealth tax, says former shadow chancellor

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Anneliese Dodds urges government not to duck ‘big decisions’ in autumn budget

The Treasury should consider a wealth tax to close the growing gap in the public finances, according to a Labour former shadow chancellor.

Anneliese Dodds, who held the role under Keir Starmer in opposition, said ministers must have a “full and frank discussion” with the public about the “really big decisions” they had to take at this autumn’s budget.

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US and China poised to extend tariff truce after failing to find resolution at talks

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Trump will need to approve pause, say US representatives after negotiations end with sides failing to break deadlock on trade terms

US and Chinese negotiators have agreed in principle to push back the deadline for escalating tariffs, although America’s representatives said any extension would need Donald Trump’s approval.

Officials from both sides said after two days of talks in Stockholm that while had failed to find a resolution across the many areas of dispute they had agreed to extend a pause due to run out on 12 August.

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Rising UK food prices turn cash-strapped shoppers away from high street

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BRC says food prices rose by 4% in July from 2024, while CBI blames economic uncertainty for people not spending

Britain’s largest retailers struggled to entice shoppers back to the high street in July as the rising cost of meat and butter drove up food prices, adding to the pressure on household finances.

According to the latest snapshot from the British Retail Consortium (BRC) food prices rose by 4% in July from a year earlier, up from 3.7% in June and above the three-month average of 3.5%.

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European Central Bank keeps interest rates on hold despite sluggish growth

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Central bank shuns calls to reduce borrowing costs as higher US tariffs loom

The European Central Bank has kept interest rates on hold as figures showed the eurozone economy maintaining a slow pace of economic growth.

In what was widely expected to be a pause before further cuts later in the year, the Frankfurt-based central bank shunned calls to reduce the cost of borrowing and held its main interest rate at 2% and the deposit rate at 2.15%.

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UK unemployment rises and wage growth slows as jobs market ‘weakens’

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ONS data shows jobless rate climbing to highest rate since June 2021 with growth in average earnings slowing to 5%.

Unemployment climbed and wage growth slowed in the three months to May, according to official figures that will pressure the Bank of England to cut interest rates next month.

Data from the Office for National Statistics, released on Thursday, showed that Britain’s official unemployment rate rose to 4.7% in the three months to May, up 0.1% from April to reach the highest level since June 2021.

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Frasers Group sales fall amid ‘challenging’ luxury market and retreat from gaming

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Pre-tax profits fall 24% despite rise in Sports Direct sales, driven by closures of House of Fraser and Game stores

A “challenging” luxury market and retreat from gaming have prompted a fall in sales and profits at Mike Ashley’s Frasers.

The group, which is majority owned by the billionaire former Newcastle United owner, said sales fell by 7.4% to £4.7bn and pre-tax profits slid by 24% to £379.5m as it closed some of its House of Fraser department stores and Game video game shops.

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China’s economy beats expectations in face of Trump’s trade war

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GDP grows 5.2% in second quarter as world’s second largest economy ‘front-loads’ shipments before tariffs kick in

China’s economy grew more strongly than expected in the second quarter as it proved resilient in the face of Donald Trump’s trade war.

China’s gross domestic product (GDP) grew 5.2% in April to June compared with a year earlier, slowing from 5.4% in the first quarter, but just ahead of analysts’ expectations for a rise of 5.1%.

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Reeves to say cuts to City red tape will bring trickle-down benefits to households

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Chancellor to announce raft of deregulation changes as City regulators move to pare back transparency rules

Rachel Reeves will claim that cutting red tape for City firms will have trickle-down benefits for households across Britain, as she tries to drum up support for a new financial services strategy.

A raft of regulatory reforms are due to be announced by the chancellor on Tuesday, in what the Treasury says will be the “biggest financial regulation reforms in a decade”. It will come before her Mansion House address to City bosses during a dinner at Guildhall in London on Tuesday evening.

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Treasury minister says ‘headline’ rate of income tax won’t go up, in hint thresholds might be frozen in budget – UK politics live

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Darren Jones also declines to rule out wealth tax when questioned about government plans

In an interview with the Times, Andrew Bailey, governor of the Bank of England, says firms are “adjusting employment and hours” in the light of last year’s rise in employer NICs. That sounds like a euphemism for cutting jobs. But he says, if the labour market slow down, the Bank may respond by cutting interest rates more aggressively.

Asked about this comment in an interview on the Today programme, Darren Jones, chief secretary to the Treasury, played down the impact of the budget. He said:

There’ve also been hundreds of thousands of new jobs created across the economy, and in the first quarter of the year [we had] the fastest growing economy in the G7, so we’re doing everything we can to create conditions for businesses to be profitable and to be able to grow.

Of course, we had that particular tax decision in the budget last year, because our commitment was to protect working people in their pay slips. And I recognise the independence of the bank governor.

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Bank of England governor says jobs slowdown could prompt rate cut; European markets fall after Trump tariff threat – business live

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Rolling coverage of the latest economic and financial news, as Andrew Bailey insists: “I think the path [for interest rates] is down”.

A Bank of England interest rate cut next month is looking more likely, according to the latest city pricing.

The money markets are indicating there’s now an 85% chance that the Bank cuts interest rates at its next meeting on 7 August, up from 76% at the end of last week.

Friday’s disappointing GDP figures, combined with these weak jobs figures boost the case for the Bank of England to cut interest rates in August. The central bank’s governor Andrew Bailey told The Times ‘slack’ was opening up in the labour market, and he believes ‘the path is downward’ for interest rates.

All eyes are on Wednesday’s inflation report with CPI expected to remain at remain around 3.4% in June, roughly unchanged for the third consecutive month.”

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Enduring confusion is the only certainty amid Trump’s latest tariff threats

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Experts suspect ‘frontloading’ of activity may have masked deeper impact of tariffs on the US economy

“There has been no change to this date, and there will be no change,” Donald Trump said on his Truth Social platform this week. “All money will be due and payable starting AUGUST 1, 2025 – no extensions will be granted.”

There had, in fact, been a change. The 90-day “pause” on the highest tariffs threatened by Trump on his so-called “liberation day” in April, elapsed on Wednesday. But with just three trade agreements in place, instead of the 300 once promised, the White House had switched one deadline for another.

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EU may as well be ‘province of China’ due to reliance on imports, says industrialist

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Stefan Scherer, boss of AMG Lithium, says Europe must become more self-sufficient in critical raw materials and new technologies

The EU may as well “apply to be a province of China” such is its inability to wean itself off that country’s supply of critical raw materials used in everything from electric vehicles to smartphones and wind turbines, a leading German industrialist has said.

As chief executive of AMG Lithium, the EU’s first factory to make the lithium hydroxide used in many car batteries, Stefan Scherer sits at the centre of what has been dubbed a new gold rush.

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White House says Canadian PM ‘caved’ to Trump demand to scrap tech tax

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Trump officials hail U-turn as Mark Carney says decision to rescind digital services tax means revival of trade talks

The United States has said that Canada’s prime minister Mark Carney “caved” to demands from the White House after his government abruptly scrapped their digital services tax on US technology companies, which was set to go into effect on Monday.

“It’s very simple. Prime minister Carney and Canada caved to president [Donald] Trump and the United States of America,” press secretary Karoline Leavitt said in a daily briefing.

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UK economic growth confirmed at 0.7% in first quarter; Lincolnshire oil refinery calls in administrators – business live

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UK-US trade deal kicks in today, lowering tariffs for British carmakers and aerospace sector

UK households hit by squeeze on living standards despite fastest growth in G7

Karim Haji, global and UK head of financial services at KPMG, said:

May’s uptick in mortgage approvals bucks the downward trend we’ve seen throughout the year so far. The gradual easing of interest rates could be helping to boost confidence and demand amongst mortgage borrowers.

The cost of living remains high, but a drop in consumer borrowing in May signals that rising incomes are starting to feed through to the cost of day-to-day expenses.

It is incredibly positive news to see an increased number of mortgage applications approved. It is one of the loudest signals of them all regarding consumer affordability, and it is also a massive vote of confidence from lenders in the longer-term prospects of the economy too.

As we head into the summer months, we have witnessed on average the number of viewings per property available see an uplift of around 30% compared to the month previous. On top of this, we have also seen the UK Government make a pledge to create a National Housing Bank which could bring significant investment to help build 500,000 new homes, enabling a potential greater degree of flexibility for those who aspire to buy.

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