Rising costs and global uncertainty may force chancellor to turn to pensioners and wealthier taxpayers
Ministers may have to target pensioners and wealthier taxpayers at the autumn budget, as senior government figures voiced fears brutal welfare reforms would still not go far enough to tackle rising costs.
The Institute for Fiscal Studies warned the chancellor may be forced to consider a freeze on tax thresholds, hikes to capital gains and potentially pension taxes.
Continue reading...Department for Work and Pensions says thousands, including children, will be hit by chancellor’s announcement, as OBR forecasts UK growth to halve in 2025
Rachel Reeves will not be raising taxes in the spring statement today, even though there are many people on the left who would prefer taxes to rise as an alternative to public spending being cut. Reeves came into office promising only one budget-type event a year, and that is one reason why she is not hiking taxes today. But mainly it’s because she thinks Britons are relatively highly taxed already, because Labour was elected on a manifesto ruling out most of the obvious possible tax rises and because she’s not convinced a sweeping wealth tax would work.
But that has not stopped campaigners calling for a wealth tax, and yesterday about 300 people attended a ‘Tax the Super-Rich’ rally outside the Treasury. It was organised by charities and social justice campaign groups, but one of the speakers was Carla Denyer, co-leader of the Green party, which is in favour of a wealth tax.
Across the country, inequality is soaring and people are being left behind, struggling to make ends meet and dealing with broken public services, all while the very richest get richer. Choosing to make cut after cut to the poorest and most marginalised, while leaving the vast resource of the extreme wealth of the super rich untouched, is immoral, harmful, and will not deliver for our communities or the economy.
Continue reading...Chancellor will announce plans to fund 18,000 social homes before fraught spring statement on Wednesday
Rachel Reeves will plough £2bn into affordable housing in a bid to “sweeten the pill” of the spending cuts being announced at this week’s spring statement.
The chancellor made the surprise announcement of the new cash – a down payment on the June spending review – as the Treasury bids to demonstrate that it remains focused on investment, rather than cuts. It will fund 18,000 affordable and social homes, part of the target to build 1.5m homes over the course of the parliament.
Continue reading...Labour MP and Lib Dem leader express concern social media companies could be let off hook just as benefits are cut
Keir Starmer has been warned against “appeasing” Donald Trump as he considers reducing a major tax for US tech companies while cutting disability benefits and public sector jobs.
His chancellor, Rachel Reeves, confirmed on Sunday that there were “ongoing” discussions about the UK’s £1bn-a-year digital services tax that affects companies including Meta and Amazon.
Continue reading...Keir Starmer has been dealt a fresh blow to his living standards pledge in advance of the spring statement
Living standards for all UK families are set to fall by 2030, with those on the lowest incomes declining twice as fast as middle and high earners, according to new data that raises serious questions about Keir Starmer’s pledge to make working people better off.
The grim economic analysis, produced by the respected Joseph Rowntree Foundation (JRF), comes before the chancellor, Rachel Reeves, makes her spring statement on Wednesday in which she will announce new cuts to public spending rather than increase borrowing or raise taxes, so as to keep within the government’s “iron clad” fiscal rules.
Continue reading...Chancellor to tell party she is making steep cuts to avoid similar fallout to that which followed 2022 mini-budget
Rachel Reeves will raise the spectre of Liz Truss’s disastrous mini-budget in the lead-up to next week’s spring statement as she tries to persuade her Labour colleagues to accept the steepest departmental cuts since austerity.
The chancellor will tell her fractious party she has decided to cut public spending rather than increasing borrowing because of the risk of a similar fallout to that which followed the then prime minister’s disastrous fiscal statement in 2022.
Continue reading...PM defends welfare cuts amid disquiet in Labour over plan charities say will push more disabled people into poverty
The rising benefits bill is “devastating for public finances” and has “wreaked a terrible human cost”, Keir Starmer has said as he defended the government’s drastic changes to the welfare system.
Writing in the Times, the prime minister said “the facts are shocking”, noting one in eight young people were not in education, employment or training and 2.8 million working-age people were out of work because of long-term sickness.
Continue reading...Charlie Bean says OBR forecasts are ‘flaky’ and cautions against trying to hit targets five years away
The former Bank of England deputy governor Charlie Bean has warned the chancellor against making kneejerk cuts in next week’s spring statement to try to hit fiscal targets that are five years away.
Rachel Reeves is preparing to slash spending, including on disability benefits, in response to weaker forecasts from the independent Office for Budget Responsibility (OBR) – prompting a backlash from within her own party.
Continue reading...Don Farrell points out most Australian beef exported to US goes to fast food giant McDonald’s
Donald Trump’s trade war could raise the price of American hamburgers, Australia’s trade minister has warned, amid fears that tariffs could be extended to beef and other agricultural products.
The trade minister, Don Farrell, said most of Australia’s beef exported to the United States went to fast food giant McDonald’s, and any new tariffs on our goods would inevitably increase the price Americans pay for their cheeseburgers or Big Macs.
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Continue reading...GDP goes in wrong direction as chancellor puts final touches to fiscal plans
For a government that has made growth its overriding mission, the 0.1% decline in GDP in January signalled by the Office for National Statistics will be depressing news.
As Rachel Reeves prepares to announce her spring statement on 26 March, the economy appears to be going in the wrong direction – underlining the fact that the Office for Budget Responsibility is likely to have presented her with notably weaker forecasts than in October.
Continue reading...Districts in Birmingham now ranked below poorest areas of France, Malta and Slovenia as institute urges rethink on planned welfare cuts
The UK has tumbled down the league of affluent nations after almost a decade of welfare cuts and stagnant incomes, according to a report that found the poorest districts in Britain now rank below the lowest-income areas of Malta and Slovenia.
In a warning for ministers to protect welfare spending before Rachel Reeves’s spring statement later this month, the National Institute of Economic and Social Research (NIESR) said the UK’s reputation for high living standards was under threat.
Continue reading...Ministers say ‘unsustainable’ rise in spending must be tackled but many backbenchers fear changes will not work
Dozens of backbench Labour MPs are unhappy with plans to cut billions from the rising welfare bill, with ministers holding meetings to convince them that the changes to disability benefits are necessary.
Labour MPs told the Guardian there were deep concerns within the parliamentary party that the changes would take money from the poorest, which was not what they had entered government to do.
Continue reading...Chancellor says increased military spending should support ‘British jobs and British industries’
Rachel Reeves has said UK companies and jobs will be prioritised under the government’s plans for a significant increase in defence spending, with an aim to support “left behind” industrial towns and the economy at large.
Announced by Keir Starmer last week amid growing fears over Donald Trump’s commitment to European security, the government will increase defence spending to 2.5% of GDP by 2027 – worth an additional £6bn a year.
Continue reading...‘Sluggish’ pace in tackling gender pay gap and worsening employment levels push UK back to 18th in PwC index of OECD countries
Women’s worsening unemployment and participation in the workforce has pulled the UK behind Canada to its lowest ranking for workplace equality among large economies in a decade.
The “sluggish” pace of change on women’s earnings relative to men’s – which means closing the gender pay gap could take more than 30 years at the current pace – has knocked the UK back one place to 18th in the Women in Work Index produced by advisory firm PwC.
Continue reading...Plan for ‘reasonable’ 2.8% rises may prove insufficient, forcing chancellor to find billions in extra funding
Rachel Reeves has been warned public sector unions will demand higher pay increases to compensate for accelerating inflation, heaping pressure on the chancellor to find billions of pounds in extra funding.
The government made recommendations in December for a 2.8% pay rise for teachers, NHS staff and other public sector workers for the financial year beginning in April, saying it was a “reasonable amount” given forecasts for the economy.
Continue reading...Impending tax rises from autumn budget fuel collapse in sentiment and rising redundancy intentions, surveys show
UK employers are preparing for the biggest redundancy round in a decade amid collapsing business confidence as firms brace for tax increases from April that Rachel Reeves announced in her autumn budget.
In a fresh blow for the chancellor, the Chartered Institute of Personnel and Development (CIPD), which represents human resources professionals, said a survey of 2,000 employers showed redundancy intentions at their highest level in 10 years, barring the Covid pandemic.
Continue reading...As her £9.9bn of headroom evaporates, chancellor will have to raise taxes, cut spending or break ‘iron-clad’ fiscal rules
When Rachel Reeves stood up in the House of Commons on budget day on 30 October as this country’s first woman chancellor, she was brimming with pride: “To girls and young women everywhere, I say: Let there be no ceiling on your ambition, your hopes and your dreams.”
Four months on, however, there are few women or men, young or old, at Westminster, who would envy Reeves’s lot in charge of the country’s finances. The bind she finds herself in is more the stuff of a chancellor’s nightmares than dreams.
Continue reading...ONS data showing British national output rose in final quarter of 2024 confounds forecasts of 0.1% decline
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Britain’s economy unexpectedly picked up in the final three months of 2024, official figures have shown, easing pressure on the chancellor, Rachel Reeves, after flatlining during the summer.
Figures from the Office for National Statistics show gross domestic product rose by 0.1% in the fourth quarter of 2024 – after zero growth in the previous three months – to beat the forecasts of City economists and the Bank of England for a decline of 0.1%.
Continue reading...While UK may not be in direct line of fire, knock-on effects on global trade has British businesses worried
“We’re vulnerable at the moment,” says Fiona Conor, the managing director of Trust Electric Heating, a Leeds-based radiator manufacturer, who has been considering expanding into the US market.
After a predictably unpredictable start to Donald Trump’s second term as US president, Conor is worried her options could be limited, as businesses across the UK brace for a global trade war.
Continue reading...UK economy expected to grow by just 0.75% this year, in fresh blow to Rachel Reeves’s attempts to raise confidence
Rachel Reeves’s plans for growth suffered a double blow after the Bank of England halved its forecast for the year and warned households would face mounting pressure from rising prices.
In a downbeat assessment as it cut interest rates for a third time in six months, Threadneedle Street warned people would face a fresh squeeze on living standards from rising inflation even as the economy stalled.
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