Rate cut unlikely until 2025 as energy prices blamed for stronger-than-expected inflation of 2.3%
Any lingering hope that the Bank of England might deliver a pre-Christmas interest rate cut next month appears to have evaporated, after official data showed inflation jumping to 2.3% in October.
The CPI measure had been expected to tick up, after dipping to 1.7% in September, but 2.3% was stronger than expected.
Continue reading...Whisky and migration thwarted earlier deal but UK PM hopeful of reaching agreement with Narendra Modi
Keir Starmer is to restart the aborted UK-India trade talks in the new year after an agreement stalled amid disagreements over whisky tariffs and migration.
No progress has been made on the deal since early this year after the last round of talks concluded. As prime minister, Boris Johnson promised a swift deal, but Rishi Sunak was said to be deeply uneasy with some of the provisions that had been negotiated by his predecessor. Talks were put on hold in March while both countries prepared for general elections.
Continue reading...PM says budget stabilised the economy, while mortgage rates are ‘individual decisions for the banks’
Keir Starmer has conceded he was disappointed in the UK growth figures last week, but denied that his government’s budget was responsible for a recent rise in mortgage rates.
The prime minister told journalists travelling to the G20 summit in Rio: “What we have done with the budget is to stabilise the economy and that, in my view, was the essential first step.
Continue reading...Mel Stride said there must be no suggestion of the UK going back into the EU single market or customs union
In news that will disappoint those of you who enjoy a Liberal Democrat stunt, PA has just reported that Ed Davey will not, as was planned, be taking a bus-driving lesson at a depot in Oxfordshire, due to logistical issues. Instead he will be visiting high-street businesses.
It is part of a campaign by the Liberal Democrats to get Labour to keep the bus fare price cap at £2 in England when it extends the scheme into next year.
The fare cap increase is like a bus tax for people across the country, impacting bus users and commuters already struggling to make ends meet. MPs must be given a say on this bus fare hike on behalf of their constituents.
Our communities have already paid too high a price for years of Conservative neglect and incompetence. This bus fare hike will hit cherished local businesses and high streets, many of which are already struggling.
Uncertainty around Labour’s first budget and high interest rates played their part, but [the GDP figures are] still a blow for Rachel Reeves, as [it] underlines difficulty of reaching her ambitious growth target.
Some in Labour want to recalibrate economic focus away from growth and towards cost of living ie “will people feel better off by time of next election?”
Continue reading...European Commission figures predict German economy, usually the engine of the EU, will contract O.1% this year
Germany’s looming general election will be fought against the backdrop of a stagnating economy, the European Commission has forecast, with GDP expected to have contracted in 2024.
The commission’s quarterly forecast suggested Germany, traditionally the engine of the bloc’s economy, will be its weakest performer in 2025, notching up growth of just 0.7% after shrinking by 0.1% this year.
Continue reading...Budapest meeting finds consensus on need to raise growth and productivity as ‘America first’ protectionism looms
EU leaders meeting in Budapest have signed a declaration aimed at boosting the bloc’s ailing competitiveness – a task given added urgency by the threat of “America first” protectionist trade policies promised by the US president-elect, Donald Trump.
The bloc has too many barriers to innovation and must drastically reduce red tape, especially for startups; ramp up investment; make access to capital easier; and raise productivity, the European Commission president, Ursula von der Leyen, said on Friday.
Continue reading...Rare agreement among forecasters gives 96% chance of today’s MPC meeting cutting borrowing costs to 4.75%
The Bank of England policymakers are widely expected to cut borrowing costs for businesses and homeowners by reducing official interest rates from 5% to 4.75% when they meet later today.
Financial markets are overwhelmingly forecasting that the Bank’s nine-strong monetary policy committee (MPC) will reduce rates for a second time when it announces its latest decision at noon.
Continue reading...Country has been enjoying historic growth in economy, which has tripled since it started crude oil extraction in 2019
Hundreds of thousands of Guyana citizens living at home and abroad will receive a payout of around £370 each after the country announced it was distributing its “mind-boggling” oil wealth.
The grant of 100,000 Guyanese dollars will be available to any citizen of the South American country over the age of 18 with a valid passport or ID card. Guyanese citizens who normally live abroad will be eligible but must be in Guyana to collect the payment.
Continue reading...Rachel Reeves throws down budget gauntlet to new Tory chief as party’s first black leader is congratulated on win
Labour has thrown down an immediate challenge to the new Tory leader, Kemi Badenoch, to back Rachel Reeves’s budget plans for big increases in tax, spending and borrowing, as a huge political divide threatened to open up over economic policy and the future of public services.
All the main party leaders congratulated Badenoch on Saturday on becoming the first black leader of a main UK party after she stormed to victory over former immigration minister Robert Jenrick with 56.5% of the vote among Conservative party members.
Continue reading...Labour said it would bring taxation of performance-related pay in the industry in line with others – but the chancellor had a change of heart
It has been almost two decades since Nicholas Ferguson, a grand figure in the private equity business, caused a storm by talking out loud about his industry’s dirty little secret. It could not be right, he said, that highly remunerated private equity executives could pay less tax than a cleaner or other low-paid workers.
Things have moved on a bit since 2007. So-called “carried interest”, or carry – the portion of an investment profit that the private equity managers retain as a bonus for success – is now taxed at 28% under the capital gains regime; in the old days, rates in effect as low as 10% could be secured thanks to various exceptions.
Continue reading...Institute for Fiscal Studies says budget ‘looks like the same silly games’ as seen under the Conservatives
Rachel Reeves is now being interview on ITV’s Good Morning Britain.
She is being interviewed by Ed Balls, the former Labour shadow chancellor who is now a TV presenter. He asks her to confirm that workers will end up losing out because of the employers’ national insurance contributions (NICs) increase.
Continue reading...Institute for Fiscal Studies says budget allows for rise in public service spending this year and next, but not thereafter
Rachel Reeves could be forced to find more money to fix public services after her budget made a start at reversing the “unrealistic” and irresponsible spending plans of the Conservatives, the Institute for Fiscal Studies (IFS) has said.
Britain’s leading experts on the government’s finances said the chancellor’s tax measures on Wednesday had allowed for a substantial short-term increase in public service spending this year and next, but not thereafter.
Continue reading...Headlines featured numerous ‘nightmare’ allusions for budget delivered the day before Halloween
After Rachel Reeves‘ first budget as chancellor, which included £40bn in tax rises, newspaper headlines in the UK featured “nightmare” and “horror show” allusions as it came a day before Halloween.
The Financial Times’ front page featured a picture of smiling Reeves headlined “Reeves unveils £40bn budget tax rise”. The paper reported the chancellor’s aims of fixing public services, and the “broken” finances, saying businesses and the wealthy would “bear bulk” of the “heaviest fiscal burden” in a generation.
Continue reading...Rachel Reeves has finally laid out Labour’s spending plans in the party’s first budget in almost 15 years. The Guardian’s John Harris is joined by political editor Pippa Crerar and political correspondent Kiran Stacey to discuss the fallout
Continue reading...Chancellor also criticised for letting the very rich off the hook with a lower than expected rise in capital gains tax
Tax rises aimed at inherited wealth are at risk of backfiring, after the chancellor was accused of betraying small family businesses while letting private equity bosses off the hook.
Labour’s first budget in 14 years included measures to close inheritance tax (IHT) loopholes and press ahead with scrapping the controversial non-dom tax status, as well as levying higher taxes on private jet flights.
Continue reading...Forecaster says extra spending revealed by Rachel Reeves will give only a short-term lift to economy
Labour has embarked on a “large, sustained increase in spending, tax and borrowing”, according to the government’s economic forecaster, as it judged that Labour’s first budget for 15 years is unlikely to increase economic growth over the next five years.
Assessing Rachel Reeves’s policies, the Office for Budget Responsibility (OBR) said the economy would expand at the same rate as predicted in March by the end of the parliament, despite a £70bn-a-year rise in spending.
Continue reading...The government knows cynical voters will need to see tangible change in public services and to feel better off
At the final political cabinet before Rachel Reeves delivered her first budget this week, ministers were presented with internal party research on what the public was expecting.
In the months since the general election, they had been fed a regular diet of gloomy warnings about the state of the economic inheritance and, more recently, high levels of pre-budget news coverage, so it was firmly on their horizon.
Continue reading...Having announced minimum wage boost, chancellor to say she can spare working people from tax rises
The UK’s national minimum wage is to rise by a higher than expected 6.7% next year, Rachel Reeves has announced before a multi-billion pound tax-raising budget designed to act as the springboard for a decade of national renewal.
Insisting that the increase to £12.21 in the pay floor marks a significant step in Labour’s plan to support the low paid, the chancellor will also say she can spare working people from the tax increases intended to plug the hole in the public finances and avoid a fresh wave of found of public spending cuts.
Continue reading...Former chancellor Jeremy Hunt says decision to publish findings of review on Wednesday is ‘significant concern’
Britain’s fiscal watchdog is to publish a detailed breakdown of the £22bn “black hole” that Labour says it inherited after Rachel Reeves presents the budget on Wednesday.
The Office for Budget Responsibility will release the conclusion of its review of how the forecast for departmental spending for its last economic and fiscal outlook, published for the March budget, was prepared.
Continue reading...Keir Starmer to announce expansion in region that will also include business club to increase economic ties
The UK will increase its military and economic presence in the Indo-Pacific to support regional stability, Keir Starmer will announce on Saturday.
In an effort to counter China’s influence, ministers will expand the Royal Navy’s presence in the region and carry out more joint patrols with Pacific island nations.
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