Category Archives: Economic policy

‘Unfair banking’ and ‘damaging’ financial rules harming UK’s small firms, MPs warn

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Treasury committee says ‘debanking’ and use of personal guarantees for loans is putting small businesses at risk

Unfair banking practices and “damaging” financial regulators are harming small businesses and putting innovation and growth at risk, parliament’s Treasury committee has warned.

A report from the committee’s inquiry into access to finance for small and medium-sized enterprises (SMEs) said a lack of supportive policies were compounding problems for firms that had survived a “torrid” five years, which included the global pandemic and energy crisis.

“Confidence amongst SMEs in accessing finance has fallen and acceptance rates for business credit has lowered significantly,” the report said.

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Rachel Reeves accuses Tories of ‘gaslighting’ public over economy

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Shadow chancellor will highlight Labour’s plans to boost economy and say Conservatives are ‘out of touch’

Rachel Reeves will draw the economic battle lines for the next general election on Tuesday, challenging the government’s claims that the economy is turning a corner when millions are still struggling with the cost of living.

The shadow chancellor will accuse Rishi Sunak and Jeremy Hunt of “gaslighting” the public with over-optimistic statements about the UK economy that are “out of touch” with most people’s lives.

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Labour membership falls by 23,000 over Gaza and green policies

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Party claims financial position still strong as it continues to hold a commanding lead in opinion polls

Labour has suffered a sharp fall in membership over the past two months following controversies over its policy on Gaza and its U-turn on green investment, according to figures released to its National Executive Committee (NEC). The drop of more than 23,000 members comes despite the party holding a commanding lead in the opinion polls, which suggests it is now seen by the wider electorate as ready and able to form the next government, after 14 years of Tory rule.

Labour sources said the party’s overall financial position remained strong despite membership subscriptions falling off, because donations large and small were healthy, and the expectation was that the unions would still give very substantial backing to the election effort.

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UK government borrowing higher than expected in February

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Borrowing of £8.4bn last month could threaten OBR forecast for £114.1bn deficit for 2023-24 as a whole

Jeremy Hunt has been handed disappointing news from the public finances after government borrowing was higher than expected in February, leaving the national debt at the highest levels since the 1960s.

The Office for National Statistics said public sector net borrowing was £8.4bn in February, £3.4bn less than in the same month a year ago. However, it was higher than any economist expected in a Reuters poll that predicted a deficit of £6bn.

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Tory party fined £10,750 by Electoral Commission for not accurately reporting non-cash donations – UK politics live

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Donations were related to an employee seconded to the party by a donor

The Conservative party has been fined £10,750 by the Electoral Commission for failing to accurately report non-cash donations worth more than £200,000.

The donations related to an employee who had been seconded to the party by a donor. The commission said:

The party under-reported non-cash donations, in the form of an employee seconded to the party by a donor between April 2020 to December 2023. The non-cash donations were under reported by more than £200,000, when the seconded employee went from part-time to full-time work at the party.

The party also reported late a single non-cash donation relating to the same seconded employee, in December 2023.

Our investigation into the Conservative and Unionist Party found a number of donations inaccurately reported or reported late. The political finance laws we enforce are there to ensure transparency in how parties are funded and to increase public confidence in our system, so it’s important donations are fully and clearly reported.

Where we find offences, we carefully consider the circumstances before deciding whether to impose a sanction. We take into account a range of factors before making our final decision, including proportionality.

Penny Mordaunt is not going to become the leader of the Conservative party with a coronation. That idea is inconceivable.

In defence of Rishi Sunak, it is quite hard for a leader to be, at this stage in his leadership, significantly more popular than the party, because the two get quite closely identified and the Conservative party’s popularity fell before Rishi Sunak did, so I wouldn’t hold him personally responsible.

I think we’ve been in office for a long time, and I agree with you that the changes of leadership didn’t help. I was not in favour of removing Boris Johnson, as you may remember, but that has happened and parties need to deal with the current situation, not what might have been.

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Kristalina Georgieva wins backing to run for second term as IMF chief

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Bulgaria’s ‘eternal optimist’ in favour with European finance ministers after first five-year stint encompassing Covid and Ukraine

The head of the International Monetary Fund, Kristalina Georgieva, will run for a second five-year term after being nominated by a string of European countries to lead the global lender.

The Bulgarian economist and champion of policies to tackle the climate crisis will be given the support of her home country, which said she had accepted the nomination for another term starting in September.

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UK mothers earned £4.44 less an hour than fathers in 2023, finds analysis

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‘Motherhood penalty’ appears to be worsening, with pay gap for median hourly pay growing by 93p an hour since 2020

The “motherhood penalty” is wreaking havoc on women and the economy, according to campaigners, as fresh analysis reveals that the pay gap between mothers and fathers in the UK has grown by nearly £1 an hour since 2020.

A study of the hourly earnings of mothers and fathers, released on International Women’s Day, found that on average mothers earned 24% less an hour than fathers in 2023 – a “motherhood pay penalty” of £4.44 an hour.

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Sunak warned unfunded axing of national insurance would harm services

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Economists say making the policy an election pledge could cost £40bn, which is badly needed for health, education and elsewhere

Rishi Sunak has been warned against fighting an election on an unfunded plan to abolish employee national insurance amid projections the move could blow a £40bn hole in the public finances.

As the pre-election battle on the economy between the Conservatives and Labour intensified, the prime minister was on Thursday under mounting pressure to explain how the measure could be afforded while public services were crumbling.

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Treasury disbanded non-dom tax policy unit weeks before budget, sources say

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Exclusive: Officials fear government is ill-prepared for lobbying from wealth advisory industry after taxation overhaul

The Treasury disbanded a unit tasked with offshore and non-dom tax policy weeks before announcing significant changes in the budget to the way foreign residents are taxed, sources have said.

The unit, which comprised technical experts on offshore tax issues, included specialists on non-dom policy. These officials would, according. to the sources, have been expected to help manage the implementation of a replacement for non-dom status as outlined by the chancellor this week.

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Budget 2024 live: Jeremy Hunt cuts national insurance, abolishes non-dom status and raises child benefit threshold

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NI cut of 2p announced, along with new tax on vapes, end of tax relief for holiday lettings and more cash for NHS IT system

Jeremy Hunt is expected to extend the windfall tax on energy companies in the budget to help fund his national insurance cut. Extending the windfall tax is a Labour proposal that the Tories used to dismiss, and, according to a Daily Telegraph story, Douglas Ross, the Scottish Conservative leader, is so angry about the move that colleagues thought he might resign. Ross is MP for Moray, in the north-east of Scotland, and he is worried that the potential impact on the oil and gas industry in Scotland will cost the party votes.

In their story, Nick Gutteridge, Dominic Penna and Simon Johnson say Ross had a row with Rishi Sunak about this at a reception on Sunday night. They report:

The leader of the Scottish Conservatives had doggedly sought out Mr Sunak across the crowded, stifling room, determined to give him a piece of his mind about the Treasury’s plans to extend the windfall tax on North Sea oil and gas giants for an extra year.

What followed was a “heated” discussion between the pair, with Mr Ross warning the move would hammer the Tory vote north of the border and the prime minister countering that it was necessary to deliver a National Insurance cut for millions of workers.

Glen O’Hara, professor of modern history at Oxford Brookes University, points to the gaping trade deficit left for Labour in 1964, when outgoing Tory Chancellor Reginald Maudling infamously left a note for his successor reading: “Good luck, old cock … sorry to leave it in such a mess.”

Conservative Chancellor Norman Lamont’s pre-election budget in 1992 introduced a lower rate of income tax which Labour opposed, allowing the Tories to portray them as a “high-tax party.” The Tories unexpectedly went on to win the subsequent poll.

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Budget 2024: Jeremy Hunt announces 2p cut in national insurance

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Chancellor also scraps ‘non-dom’ tax breaks and slashes capital gains on property in pre-election gambit

Jeremy Hunt has announced a 2p national insurance cut in his budget as a pre-election gambit to revive flatlining opinion poll ratings and reboot Britain’s economy from recession.

In what could be the last major economic intervention before voters go to the polls, the chancellor said the government was making progress on its economic priorities and could now help hard-pressed families by permanently lowering certain taxes.

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Clare Lombardelli named deputy governor of Bank of England

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Ex-Treasury official and adviser to David Cameron will replace Ben Broadbent, making MPC majority female for first time

The Bank of England’s interest-rate-setting committee is set to become majority female for the first time, after the appointment of a former key adviser to David Cameron and George Osborne as one of its deputy governors.

Clare Lombardelli, the chief economist at the Organisation for Economic Co-operation and Development (OECD), will sit on the nine-member monetary policy committee (MPC) when she joins as the Bank’s next deputy governor for monetary policy.

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Put aside differences to focus on growth across UK, Ed Balls tells politicians

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Former shadow chancellor is one of the authors of a new academic paper on how to bridge the regional divide

Britain needs a 20-year cross-party consensus to level up the economy and unleash the untapped potential of regions outside London and the south-east, the former Labour shadow chancellor Ed Balls has said.

Balls, one of five co-authors of an academic paper on bridging the UK’s regional divide, said it was vital that Labour and Conservative politicians put aside their differences in order to embed necessary funding and governance reforms.

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Jeremy Hunt ‘considering spending cuts’ to fund pre-election tax giveaway

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Treasury looking at reducing projected rise in public spending from 2025, FT reports citing insiders

Jeremy Hunt is considering making billions of pounds of spending cuts to fund pre-election tax cuts in the next budget, according to a report.

The chancellor is looking at “further spending restraint” after 2025 if official economic forecasts suggest he does not have enough headroom to pay for “smart tax cuts”, the Financial Times reported, citing Treasury insiders.

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Even a technical recession is a headache for Rishi Sunak

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Governments try to generate a feelgood factor before an election. The UK has the opposite: a feel-bad factor

In the end it wasn’t really that close. The UK economy is now technically in recession after contracting by 0.3% in the final three months of 2023.

The official data brings to an end a miserable year for the UK. Growth in 2023 as a whole was just 0.1% – the weakest performance outside the Covid pandemic year of 2020 since 2009.

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UK pay growth slows less than expected as workers bid up wages

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December figures prompt predictions Bank of England may cut interest rates later than previously expected

Pay growth slowed less than expected in December, prompting predictions the Bank of England could start cutting interest rates later than previously expected.

Earnings growth, excluding bonuses, fell only modestly to 6.2% in October to December 2023 from a revised 6.7% in the previous three months, as workers continued to bid up their wages amid skills shortages and a record number of people with long-term sickness.

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CBI tells Jeremy Hunt to focus on green investment instead of tax cuts in budget

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Lobby group joins calls for chancellor to resist pre-election giveaways next month and spend on projects to boost economy

A leading business lobby group has urged Jeremy Hunt to resist calls for large-scale tax cuts in his budget next month, saying the government needs to avoid “short-termism” and devote spending to projects that boost the economy.

Adding its voice to a growing clamour for green investment, the Confederation of British Industry said pre-election giveaways at the budget should be kept to a minimum to allow for a surge in spending to achieve net zero.

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Labour’s mixed messages on £28bn green pledge put it in worst of all worlds

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Tories watch on delighted as Starmer repeats figure while the shadow Treasury team distance themselves

For weeks, Labour officials have been locked in meetings as they try to figure out how to present Westminster’s worst kept-secret: Keir Starmer’s slow U-turn away from his pledge to spend £28bn a year on the green economy.

Publicly, senior party figures insist that nothing has changed since last summer, when the shadow chancellor, Rachel Reeves, said the party would spend £28bn only if the party’s strict fiscal rules allowed.

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Jeremy Hunt suggests tax cuts in budget won’t match last year’s £20bn giveaway – UK politics live

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The chancellor said he wanted to manage people’s expectations ahead of the spring budget

The UK needs a government guided by clear purpose, Reeves says.

Labour has set out five missions. But they are all tied to the economic mission – to raise growth.

These are the symptoms of economic decline.

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Jeremy Hunt claims Nigel Lawson’s mantle as he teases tax cuts

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Hunt draws comparisons with Thatcher’s tax-slashing chancellor as he claims UK is ready for economic boom

Jeremy Hunt has compared himself to former tax-cutting chancellor Nigel Lawson, as he joined Rishi Sunak in teasing further potential cuts in the spring budget.

Writing in the Mail on Sunday, the chancellor drew comparisons with the late Lawson, who was known for slashing personal taxation while serving in the Thatcher government.

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