July data shows total public debt was £2.98tn, or 94% of GDP – up £96bn on a year earlier
The UK government ran a larger than expected £1.8bn deficit in July, underlining the challenges facing the chancellor, John Healey, as he draws up his first budget.
City economists had expected a shortfall of zero for July, a month when Treasury receipts tend to be swollen by self-assessment income tax payments.
Continue reading...Some want the chancellor to exploit newly flexible fiscal rules – others want a more creative approach, such as borrowing from markets
With just 12 weeks to go until his first budget, new chancellor John Healey is seeking ways to ramp up public investment, without busting the Treasury’s fiscal rules – and some economists are urging him to be bold.
As he settles into No 11 Downing Street, the former defence secretary’s most immediate challenges concern day-to-day government spending.
Continue reading...Some want the chancellor to exploit newly flexible fiscal rules – others want a more creative approach, such as borrowing from markets
With just 12 weeks to go until his first budget, new chancellor John Healey is seeking ways to ramp up public investment, without busting the Treasury’s fiscal rules – and some economists are urging him to be bold.
As he settles into No 11 Downing Street, the former defence secretary’s most immediate challenges concern day-to-day government spending.
Continue reading...Sector cites ‘billions of pounds in additional costs’ from new business rates and increase in minimum wage thresholds
Two-thirds of hospitality businesses are planning to cut jobs as a result of “suffocating” costs imposed by government, as new business rates and higher wage bills come into force.
Many pubs, restaurants and hotel companies will see their costs increase significantly from 1 April after Rachel Reeves’s changes to business rates and an increase in minimum wage thresholds announced at the chancellor’s November budget.
Continue reading...Rachel Reeves’ upcoming spring forecast has not led to slowdown, as property tax rumours did in November
House prices in the UK increased in February as Rachel Reeves avoided a repeat of the pre-budget “negative speculation” that depressed the market, as she prepares to present the spring forecast on Tuesday.
The average price of a home rose to £273,176 last month, up by 0.3% from the month before, Nationwide said. It matched January’s monthly increase, and was above analysts’ forecasts of a 0.2% gain. The annual growth rate remained steady at 1%, the country’s biggest building society said.
Continue reading...Clarification creates prospect of two-tier system for retirees solely on new state pension and those on private schemes
People who rely only on their state pension for their income will not have to pay tax on it, the chancellor, Rachel Reeves, has said, creating the prospect of a two-tier system for those in retirement.
The new state pension is poised to rise to £241.30 a week next April, putting the annual income for someone receiving the standard payment at £12,547 – just below the personal tax allowance of £12,570 a year.
Continue reading...While some call budget ‘tactical victory’, few MPs believe it is enough for Labour to beat Reform
Labour MPs have said they believe Keir Starmer’s leadership is safe until at least the May elections, after a budget that avoided any major damaging measures but which few MPs believe will revive the party’s fortunes.
More than a dozen previously loyal MPs told the Guardian they did not believe the budget would shift the fundamentals required for the party to beat Reform. “It only delays what is inevitable,” one minister said.
Continue reading...Chancellor axes two-child benefit cap and cuts energy bills paid for by mansion tax and freezing tax thresholds
Rachel Reeves targeted Britain’s wealthiest households with a £26bn tax-raising budget to fund scrapping the two-child benefit policy and cutting energy bills.
On a chaotic day that involved key details of her budget accidentally being released early by the Office for Budget Responsibility (OBR), the chancellor defended the measures, saying she was “asking everyone to make a contribution to repair the public finances”, but that she wanted the wealthiest to pay the most.
Continue reading...Building societies fear consumers will be put off from saving if chancellor’s budget announces a 40% reduction
Rachel Reeves’s plan to slash the annual cash Isa limit by 40% could lead to higher mortgage rates and deter consumers from saving, finance bosses have said.
The chancellor is expected to cut the maximum amount people can put into tax-efficient cash individual savings accounts from £20,000 a year to £12,000 in Wednesday’s budget.
Continue reading...Chancellor admits economy ‘feels stuck’ for many as she signals intention to freeze income tax thresholds
Rachel Reeves has promised to “grip the cost of living” in the budget as she prepares to scrap the two-child welfare limit and freeze rail fares, while putting forward a multibillion-pound tax-raising package.
The chancellor is preparing to give her second budget on Wednesday after weeks of uncertainty about the scale of the tax rises she will need to impose to plug a financial hole of about £20bn.
Freezing income tax thresholds for an extra two years to 2030, bringing more people into higher tax bands as wages rise.
Making salary sacrifice schemes less generous, including those for pension contributions.
Bringing in higher tax on the most expensive properties, including a surcharge on the highest-value houses.
A pay-per-mile scheme on electric cars to help fill the tax gap from petrol duty as more people opt for green vehicles.
Continue reading...November drop of 1.8% is biggest for this time of year since 2012, with chancellor’s plans looming
Budget speculation has depressed the UK property market, figures from a leading property website have suggested, with asking prices slipping in the run-up to Rachel Reeves’s much anticipated fiscal set piece on 26 November.
The average new seller asking price fell by 1.8%, or £6,589, month on month in November, the figures collated by the property website Rightmove set out, taking the average price tag on a British home put up for sale to £364,833.
Continue reading...Labour had laid the ground to break a manifesto pledge on taxes for working people but has now made a U-turn
Rachel Reeves is set to abandon a plan to raise income tax in her budget with the chancellor reportedly “ripping up” the main measures in the wake of turmoil in the party.
A source told the Guardian that plans to break the manifesto pledge on income tax had been ditched by the prime minister, Keir Starmer, and the chancellor.
Continue reading...New deputy leader also calls on government to lift two-child benefit cap urgently and in full
Labour should stand by its manifesto commitment not to raise income tax, national insurance or VAT, its deputy leader, Lucy Powell, has said in a challenge that will put pressure on Rachel Reeves.
With the Treasury examining whether to raise income tax to plug a £30bn fiscal hole, Powell said it was “really important we stand by the promises we were elected on and do what we said we would do”.
Continue reading...CEO says fiscal discipline should be balanced with ‘policies that create stability, consistency and support growth’
NatWest Group’s chief executive has warned the government against increasing taxes on banks in the autumn budget as the high street lender reported a 30% jump in profits.
Paul Thwaite said he understood the “difficult choices” that the chancellor, Rachel Reeves, had to make in order to help close a potential £30bn shortfall in the public finances but argued she needed to “balance fiscal discipline” with “policies that create stability, consistency and support growth”.
Continue reading...Annual September rate confounds forecasts of a rise, as pace of food price growth slows for first time since March
UK inflation was unchanged last month at 3.8%, confounding expectations of a rise, in welcome news for the chancellor, Rachel Reeves, as she plans for her crucial budget next month.
The Office for National Statistics (ONS) said that inflation measured on the consumer prices index remained at the same level in September as in August and July.
Continue reading...Exclusive: Chancellor hints at rises and calls out past ‘scaremongering’ over VAT on private schools and changes to non-doms
Rachel Reeves has said higher taxes on the UK’s wealthy will form part of next month’s budget, as she shrugged off the “scaremongering” and “bleating” of her critics, and stressed her determination to repair the public finances.
Speaking in Washington, where she is attending the annual meetings of the International Monetary Fund (IMF), the chancellor told the Guardian there “won’t be a return to austerity” and hinted at tax increases for the most well-off.
Continue reading...Investor jitters follow report by IPPR, with stock market value of sector cut by almost £8bn in morning trading
UK bank shares tumbled on Friday, cutting the stock market value of the sector by almost £8bn in morning trading, as fresh calls for a windfall tax on large lenders in the autumn budget spooked investors.
Calls for a tax grab, in a paper written by the Institute for Public Policy Research (IPPR) thinktank, took a toll on some of the UK’s biggest high street banks. NatWest Group suffered the biggest drop on Friday morning, registering a decline of as much as 5% in its share price, while Lloyds Banking Group and Barclays followed close behind, falling 4.5% and 3.6% respectively. HSBC dropped more than 1%.
Continue reading...Despite concerns about economy, poll shows optimism about trading prospects at highest level since 2014
Confidence among UK businesses has grown despite anxiety about the state of the economy, in a rare slice of positive news for the chancellor, Rachel Reeves, in the run-up to her autumn budget.
An August poll of UK companies by Lloyds Bank showed that improved sentiment among manufacturers and retailers helped push overall optimism within UK plc up by two percentage points, with 54% of companies now feeling confident in the current environment.
Continue reading...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.
Continue reading...NIESR suggests a rise of 5p in the pound on basic and higher rate of income tax would fill the budget gap
Rachel Reeves will need to raise taxes to close a government spending gap that is on course to reach more than £40bn after a slowdown in economic growth and higher-than-expected inflation, according to a leading thinktank.
In a blow to Labour’s hopes of balancing the books without breaking manifesto commitments ruling out personal tax rises, the National Institute of Economic and Social Research (NIESR) said a number of factors would knock off course the chancellor’s plans to stay within Whitehall spending limits.
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