Category Archives: Budget deficit

OBR says inadvertent budget leak is ‘worst failure’ in its 15-year history

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Investigation finds organisation’s leadership over many years was to blame for error, and similar breach happened earlier this year

Britain’s budget watchdog has said the early leak of its budget documents before Rachel Reeves made her speech was the “worst failure” in its 15-year history as it emerged a similar breach had occurred earlier this year.

The Office for Budget Responsibility (OBR) said an investigation had found that the leadership of the organisation, over many years, was to blame for the early release of its Economic and Fiscal Outlook (EFO) document online nearly an hour before Reeves’s address last Wednesday.

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Rachel Reeves targets UK’s wealthiest in £26bn tax-raising budget

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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.

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UK government borrows more than expected in setback before budget

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October figures represent final snapshot of public finances before Rachel Reeves’s tax and spending statement

Rachel Reeves was urged to use next week’s budget to create significantly more headroom against her fiscal rules, after official figures showed the UK government borrowed almost £10bn more than forecast in the year to October.

In the final snapshot of the public finances before the chancellor’s crunch budget, the Office for National Statistics (ONS) said borrowing – the difference between public spending and income – was £17.4bn last month.

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Pressure rises on Reeves as government borrowing costs hit 27-year high

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Chancellor will face more limited fiscal headroom at budget after yield on 30-year bond increases to 5.723%

Britain’s long-term borrowing costs have hit their highest level in 27 years, intensifying the pressure on the chancellor, Rachel Reeves, before the autumn budget.

The yield, or interest rate, on 30-year UK government debt hit 5.723% on Tuesday. That is its highest level since 1998, indicating that it will cost the UK more to borrow from the markets, above the previous 27-year high of 5.649% set in April.

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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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US credit rating downgrade could add to pressure on government debt

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Loss of Moody’s triple-A rating comes amid concerns about fiscal trajectory and widening budget deficit

US government debt may come under more pressure this week after the credit rating agency Moody’s stripped the US of its top-notch triple-A credit rating.

Moody’s dealt a blow to Washington last Friday, when it downgraded the US and warned about rising levels of government debt and a widening budget deficit. Moody’s cut its credit rating on the US by one notch to Aa1 from Aaa, becoming the last of the big three agencies to downgrade the US.

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Former Bank of England deputy warns Rachel Reeves against kneejerk cuts

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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.

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Rachel Reeves has three options to dodge an economic crisis and all are unthinkable

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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.

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Unambiguously bleak Bank of England forecasts pave way for spending cuts

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Weak jobs market and above-target inflation will dent Reeves’s growth plans and may wipe out fiscal headroom

With the public finances tight and Rachel Reeves having pledged to balance the books, interest rate cuts are one of the few levers that could boost the UK’s economic growth in the short term, and the chancellor will be glad of the Bank of England’s quarter-point reduction on Thursday – and the clear signal that it is now in cutting mode.

Seven of the monetary policy committee’s (MPC) nine members backed the quarter-point drop, taking the Bank’s policy rate to 4.5%, while two wanted to be more “activist”, proposing a half-point cut. The Bank of England’s governor, Andrew Bailey, said the MPC would be “taking a gradual and careful approach to reducing rates further”.

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UK borrowing jumps unexpectedly, adding to pressure on Rachel Reeves

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Increase to £17.8bn is well above City forecasts and is highest December figure for four years

UK government borrowing jumped unexpectedly to £17.8bn last month, piling pressure on Rachel Reeves to plan budget cuts before a spending review in the summer.

The figure was about a quarter higher than the City had forecast and was up by £10.1bn more than in the same month a year earlier, making it the highest December borrowing for four years.

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Shares in UK gambling firms fall £3bn amid talk of higher taxes in budget

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Thinktank reports saying sector should be hit with extra £900m to £3bn in levies prompts market selloff

Shares in British gambling companies have dropped sharply, reducing the stock market value of large operators by more than £3bn, after the Guardian reported that Treasury officials could tap the sector for between £900m and £3bn in extra taxes.

The chancellor, Rachel Reeves, has come under pressure from two influential thinktanks to raise taxes on the industry, as she pulls every available lever to plug a £22bn “black hole” in the nation’s finances.

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Will Rachel Reeves’s rules on debt and spending survive the budget?

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The chancellor desperately needs more money to finance growth and public spending so expect a bit of tweaking to supposedly strict constraints

Change*. If Labour’s one-word campaign slogan had an asterisk, it would have directed voters to Rachel Reeves’s budget.

Later this month the chancellor will attempt to walk the line between repairing Britain’s battered public realm, while sticking to a manifesto promise to balance the books without raising taxes on working people.

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Labour needs £25bn a year in tax rises to rebuild public services, warns IFS

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Thinktank says tax increases in budget will be necessary even if Rachel Reeves changes fiscal rules

Keir Starmer’s promise to end austerity and rebuild public services will require tax increases of £25bn a year in the coming budget even if debt rules are changed to provide scope for extra investment spending, a leading thinktank has said.

In its preview of the first Labour budget in 14 years, the Institute for Fiscal Studies said Rachel Reeves would need to raise taxes to fresh record levels to meet the government’s policy goals. The chancellor was also warned of the risk of a Liz Truss-style meltdown if the City responded badly to substantially higher borrowing.

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NHS spending rise lags behind Tory funding pledges, IFS finds

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Thinktank says extra funding eaten up by higher inflation despite greater demand with service in poor state of repair

Spending on the NHS in England has risen less quickly than the Conservatives promised at the last election despite the extra demand created by the pandemic and record waiting lists, a leading thinktank has said.

The Institute for Fiscal Studies (IFS) said increases in funding from the government had been eaten up by higher than expected inflation and, as a result, NHS day-to-day spending had grown by 2.7% a year during the current parliament – below the 3.3% pledged by Boris Johnson in 2019.

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Thames Water collapse could trigger Truss-style borrowing crisis, Whitehall officials fear

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Exclusive: Concerns over effect on UK’s finances lead officials to believe utility should be renationalised before general election

Senior Whitehall officials fear Thames Water’s financial collapse could trigger a rise in government borrowing costs not seen since the chaos of the Liz Truss mini-budget, the Guardian can reveal.

Such is their concern about the impact on wider borrowing costs for the UK, even beyond utilities and infrastructure, that they believe Thames should be renationalised before the general election.

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Jeremy Hunt’s scope for tax cuts hit by higher-than-expected borrowing

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Government borrowed £120.7bn in the last financial year, with just under £12bn in March

Jeremy Hunt’s scope for a substantial pre-election tax giveaway has been hit after the latest set of official figures showed the UK’s public finances in worse shape than thought at last month’s budget.

Figures from the Office for National Statistics (ONS) showed the government borrowed £120.7bn in the 2023-24 financial year – £6.6bn more than the Office for Budget Responsibility (OBR) had expected.

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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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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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Jeremy Hunt fuels election speculation as 6 March spring budget announced

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Chancellor has asked the OBR to prepare forecasts for the economy and public finances to be presented to parliament

Jeremy Hunt has announced that a spring budget expected to feature a host of tax cuts will be held on 6 March, fuelling speculation over an early general election.

While government sources insisted nothing should be read into the date, it is the earliest the set-piece fiscal event has been held in 13 years of Conservative government – apart from 2021 when the Treasury was trying to kickstart the economy after Covid.

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How a spring UK budget could fire the starting gun for an early election

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UK economic prospects are bleak but an agenda-setting fiscal event such as sweeping tax cuts in March offers another roll of the dice

To grasp the nettle, or wait in the hope that things somehow miraculously improve. This is the choice Rishi Sunak will be weighing for the next general election, as the Conservatives limp towards the finishing line of another challenging year.

After Jeremy Hunt announced the government would hold an earlier than anticipated budget, with a date set for 6 March, the possibility of a poll in May, in the afterglow of some electioneering tax cuts, is clearly being given considerable thought.

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