Why OBR forecast is being held back until Kwarteng’s next fiscal plan

Huge policy changes are needed to get UK back on track – so early publication would give an incomplete picture

The message the government wanted to get out was clear. After less than a month as prime minister, Liz Truss had converted from vocal scourge of Treasury orthodoxy to an active supporter.

Given the fallout in financial markets after the not-so-mini-budget, Truss and her chancellor, Kwasi Kwarteng, laid on a heavily stage-managed meeting on Friday with officials from the Office for Budget Responsibility, the Treasury’s independent economic forecaster, to try to smooth over the mess.

Continue reading...

Treasury to delay publishing OBR forecast by six weeks after 7 October delivery – UK politics live

Budget watchdog to give assessment of fiscal plans next week but public will have to wait until chancellor’s November statement

Following a meeting with the prime minister, Liz Truss, and the chancellor, Kwasi Kwarteng, the Office for Budget Responsibility has confirmed it will deliver an initial forecast on 7 October.

A spokesperson for the OBR said:

[The forecast] will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the government’s policies.

We discussed the economic and fiscal outlook, and the forecast we are preparing for the chancellor’s medium-term fiscal plan.

We will deliver the first iteration of that forecast to the chancellor on Friday 7 October, and will set out the full timetable up to 23 November next week.

Continue reading...

Truss and Kwarteng to hold back OBR forecasts for six weeks

PM and chancellor say they will not publish projections until late November despite them being ready next week

Liz Truss and Kwasi Kwarteng will refuse to release forecasts from the Office for Budget Responsibility (OBR) until more than six weeks after receiving them, despite calls for them to be published as soon as possible.

The prime minister and chancellor said they would only publish the independent forecasts on 23 November alongside a fiscal statement, despite them being ready on 7 October.

Continue reading...

OBR: we offered to update forecasts in time for ‘mini-budget’ – live

Watchdog said it was ready to supply information, but was not asked to do so by Kwasi Kwarteng

Q: Can you reassure listeners that your judgment is better than that of people like the IMF and the Bank of England, who have criticised the mini-budget?

Truss says:

I have to do what I believe is right for the country and what is going to help move our country forward.

Continue reading...

Treasury watchdog to ask Kwarteng to hand over growth forecasts

Tory chair Mel Stride says watchdog needs to hear how chancellor will boost growth, and suggests one option might be via immigration

Kwasi Kwarteng will be called before parliament’s Treasury watchdog and asked to hand over independent growth forecasts, as its chairman said there is “not a very broad path” out of the current economic situation.

Mel Stride, a Conservative MP and chair of the Treasury committee, said Kwarteng was “very, very unlikely to reverse” the £45bn of unfunded permanent tax cuts he announced last Friday, even though that is an option. The alternative, he said, was to act quickly to “demonstrate to the markets that growth is realistic”. The third option would be deep cuts to public spending, but that would be difficult given the current pressure of inflation, Stride said.

Continue reading...

Bank of England in £65bn scramble to avert financial crisis

Bank of England left with no action but to intervene after Kwasi Kwarteng’s mini-budget

The Bank of England has been forced into emergency action to halt a run on Britain’s pension funds after the impact of Kwasi Kwarteng’s ill-received mini budget prompted fears of a 2008-style financial crisis.

Threadneedle Street said the fallout from a dramatic rise in government borrowing costs since the chancellor’s statement had left it with no choice but to intervene to protect the UK’s financial system.

Continue reading...

‘Great British Railways is dead’: rail industry at lowest ebb since the days of Railtrack

Grant Shapps ‘revolutionary’ GBR plan faces huge challenges

Barely 18 months have elapsed since a starry-eyed Grant Shapps unveiled the blueprint for a “revolutionary” Great British Railways, but it already has the flavour of an optimistic misnomer. Even an adequate British railway would be welcomed by those passengers stranded by everything from Avanti’s collapse to failing infrastructure and unprecedented strikes.

Only a fraction of the timetabled trains continue to run between London and Britain’s biggest cities, though operator Avanti has pledged to start its recovery to full service this week. National strikes, the likes of which had not been seen for 30 years, are now a regular occurrence, with little sign of breakthrough in talks. Infrastructure projects have been pared back or shelved, with the public all but gaslit with reannounced schemes for new railways.

Continue reading...

Truss and Kwarteng had row over sterling crisis response, say Whitehall sources

First signs of friction between PM and chancellor emerge as pound falls to historic low following mini-budget

The first signs of friction between Liz Truss and Kwasi Kwarteng over how to deal with the tanking pound have emerged, after the pair met in No 10 to thrash out how to respond on Monday.

Downing Street rebuffed talk of a split between No 10 and No 11 over how to deal with the market reaction to the mini-budget, and denied that there was a row.

Continue reading...

Homeowners warned of ‘significant’ rise in UK interest rates

Bank of England’s chief economist speaks out after mini-budget, with financial markets expecting rates to reach up to 6%

Britain’s homeowners have been warned to brace themselves for a “significant” increase in interest rates from the Bank of England in response to Kwasi Kwarteng’s tax-cutting mini-budget last week.

Huw Pill, Threadneedle Street’s chief economist, added to the concerns of millions of mortgage payers who have already seen hundreds of home loan products pulled by lenders in anticipation of a big increase in the cost of borrowing.

Continue reading...

‘Fiscal sustainability’ plus rising borrowing costs could add up to cuts

To make the sums work, some suggest Kwasi Kwarteng may include deep spending reductions in his medium-term fiscal plan

When Kwasi Kwarteng met City figures on Tuesday, the Treasury said he had “reiterated the government’s commitment to fiscal sustainability”: though the grim faces of attendees in the official photos suggested they may not have been terribly reassured.

Some analysts are now warning that with borrowing costs rising sharply, and the chancellor determined not to water down his radical tax plans, “fiscal sustainability” points to one thing: spending cuts.

Continue reading...

Labour delegates urged to back PR to end ‘trickle-down democracy’ – UK politics live

Latest updates: Labour delegate says current electoral system allows Tories to get away with measures like ‘protecting bankers’ bonuses’

In June, as the RMT union launched what has become an ongoing series of strikes, Keir Starmer ordered Labour frontbenchers and shadow ministerial aides not to join picket lines. This infuriated leftwing Labour MPs and some union leaders, notably Sharon Graham, the general secretary of Unite.

At one point it looked as if there might be a huge row at conference about whether shadow ministers should or should not be allowed to join picket lines. But, in an interview with the Today programme this morning, Graham suggested that a truce of sorts has been agreed – even if the two sides do not entirely see eye to eye.

My issue about this … isn’t necessarily around one person on a picket line because, quite frankly, that isn’t the issue. The issue is the mood music [ordering shadow ministers not to join picket lines] suggests. It suggests a mood music that being on the picket line is somehow a bad thing. It’s a naughty step situation.

The party who is there to stick up for workers should not give the impression – that’s the problem, it gives the impression – that they are saying picket lines are not the place to be. And I think that it was unfortunate. I think it was a mistake. I think, to be honest with you, Labour knows it was a mistake. And I don’t actually think it’s holdable.

When people go on strike it is a last resort at the end of negotiations. And I can quite understand how people are driven to that … I support the right of individuals to go on strike, I support the trade unions doing the job that they are doing in representing their members.

I’m incredibly disappointed that as delegates we’ve been excluded from this key part of the conference’s democratic process.

This is an unprecedented move silencing members’ voices. Our CLP sent us here to Liverpool to promote our motion on public ownership and a Green New Deal, but we’ve been unfairly denied that right.

Continue reading...

City sceptical about benefits of scrapping cap on banker bonuses

Sources at largest banks say the did not lobby for move nor expect it to result in major changes to pay packets

When City of London executives were summoned to No 11 Downing Street earlier this month, they were promised reforms that would boost growth, attract talented bankers and usher a new era of prosperity for financial services.

But what the chancellor, Kwasi Kwarteng, failed to mention to bank bosses was that their pay would become a lightning rod for controversy in the mini-budget that followed.

Continue reading...

Kwasi Kwarteng could borrow for the right reasons. These are the wrong ones

Money spent on the green transition or skills would reap a dividend. But this cash is just going to the rich

The billions of pounds of extra borrowing signalled by Kwasi Kwarteng in his not-so-mini budget can be justified as long as the money isn’t flushed down the toilet.

Funds for renewable energy projects or to boost skills training would generate a return over the next decade.

Continue reading...

Tories gambling with the finances of British people, says Starmer

Labour leader attacks ‘casino economics’ in wake of £45bn package of tax cuts announced by chancellor

Sir Keir Starmer has accused the government of “gambling the mortgages and finances” of the British people with its “casino economics”.

Speaking before his party’s conference in Liverpool, the Labour leader tweeted: “Tory casino economics is gambling the mortgages and finances of every family in the country. Labour will secure growth for working people, that benefits all communities. My government will deliver a fairer, greener future.”

Continue reading...

Mini-budget 2022: pound crashes as chancellor cuts stamp duty and top rate of income tax – live

Tax cuts to cost Treasury around £37bn in 2023-24, official figures reveal

There are no urgent questions in the morning, and so Kwasi Kwarteng, the chancellor, will be delivering his statement soon after 9.30am.

The Commons starts sitting at 9.30am, but they always begin with prayers in private, and so Kwarteng will be up a few minutes later.

The last time they did it one third of the beneficiaries were people buying second homes or buy to let, so we are sceptical that this is the magic bullet to increase homeownership. What we really need to do is to build more houses and to help get people onto the property ladder by increasing the supply of housing.

When this has been done before, it has often fuelled an already hot market and many of the beneficiaries have been people buying a second or third home, rather than the first time buyers that we really want to help who are often trapped in private rented accommodation where they’re paying as much in rent every month as they would in a mortgage.

Continue reading...

Kwarteng accused of reckless mini-budget for the rich as pound plummets

Strategy of sweeping tax cuts gets hostile reception from markets and economic thinktanks, leaving some Tory MPs aghast

Kwasi Kwarteng has been accused of delivering a reckless mini-budget for the rich after his £45bn tax-cutting package sent the pound crashing to its lowest level against the dollar in 37 years.

In a high-risk strategy designed to revive Britain’s stagnant economy, the new chancellor announced more than £400bn of extra borrowing over the coming years to fund the biggest giveaway since Tony Barber’s ill-fated 1972 budget.

Continue reading...

UK in recession and further interest rate hikes probable, Bank warns Kwarteng

Threadneedle Street makes clear on eve of tax-cutting mini-budget that plans risk triggering more rate rises

The Bank of England has warned Kwasi Kwarteng the economy is in recession and it will most probably need to push interest rates higher after Friday’s tax-cutting mini-budget.

On the eve of a major package of support from the chancellor designed to break what he called the economy’s “cycle of stagnation”, Threadneedle Street said the UK economy was heading for a second consecutive quarter of falling output, with gross domestic product set to shrink 0.1% in the three months to September.

Continue reading...

National insurance increase will be reversed from 6 November, says Kwasi Kwarteng – UK politics live

The chancellor says the move will save 28m people £330 on average next year

Catholics outnumber Protestants in Northern Ireland for the first time, a demographic milestone for a state that was designed a century ago to have a permanent Protestant majority, my colleague Rory Carroll reports.

Thérèse Coffey is deputy prime minister as well as health secretary. Speaking on ITV’s Good Morning Britain this morning, and responding to a question from the former Labour MP Ed Balls, who was presenting, she said that as deputy PM whould be would “chairing things like the home affairs committee and different elements like that”. But she rejected claims this meant she would be doing the health job part time. She said:

I’m conscious that in two weeks we’ve already pulled together our plan for patients and we will continue to develop that.

I don’t think it will be a case of being part-time ... We don’t have fixed working hours.

Continue reading...

Kwasi Kwarteng to shrink part-time work benefits to grow labour supply

New UK chancellor aims to reverse inactivity in labour market, especially among over-50s

Kwasi Kwarteng will tighten benefit rules for part-time workers, requiring them to work longer hours or take steps to increase their earnings.

The new rule will require benefit claimants working up to 15 hours a week to take new steps to increase their earnings or face having their benefits reduced. The current threshold is nine hours, though it was increased this summer to 12 hours, which will come into force next week.

Continue reading...

Kwasi Kwarteng urged to allow release of OBR forecasts with mini-budget

Tory chair of Treasury committee says independent forecasts vital to provide reassurance to markets

The Tory chair of the Treasury select committee has urged Kwasi Kwarteng to allow independent forecasts for the public finances to be published alongside his mini-budget on Friday.

Mel Stride released a strongly worded statement urging more clarity around the effects of the new chancellor’s fiscal interventions.

Continue reading...