14 minutes ago
The OBR growth and inflation forecasts paint a much bleaker picture
The OBR’s growth and inflation forecasts on Wednesday painted a much bleaker picture than previous forecasts in March.
At the time, the OBR said inflation would fall to 0.9% by the end of 2024, but revised this to 2.8% on Wednesday. The consumer price index is not expected to reach the Bank of England’s 2 percent target until 2025, meaning interest rates are likely to remain “higher for longer” even if growth stalls.
Growth forecasts were also significantly downgraded from the 1.8% and 2.5% predicted in March to 0.6% this year and 0.7% next year.
“It’s clear that interest rates are weighing on the wider economy and, despite the government’s best intentions, it will be difficult for the UK to offset these periods of lost growth,” said Lindsay James, investment strategist at Quilter Investors.
“This has been heralded as the ‘Autumn Declaration of Growth’ and the government is trying to give the economy a boost, but it is questionable how effective and sustained this growth will be.”
With an election scheduled for some time in 2024 and the Conservatives trailing far behind in the polls, James said Wednesday’s statement was “much more political in nature.”
“Given price increases and economic growth, the freebies announced today are something of a gamble by the government. With inflation still at more than double the Bank of England’s target, there could be even less scope for giveaways in the spring,” she said.
“As a result, today’s decisions will be driven far more by the polls than by any fundamental improvement in the UK’s long-term financial position.”
-Elliot Smith
33 minutes ago
Labour’s shadow chancellor highlights the impact of existing tax rises
Rachel Reeves, shadow chancellor of the main opposition Labor party, begins her response by saying the impact of previous income tax freezes dwarfs Wednesday’s National Insurance cut.
“The government had already introduced tax rises equivalent to a 10p rise in National Insurance, so today’s 2p cut will not remotely offset the tax rises already introduced by this Conservative government,” she says.
“The fact is that taxes will be higher in the next election than they were in the last. That is the legacy of the conservatives.”
38 minutes ago
Reduction of social security contributions from 12% to 10%
Hunt announces that workers’ compensation will be cut from 12% to 10% from January 6th.
“If we want people to get up early in the morning, if we want them to work at night, if we want an economy where people go the extra mile and work hard, then we have to recognize that their hard work benefits us all is coming.” he says.
“This change will help 27 million people. This means someone on an average salary of £35,000 will save over £450.”
The “Tier 2” NI levy for self-employed people earning more than £12,570 will be abolished, saving the average self-employed person £192 a year.
46 minutes ago
The trade tax relief will become permanent
Hunt confirms the tax break for fully settled businesses will be permanent.
Companies will be able to claim back 25p of corporation tax for every pound they invest in IT, machinery and equipment, a move that will cost the Treasury £11bn a year. Hunt said it was the “biggest corporate tax cut in modern British history”.
7 hours ago
Hunt confirms £4.5bn for UK manufacturing
Hunt confirms pre-announced £4.5 billion of funding for UK manufacturing to boost investment in eight sectors across the UK, available for five years from 2025.
As the Treasury announced last week, this includes £960m for clean energy, over £2bn for the automotive industry, £975m for aerospace and £520m for life sciences manufacturing.
The entire manufacturing sector accounts for over 43% of all UK exports and employs around 2.6 million people. Finance Secretary Jeremy Hunt said the government was seeking the funding to “support the sectors in which the UK is or could be a world leader”.
“Our £4.5 billion funding will leverage multiples of funding from the private sector and in turn grow our economy by creating more skilled, better-paid jobs in new industries that are built to last,” Hunt said in a statement .
-Elliot Smith
58 minutes ago
Hunt: Government to invest £500m in AI
Hunt promises an additional £500 million investment in artificial intelligence.
“When it comes to technology, we know that AI will be at the heart of any future growth. “I want to make sure our universities, scientists and startups can access the computing power they need,” he says.
“Building on the success of the supercomputing centers in Edinburgh and Bristol, I will invest £500 million over the next two years to fund additional innovation centers to help us become an AI powerhouse.”
An hour ago
The UK economy is expected to grow by 0.6% this year and 0.7% next year
The OBR forecasts the UK economy will grow by 0.6% this year and 0.7% next year, Hunt reveals.
GDP is then expected to grow by 1.4% in 2025, 1.9% in 2026 and 2% in 2027.
This represents a significant downward revision for 2024 and 2025, for which the OBR’s spring forecasts had forecast growth of 1.8% and 2.5% respectively.
An hour ago
Alcohol tax frozen, tobacco tax increased
Alcohol duty will be frozen until August 1, 2024, Hunt confirms, while duty on hand-rolled tobacco will be increased by a further 10%.
An hour ago
Britain needs a “more productive state, not a bigger state”: Hunt
Hunt says the UK needs a “more productive state, not a bigger state”, setting a new public sector productivity growth target of 0.5% a year.
This follows an existing plan to reduce the size of the public service to pre-pandemic levels, as part of measures to ensure public sector spending growth is “always lower than economic growth”, says Hunt.
An hour ago
The British government’s policy to reduce inflation is not enough: City of London Corporation
Chris Hayward, political chairman of the City of London Corporation, weighs in on the inflation risk of the UK government’s new fiscal policies, how to restore “broken trust” with the EU and why he sees Labor as a “pro-business party.”
An hour ago
The government will cover 2% of GDP defense spending, says Hunt
Hunt says the UK will meet its NATO commitment to spend 2% of GDP on defense, which he says is “critical at a time of global threats to the international order, particularly from Putin’s nasty war in Ukraine”. .
An hour ago
Hunt: Public sector borrowing is expected to fall from 4.5% this year to 1.1% in 2028/9
According to the OBR, borrowing is lower this year and next, averaging £0.7 billion a year across the forecast compared to the spring forecast, says Hunt.
Public debt falls from 4.5% of GDP in 2023/4 to 3% next year, 2.7% in 2025/6, 2.3% in 2026/7, 1.6% in 2027/ 8 and 1.1% in 2028/9.
“It also means we meet our second fiscal rule that public sector borrowing must be below 3% of GDP not just last year but in almost every year of the forecast,” says Hunt.
“Part of this improvement is due to higher tax revenues from a stronger economy, but we are also taking a disciplined approach to public spending.”
An hour ago
Hunt: Debt to GDP decline
According to the OBR, underlying debt is now forecast at 91.6% next year, 92.7% in 2024/5 and 93.2% in 2026/7, before rising in the final two years of the forecast 92.8% in 2028/9.
“In every year this is lower than the forecasts from spring. We are therefore meeting our fiscal rule for underlying debt to fall as a share of GDP in the final year of the forecast, with double the headroom compared to the OBR’s March forecast, and we will continue to have the second lowest government debt in the G7 said Hunt.
An hour ago
Hunt: State pension to rise by 8.5%
Hunt said the full new state pension will rise by 8.5% to £221.20 a week, worth up to £900 a year for pensioners.
Including today’s measures, this government’s “total commitment to reducing cost of living pressures” stands at £104 billion, he adds.
An hour ago
Hunt: Universal Credit and other benefits are set to rise by 6.7%
Hunt said universal credit and other benefits will rise by 6.7%, in line with September’s annual inflation figure and an average increase of £470 for 5.5 million households next year. Universal Credit is a means-tested social security payment to low-income or unemployed households.
Local housing benefit will be increased to the 30th percentile of local market rents, meaning 1.6 million households will receive an average of £800 in support next year.
An hour ago
OBR: Inflation is expected to fall to 2.8% next year
The independent Office for Budget Responsibility forecasts inflation will fall to 2.8% by the end of 2024 and fall back to the Bank of England’s 2% target in 2025, Hunt says.
An hour ago
Resolution Foundation: Restructuring instead of tax cuts
The Resolution Foundation, a think tank focused on improving living standards for low- and middle-income households, says the chancellor’s measures will amount to a “major tax restructuring”, with tax cuts on top of already planned tax rises.
Resolution Foundation economists Torsten Bell, Adam Corlett and Lalitha Try said the most likely personal tax cut would be the basic income tax, with 36 million people benefiting an average of £200 a year from a basic rate cut of £0.01. The foundation estimates this measure would cost the Treasury £7 billion a year.
Still, overall income taxes were found to be rising due to Hunt’s previously announced tax freezes, which are currently underway.
“We’re rearranging taxes instead of cutting them – most people see taxes going up. Why? Because major, already announced tax increases are underway,” the Resolution Foundation said.
“In particular, when we think about the impact of these changes next April, freezing the income tax and national insurance thresholds (rather than increasing them by 6.7 per cent in line with inflation) will raise £8 billion and cost all property tax workers.” 270 ( and pensioners £170).”
-Elliot Smith
3 hours ago
TUC boss: Sunak ‘increases his credibility’ by claiming falling inflation
Paul Nowak, general secretary of the Trades Union Congress, told CNBC on Wednesday that Prime Minister Rishi Sunak is “showing his credibility” by trying to claim credit for halving inflation.
The headline consumer price index rose 4.6% year-on-year in October, compared with more than 10% in January, as falling energy prices and Bank of England interest rate hikes slowed inflation.
In January, the prime minister cited halving inflation as one of his top priorities and quickly declared victory following the release of the consumer price index last week. However, the country’s economic institutions had unanimously forecast that inflation would fall below 5% by the end of the year, regardless of government policy.
“A year ago the Prime Minister told us that inflation wasn’t the government’s fault – it was global energy prices – and now he reckons he’s brought inflation down so you can’t have your cake and eat it.” Nowak told CNBC’s Silvia Amaro.
“Of course, any easing of inflationary pressures is good, but these price increases are entrenched, and at a time when the wages of ordinary working people have not increased, the price of a supermarket store has not decreased, the price of the need, the car Filling the tank hasn’t gone down, rent and mortgages certainly haven’t gone down, and so I fear the Prime Minister is overstating his credibility a bit by claiming to have brought down inflation and lowered the cost of living during the crisis. “
–Elliot Smith
4 hours ago
UK Liberal Democrat Leader: To stimulate the economy, the health crisis must be tackled
Ed Davey, leader of the Liberal Democrats, says the government must address long-standing problems with the National Health Service to realize its ambitions for economic growth.
A survey conducted by the party found that one in three working adults in the UK miss work while waiting for an NHS appointment or treatment, while one in five are unable to go to work while waiting Waiting to see your family doctor.
Davey told CNBC’s Silvia Amaro on Wednesday that a massive shortage of primary care physicians and a failure to strengthen the care system are causing hospitals to become overwhelmed and forcing people to stay away from work longer than necessary, “undermining the economy.” .
“If we want our economy to grow we really need to tackle these sorts of problems and the Conservatives promised to do that at the last election and they failed absolutely miserably – they wasted a lot of money on politics, for example PPE contracts during the pandemic that have wasted billions of pounds – so we need better spending on health, but we need to address people’s problems,” he said.
“The Conservatives have really misunderstood the problems in our healthcare system and their impact on the economy, and that has really worried me [Prime Minister] Earlier this week, he actually excluded health from his top priorities. He is completely out of touch and doesn’t understand what companies are saying and what people are suffering about.”
-Elliot Smith
5 hours ago
Head of London’s financial center: Labor is now a “business-friendly party”
LIVERPOOL, UK – October 11, 2023: Keir Starmer, leader of Britain’s main opposition Labor Party, applauds a speaker on the final day of the Labor Party’s annual conference in Liverpool, northwest England, on October 11, 2023.
Paul Ellis | Afp | Getty Images
Chris Hayward, policy chairman of the City of London Corporation, which represents the interests of London’s financial district, told CNBC on Wednesday that a Labor government would not “frighten” businesses.
Polls suggest the UK’s main opposition Labor Party could be on track to take power with a clear majority at the next general election, which must be held before the end of January 2025.
“We are cross-party at the City Corporation – we work with politicians from all sectors and with the government we are given – but I think Labor has changed dramatically since the last general election,” he said.
Labor lost the 2019 election in a landslide under its far-left former leader Jeremy Corbyn, but current leader Keir Starmer has sought to rebuild the party as a centrist, moderate alternative to a ruling Conservative Party that has been widely seen as leaning rightward in recent years.
“They are now a pro-business party and that is fundamental for us in the city. “We need a government that understands that encouraging business growth actually generates tax revenue, which in turn will boost spending on public services,” Hayward said.
“I think this would be a government that wouldn’t scare businesses in the city.”
-Elliot Smith