Business
Reeves defends Budget tax and spending choices as ‘fair and necessary’
Rachel Reeves defended her recent Budget as “fair and necessary”, saying more of the economic “burden” of her decisions should fall on the wealthy.
In an interview with The Guardian, she said she had made choices to increase taxes and improve public infrastructure, and had “chosen to protect public spending”.
“I wasn’t willing to cut public services, because people voted for change at the election,” she said.
Ahead of the Budget, warnings suggested that Rachel Reeves could face a fiscal gap of up to £20 billion in meeting her self-imposed rule of not borrowing for day-to-day spending.
The debate intensified after the Office for Budget Responsibility (OBR) revealed on Friday it had informed the Chancellor as early as September 17 that the gap was likely smaller than initially expected.
Ms Reeves said: “People often talk about what chancellors do in their budget, but sometimes what’s more important are the things you don’t do. One of the things I didn’t do was cut the investment that I put into capital spending, new schools and hospitals, new energy infrastructure, rail infrastructure.
“It would have been the easiest thing to do to say the OBR’s done this downgrade, you need to cut our cloth accordingly.”
Ms Reeves also denied claims that working-age people were being asked to carry the bulk of the economic burden.
“It’s quite clear that the economic burden in the budget was not about age. It was about wealth,” she said.
“People who bear more of the burden are those with big incomes and assets… so I don’t accept that.”
Conservative leader Kemi Badenoch said the revelation from the OBR showed Ms Reeves had “lied to the public” and should be sacked.
Downing Street was asked on Friday whether Ms Reeves’ warnings of coming difficult decisions despite the OBR’s improved forecasting meant she had misled the public and the markets in the run-up to the Budget.
“I don’t accept that,” the Prime Minister’s official spokesman said.
He added: “As she set out in the speech that she gave here (Downing Street), she talked about the challenges the country was facing and she set out her decisions incredibly clearly at the Budget.”
On November 4, Ms Reeves set the scene for the Budget with a Downing Street speech that suggested tax rises were needed to secure the UK’s economic future and that poor productivity growth would have “consequences for the public finances” in terms of lower tax revenue.
But a letter from the OBR to the Treasury Select Committee of MPs published on Friday appeared to suggest an improved tax take from growing wages and inflation meant that gap had diminished before she even made the speech.
Dame Meg Hillier, Labour chairwoman of the committee, asked OBR chief Richard Hughes to set out a timeline for its pre-Budget forecast process, which informed the Chancellor’s decision-making.
The OBR’s first fiscal forecast ahead of the Budget, received by Treasury officials on September 17, suggested the black hole was £2.5 billion.
The watchdog’s final forecast on October 31 then suggested that it had been eliminated altogether and that there was now a £4.2 billion net positive above the Chancellor’s day-to-day spending plans.
The prospect of a hike in income tax rates – which was trailed for several weeks – was dropped on November 13, with the Treasury citing improved forecasting.
However, the OBR suggested it had provided ministers with no new forecasting in November.
“No changes were made to our pre-measures forecast after October 31,” the watchdog’s letter to the Treasury Select Committee said.
At the Budget on Wednesday, Ms Reeves hiked taxes by £26 billion, including by freezing thresholds on income tax.
The tax hikes come in response to downgraded economic forecasts but also increased welfare spending because of the abolition of the two-child benefit cap and the Labour revolt over attempts to curb the benefits bill.
Ms Reeves also used some of the tax take to build herself a bigger buffer against her borrowing rules.
The Chancellor also told the newspaper the leak of the OBR’s Economic and Fiscal Outlook (EFO), published more than half an hour before the Chancellor delivered her Commons statement, was “a bit of a scary moment”.
“My worry was that the budget is a story as well as a set of numbers … but in the end it was, I think, OK,” she said.
OBR chairman Richard Hughes has launched an investigation involving a cybersecurity expert, and said he would be prepared to resign if the Chancellor and MPs on the Treasury Committee lost confidence in him.
Tesco Pet Insurance, who provided the cover, says “the cost of claims is one of a number of factors that can affect the price of a policy at renewal” and also noted Tilly’s age had been reflected in the quote. It says the couple had a more comprehensive policy, which typically costs more than basic levels of cover, and that alternative options were presented to Fawcett and Neild.
The UK must not “cut ourselves off” from trade opportunities in China despite security and business risks, the head of the Confederation for British Industry has warned.
CBI chief Rain Newton-Smith highlighted that British businesses see increased trade with Chinese firms as an opportunity to drive growth.
Her remarks came as business leaders were questioned by MPs on Parliament’s Business and Trade Select Committee regarding the UK’s economic relationship with China.
Last December, Prime Minister Sir Keir Starmer admitted China poses security threats to the UK but urged for greater business ties.
Ms Newton-Smith, chief executive of one of the UK’s largest business groups, was positive about the Government’s engagement with China.
“You can’t have a growth strategy without a strategy for China,” she said.
“China has the biggest contribution to global growth, is the third largest trading partner, and the world’s largest consumer market.
“The UK is second largest exporter of trade and services.
“We are mindful as all businesses are of security risks but it is really important that we have a strategy towards China.
“This Government has increased the economic engagement with China and including business within this does help us as a country.”
She added: “If we think about the future economy, there is a huge market in China and I think we mustn’t cut ourselves off from some of the opportunities there, even if in some areas there are difficult conversations and negotiations that need to be had.”
Peter Burnett, chief executive of the China-Britain Business Council, told the committee: “There are risks associated with technology advancement, AI, industrial development that they need to assess.
“Increasingly you will find them saying that they need to engage more in China to understand those risks and to develop some of the technologies along some of those risks themselves.”
Business
Trump says he’d be disappointed if Fed pick doesn’t cut rates; Warsh vows to be ‘independent actor’ – The Times of India
US President Donald Trump on Tuesday said he would be disappointed if his nominee for Federal Reserve chair, Kevin Warsh, does not cut interest rates right away after taking office if confirmed by the Senate. Trump, during an interview with CNBC’s “Squawk Box,” also said “we have to find out” about the construction costs of the new Federal Reserve building.Warsh, a former Federal Reserve official and financier, is currently facing Senate confirmation hearings where he has stressed his independence from political pressure.“The president never once asked me to commit to any particular interest rate decision, and nor would I agree to it if he had,” Kevin Warsh said under questioning by the Senate Banking Committee, as quoted by LA Times. “I will be an independent actor if confirmed as chair of the Federal Reserve.”Warsh told lawmakers that fighting inflation would be one of his main priorities if confirmed.“Congress tasked the Fed with the mission to ensure price stability, without excuse or equivocation, argument or anguish,” Warsh said. “Inflation is a choice, and the Fed must take responsibility for it.”The comments come as investors closely watch his confirmation hearing, with inflation remaining at 3.3% annually and global tensions, including the war in Iran pushing up gas prices, adding pressure on the economy. Higher inflation typically leads the Federal Reserve to keep interest rates steady or raise them rather than cut them, as rate changes affect mortgages, auto loans, and business borrowing.Democrats on the Senate Banking Committee accused Warsh of shifting his stance on interest rates over time, supporting higher rates under Democratic presidents and lower rates during Trump’s presidency.Warsh, if confirmed, would take over at a time when inflation pressures make it difficult for the Federal Reserve to cut rates, even as Trump continues to push for lower borrowing costs. Trump has repeatedly urged rate cuts and has long clashed with current Fed chair Jerome Powell over monetary policy. Powell has also been the subject of a Department of Justice criminal probe after refusing Trump’s requests for faster rate cuts. Trump told CNBC that he does not plan to pressure the Justice Department to end that probe.
Trump repeats call for Congress to rein in college sports
I was left with an £8,000 vet bill when my insurer cancelled my pet policy
Reese Witherspoon breaks silence after AI support controversy
-
Fashion6 days agoFrance’s LVMH Q1 revenue falls 6%, shows resilience amid Iran war
-
Sports1 week agoThe case for Man United’s Fernandes as Premier League’s best
-
Entertainment1 week agoPalace left in shock as Prince William cancels grand ceremony
-
Business1 week agoUK could adopt EU single market rules under new legislation
-
Entertainment6 days agoIs Claude down? Here’s why users are seeing errors
-
Fashion1 week agoEnergy emerges as biggest cost driver in textile margins
-
Business1 week agoDelta Air Lines unveils first new Delta One suite in premium cabin arms race
-
Fashion1 week agoAsia claims largest share of markets on Kearney FDI Confidence Index