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☆ UK growth demands better-directed fiscal fireworks
▼ + stars: | 2023-03-13 | by ( Francesco Guerrera | ) www.reuters.com time to read: +7 min

As a former health minister, Hunt is familiar with the Hippocratic Oath’s principle of “first, do no harm.” That credo didn’t resonate with former finance minister Kwasi Kwarteng. The Institute for Fiscal Studies estimates that borrowing in the current financial year is running 31 billion pounds below the November forecast by the Office for Budget Responsibility (OBR), the UK’s independent fiscal watchdog. A further 6 billion pounds will freeze fuel duties, avoiding a 23% rise from April. In November, the OBR forecast that Downing Street would meet that goal with just 9.2 billion pounds to spare. That would still cost 11 billion pounds a year but would boost investment by 5% in the long run.

☆ UK to extend energy bill help for 3 months - source
▼ + stars: | 2023-03-03 | by ( ) www.reuters.com time to read: +2 min

Government subsidies are scheduled to be scaled back from next month, meaning average annual bills would rise to 3,000 pounds ($3,600) from 2,500 pounds now. Hunt is due to deliver a budget statement on March 15, when any extension to the level of support could be announced. "The Chancellor has been clear that we will keep all our support under review... we are already doing all we can to support people struggling with high energy bills," a spokesperson for prime minister Rishi Sunak said on Friday. Hunt can count on a roughly 30-billion-pound windfall as he prepares his budget, according to the Institute for Fiscal Studies (IFS). Keeping the current level of energy subsidies would cost 2.7 billion pounds until the end of June, based on current energy price forecasts, the IFS estimated this week.

☆ In a health system in crisis, Britain's heart care suffers
▼ + stars: | 2023-02-02 | by ( Alistair Smout | ) www.reuters.com time to read: +11 min

Britain's cardiology departments are a microcosm of the problems that have spread through the system. In November, around 8,000 people like Cogan had been waiting more than a year for heart treatment, up from a couple of dozen pre-pandemic. Reuters GraphicsTeams were still trying to restore cardiac services to pre-pandemic levels, NHS England said. Pandemic disruptions to diagnosis and treatment, in addition to delays in emergency care, had an outsized impact on cardiological care, she said. On one visit to his local Colchester hospital, staff could not find a working ECG machine to read his heart's electrical activity when he felt a twinge.

☆ El Salvador's Congress approves pension system reforms
▼ + stars: | 2022-12-21 | by ( ) www.reuters.com time to read: +1 min

SAN SALVADOR, Dec 20 (Reuters) - El Salvador's Congress on Tuesday approved reforms to increase pensions and create a state entity to supervise the retirement income system, despite criticism from experts who argued the measures were insufficient. El Salvador's population is 6.7 million. Congress also endorsed the creation of the Salvadoran Pension Institute, a state entity that will oversee the pension system and private funds. The changes, approved by the congress with a pro-government majority, will take effect in January 2023 for all workers affiliated with the pension system. The pension system in El Salvador has operated privately since 1998.

Hunt said he deferred most of the curbs on spending because cutting now would make the current recession worse. "There is nothing Conservative about spending money that you haven't got," he said. The front page of the Financial Times declared "Hunt paves way for years of pain". "All of that borrowing we've done over the last many years is coming home to roost," Johnson told BBC radio. "We're going to be stuck at 100 billion pounds a year being spent on debt interest in the medium term.

Hunt, reminding lawmakers of his own past as an entrepreneur in marketing and publishing, made accelerating economic growth a priority in his budget speech to parliament on Thursday. Britain is badly in need of a growth fillip. It also cut its growth forecast for 2024 to 1.3% before a better couple of years thereafter with growth at 2.6% and 2.7%. It said Hunt's plan to cut public investment from 2024 would probably weigh on productivity growth - key to an economy's long-term prospects - beyond its five-year forecasts. "I have tried to avoid anything that damages long-term growth," Hunt told the BBC.

He froze until 2028 a threshold at which employers start to pay social security contributions, which will cost companies more. Public spending would grow more slowly than the economy but rise in overall terms, he said. It now expects gross domestic product to contract by 1.4% next year compared with its projection in March for growth of 1.8%. The OBR forecasts GDP growth of 1.3% in 2024 and 2.6% in 2025, compared with previous forecasts of 2.1% and 1.8% respectively. Thursday's forecasts by the OBR showed that target would be met in the 2027/28 financial year.

☆ UK to turn page on 'Trussonomics' with budget plan
▼ + stars: | 2022-11-16 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

He and Sunak say they must now go further. Critics say a return to austerity is unnecessary, will hurt millions of households and will deepen the expected recession. How soon spending cuts and tax rises come will be key for the short-term economic outlook. Hunt risks reviving tensions within the ruling Conservative Party, many of whose members were already upset at the scale of tax increases he announced when finance minister. The budget statement will be accompanied by forecasts from the Office for Budget Responsibility which are likely to echo the BoE's message that Britain is heading for a long recession.

☆ UK budget: Britain is bringing back austerity. Here's why
▼ + stars: | 2022-11-16 | by ( Julia Horowitz | ) edition.cnn.com time to read: +5 min

The country is staring down the barrel of a grueling recession, and investors remain on edge as interest rates rise. That requires Hunt, who has acknowledged that Britain faces “extremely difficult” decisions, to pull off a delicate balancing act. When the government adopted an austerity program in 2010 on the heels of the Great Recession, it shaved 1% off the country’s GDP, according to the UK budget watchdog. Just four years ago, former Prime Minister Theresa May pledged to bring nearly a decade of austerity to a close. “If we hadn’t had Brexit, we probably wouldn’t be talking about an austerity budget this week.

☆ UK still faces 40 billion pound budget hole - Resolution Foundation
▼ + stars: | 2022-11-01 | by ( David Milliken | ) www.reuters.com time to read: +3 min

LONDON, Nov 1 (Reuters) - Britain still faces a 40 billion pound ($46 billion) budget hole that will need to be filled by tax rises as well as spending cuts, despite recent U-turns on measures proposed during Liz Truss's short-lived premiership, a think tank said on Tuesday. Previous finance ministers had also left a minimum of 12 billion pounds of leeway to achieve their budget goals, the think tank added. The government is reviewing a previous promise to raise pensions and welfare benefits in line with inflation, which will cost around 9 billion pounds. Around 17 billion pounds of Truss's tax cuts remain in place, largely the reversal of a 15 billion pound rise in payroll taxes introduced by Sunak when he was finance minister. "This reality means that the Autumn Statement is likely to involve tax rises, not just spending cuts."

Sunak, Britain’s third prime minister in seven weeks, took office on Tuesday with a pledge to fix the “mistakes” Truss made. Truss’ “mini” budget of September 23 crashed the pound and caused a rout in the bond market, sending UK borrowing costs — including mortgage rates — soaring. One area Sunak may be tempted to tap is the social welfare budget. That could save £7 billion ($8 billion) in 2023-24, according to the IFS, but would prove controversial. According to Hunt, the budget, when it comes, will set out how the government plans to reduce debt in the medium term.

☆ UK economy: Rishi Sunak only has unpleasant choices as prime minister
▼ + stars: | 2022-10-25 | by ( Julia Horowitz | ) edition.cnn.com time to read: +7 min

There’s little appetite for government spending cuts after years of austerity in the wake of the 2008 global financial crisis. Plus, failing to help households deal with surging living costs could prove politically devastating and further weigh on the economy. Finance minister Jeremy Hunt got the ball rolling last week when he reversed £32 billion ($37 billion) in tax cuts that formed the bedrock of Truss’ plan to boost growth. Risk of a ‘doom loop’Investors and economists expect that the government will announce a mixture of tax increases and spending cuts shortly. No one wants to repeat the errors of the brief Truss era, when her gamble that unfunded tax cuts would jumpstart growth backfired spectacularly.

☆ Pound holds ground as Rishi Sunak leads race to become UK prime minister
▼ + stars: | 2022-10-24 | by ( Julia Horowitz | ) edition.cnn.com time to read: +6 min

London CNN Business —Britain’s third prime minister in seven weeks will face the huge challenge of projecting stability after a period of historic political and financial market chaos. Rishi Sunak emerged over the weekend as the clear front-runner in the dramatic race to replace Liz Truss, who’s set to be the shortest-serving prime minister in UK history. “A key focus for the next Prime Minister and their chosen Chancellor needs to be fiscal responsibility,” Carl Emmerson, deputy director of the Institute for Fiscal Studies, said in a statement. An economy in recessionThe Bank of England forecast last month that the UK economy was already in recession. 10 Downing Street, investors and economists expect the revamped economic plan outlined by current finance minister Jeremy Hunt to remain intact.

☆ VIEW Rishi Sunak to become Britain's new PM, UK markets rally
▼ + stars: | 2022-10-24 | by ( ) www.reuters.com time to read: +8 min

LONDON, Oct 24 (Reuters) - Former British finance minister Rishi Sunak will be Britain's next prime minister after his rivals quit the race, which analysts said had relieved some of the nervousness around the outlook for the UK economy, boosting domestic markets. The new Prime Minister needs to confirm their leadership team as soon as possible and provide clarity on their strategy for stabilising the economy and their policy priorities. ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY WEALTH, NEW YORK:"Coming to a very rapid decision on who the prime minister is going be certainly breathes a sigh of relief into the markets. RUTH GREGORY, SENIOR UK ECONOMIST, CAPITAL ECONOMICS, LONDON:"The fall in gilt yields on the news today that Rishi Sunak will become the UK’s next Prime Minister has reduced the chances of a significant fiscal consolidation. With the pound, just because we have a new Prime Minister in place, all of the issues don't just go away and we still have remarkable strength being enjoyed by the dollar."

☆ Lurking behind Britain’s political mess is an economy on the edge
▼ + stars: | 2022-10-21 | by ( Julia Horowitz | ) edition.cnn.com time to read: +5 min

London CNN Business —The spectacle surrounding Liz Truss, who on Thursday secured her fate as the shortest-serving prime minister in UK history, has quickly given way to a frenetic race to determine who will replace her. 10 Downing Street next will inherit an economic mess with no easy fixes. “A key focus for the next Prime Minister and their chosen Chancellor needs to be fiscal responsibility,” Carl Emmerson, deputy director of the Institute for Fiscal Studies, said in a statement on Friday. An economy in recessionEconomists agree that if the United Kingdom isn’t already in recession, one is likely to arrive soon. The cost of uncertaintyTruss has said the Conservative Party will install a new prime minister within a week.

Separate official data showed Britain's borrowing grew by more than expected, underscoring the challenge facing new finance minister Jeremy Hunt and whoever succeeds Liz Truss as prime minister next week. Sales volumes fell by 1.4% from August - almost three times the 0.5% fall in a Reuters poll of economists. Separate data published by the ONS showed Britain borrowed 20.01 billion pounds ($22.37 billion) in September, more than the 17.1 billion pounds expected in the Reuters poll of economists. So far in the 2022/23 financial year, which began in April, borrowing stands at 72.5 billion pounds, down about 26% from the same period last year but almost 36 billion pounds more than in the April-September period of 2019, before the pandemic. He said borrowing this year could be almost 200 billion pounds, double the Office for Budget Responsibility's forecast.

☆ Factbox: Windfall taxes, spending cuts on table as Hunt tries to fix UK budget
▼ + stars: | 2022-10-19 | by ( ) www.reuters.com time to read: +4 min

LONDON, Oct 19 (Reuters) - Britain's latest finance minister Jeremy Hunt needs to raise an estimated 40 billion pounds ($45 billion) to repair public finances. British banks hold around 947 billion pounds of reserves at the BoE, largely as a result of quantitative easing that the central bank is yet to reverse. Cost estimates for completing HS2 soared to 100 billion pounds before the Leeds link was removed. The change represented a saving of 3.5 billion pounds in its first year in 2021. Asked on Oct. 19 about the foreign aid budget, Truss said more details would be set out in due course.

☆ Britain's failed tax experiment will leave economic scars and credibility issues, analysts say
▼ + stars: | 2022-10-18 | by ( Jenni Reid | ) www.cnbc.com time to read: +6 min

U.K. Prime Minister Liz Truss faces increasing pressure to resign. The yield on these bonds, which reflect the cost of borrowing for the government and influence interest rates on many products such as mortgages, eased lower after the statement Monday. The yield on 10-year bonds, the closely-watched benchmark seen as the indicator of long-term interest rates, remains significantly elevated at 4.045%, up from 3.49% before the budget. Bonds tend to become less attractive when interest rates rise, decreasing their price and sending up the yield. watch nowWider effectsWith the ideologically-driven policy platform Truss ran on now dead in the water, there is uncertainty in many other areas.

☆ Analysis: Despite tax U-turn, UK's Hunt still faces tough budget choices
▼ + stars: | 2022-10-17 | by ( William Schomberg | ) www.reuters.com time to read: +5 min

LONDON, Oct 17 (Reuters) - The screeching about-turn on tax cuts by finance minister Jeremy Hunt on Monday will not spare Britain from painful spending cuts and new tax hikes to fix the country's public finances. Paul Johnson, director of the Institute for Fiscal Studies, a think-tank, said Monday's tax cuts U-turn was relatively simple compared with the balance Hunt must strike between more tax increases and spending cuts over the next two weeks. Hunt said the tax U-turns announced so far would raise about 32 billion pounds a year in extra revenues. That was 40 billion pounds above the level needed to cut debt as a share of the economy which currently is about 97%. "With tens of billions of spending cuts still to come, and a new energy support package needing to be devised, many of Jeremy Hunt's tough choices still lie ahead," Torsten Bell, chief executive of the Resolution Foundation, said.

☆ New UK finance minister rips up Truss’ economic plan in stunning policy reversal
▼ + stars: | 2022-10-17 | by ( Julia Horowitz | ) edition.cnn.com time to read: +5 min

The stunning reversal would raise £32 billion ($36 billion), he said. “No government can control markets, but every government can give certainty about the sustainability of public finances,” Hunt said. “The United Kingdom will always pay its way.”The moves represent a gutting of Prime Minister Liz Truss’ flagship policies and leave her in a perilous political position. On Friday, Truss fired Kwasi Kwarteng, her previous finance minister, and reinstated a big tax hike on corporations. “A central responsibility for any government is to do what’s necessary for economic stability,” Hunt said.

☆ Long-term damage for the UK due to failed tax cuts, leading thinktank says
▼ + stars: | 2022-10-17 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailLong-term damage for the UK due to failed tax cuts, leading thinktank saysPaul Johnson, director of the Institute for Fiscal Studies, speaks to CNBC's Arabile Gumede after the latest U.K. economic policy annoucements.

Yet he ultimately carried the can for an unwelcome fiscal plan that roiled bond markets, spooked investors and sparked a major backlash from governing Conservative Party lawmakers. Cutting his visit short, he flew back to London on Friday to "continue work at pace" for a medium-term fiscal plan due at the end of the month. Nor were further moves to re-embrace Treasury orthodoxy through the choice of Scholar's replacement and a decision to bring forward a medium-term fiscal plan and forecasts. In a reply to Kwarteng, Truss said she was deeply sorry to lose a long-standing friend from government. But a finance minister being ditched so quickly for his policies - especially when they were so closely aligned with the prime minister - is unprecedented in modern times.

☆ Strikes, possible blackouts and a plunging currency: Brits are being hit by a wave of bad news
▼ + stars: | 2022-10-13 | by ( Elliot Smith | ) www.cnbc.com time to read: +7 min

'The recession has begun' The U.K. is the only G-7 economy not to have re-attained its pre-pandemic GDP level by the second quarter of 2022, Citibank Chief U.K. The ONS said GDP was only just returning to its pre-pandemic level, highlighting the challenge facing Prime Minister Liz Truss' "growth, growth, growth" agenda. "We now believe the recession in the U.K. has begun in the third quarter of 2022 and will likely last for three quarters. "The cost of living crisis is having a detrimental effect on individuals, not only financially, but physically and mentally too." Members of the CWU (Communication Workers Union) also continue to strike, including 115,000 postal employees of former state monopoly Royal Mail.

And futures now assume the inflation fight will fall solely on the BoE and expect it to triple policy rates to as high as 5.8-6% next year. On Tuesday, the independent Institute for Fiscal Studies said Kwarteng needed 62 billion pounds ($68.22 billion) of spending cuts to keep public debt sustainable over time, with borrowing this year on course for 194 billion pounds and still above 100 billion by 2026/27 - over 70 billion higher than OBR forecasts in March. QE involves the purchase of mostly gilts from commercial banks in return for interest-bearing reserves at the central bank. And, unlike other major central banks, the BoE policy rate itself is the rate paid on those bank reserves. NIESR last year urged a solution to the problem whereby Treasury and central bank reduced the maturity mismatch by swapping longer-dated gilts back to Treasury to cut duration of its portfolios.

☆ UK PM Truss says she will not cut public spending to fund tax cuts
▼ + stars: | 2022-10-12 | by ( ) www.cnbc.com time to read: +1 min

British Prime Minister Liz Truss said on Wednesday she would not cut public spending. British Prime Minister Liz Truss said on Wednesday she would not cut public spending after her government came under pressure to fund vast tax cuts that have roiled markets and sparked alarm over government finances. The Institute of Fiscal Studies (IFS) said this week that the government needed to find 62 billion pounds ($68.5 billion) of spending cuts or tax rises to stop the public debt growing. Truss was asked at her weekly parliamentary questions if she was still committed to a pledge she made during the Conservative Party leadership contest that she was not planning public spending cuts. "What we will make sure is that over the medium term the debt is falling, but we will do that not by cutting public spending but by making sure we spend public money well," she said.

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