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☆ U.K. Unveils Largest Tax Increases and Spending Cuts in a Decade
▼ + stars: | 2022-11-17 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—The U.K. government announced sweeping tax increases and spending cuts on Thursday, becoming the first major Western economy to start sharply limiting its spending growth after years of ramped-up fiscal stimulus during the pandemic and recent energy subsidies. The measures mark a second major shift in U.K. economic policy in just a matter of months, after previous British Prime Minister Liz Truss spooked financial markets by pledging to jump-start growth with tax cuts funded by more borrowing. Her successor Rishi Sunak is now taking economic policy in the other direction, trying to convince investors the U.K. is serious about eventually taming rising government debt. His challenge will be to regain market confidence without causing major damage to an economy widely expected to enter a recession.

☆ U.K. Unveils Tax Increases and Spending Cuts in a Decade to Shore Up Finances
▼ + stars: | 2022-11-17 | by ( Paul Hannon | Max Colchester | ) www.wsj.com time to read: 1 min

The U.K. government announced the largest tax increases and spending cuts in a decade on Thursday, becoming the first major Western economy to start sharply limiting its spending growth after years of ramped-up fiscal stimulus during the pandemic and recent energy subsidies. The measures mark a second major shift in U.K. economic policy in just a matter of months, after previous British Prime Minister Liz Truss spooked financial markets by pledging to jump start growth with tax cuts funded by more borrowing. Her successor Rishi Sunak is now taking economic policy in the other direction, trying to convince investors the U.K. is serious about eventually taming rising government debt. His challenge will be to regain market confidence without causing major damage to an economy widely expected to enter a recession.

☆ U.K. Unveils Tax Increases and Spending Cuts to Corral Debt
▼ + stars: | 2022-11-17 | by ( Paul Hannon | Max Colchester | ) www.wsj.com time to read: 1 min

The U.K. government announced the largest tax increases and spending cuts in a decade on Thursday, becoming the first major western economy to start sharply limiting its spending growth after years of ramped-up fiscal stimulus during the pandemic and recent energy subsidies. The measures mark a second major shift in U.K. economic policy in just a matter of months, after previous British prime minister Liz Truss spooked financial markets by pledging to jump start growth with tax cuts funded by more borrowing. Her successor Rishi Sunak is now taking economic policy in the other direction, trying to convince investors the U.K. is serious about eventually taming rising government debt. His challenge will be to regain market confidence without causing major damage to an economy widely expected to enter a recession.

☆ U.K. Inflation Hits 41-Year High as Recession Looms
▼ + stars: | 2022-11-16 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

Consumer prices have been rising sharply in the U.K.LONDON—The U.K.’s annual rate of inflation rose to a fresh 41-year high in October on surging energy prices, but a government price cap on energy and a looming recession means any further increases to inflation in coming months are likely to be more modest. Consumer prices were 11.1% higher than a year earlier, a faster rate of inflation than the 10.1% recorded in September and the highest since October 1981, the Office for National Statistics said Wednesday.

☆ U.K. Economy Shrank in Third Quarter, Sliding Toward Recession
▼ + stars: | 2022-11-11 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

The U.K. economy contracted in the three months through September, as high energy prices and rising interest rates mark the beginning of what policy makers expect will be a long-lasting recession that is likely to spread across Europe in coming months. The country’s gross domestic product was 0.7% lower on an annualized basis in the third quarter compared with the three months through June, the U.K.’s Office for National Statistics said Friday. That was the first decline in output since the first three months of 2021, when large parts of the economy were in lockdown to contain a surge in Covid-19 infections.

☆ Bank of England Raises Key Interest Rate by 0.75 Point
▼ + stars: | 2022-11-03 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

The Bank of England raised its key interest rate by 0.75 percentage point on Thursday, its largest rise since 1989, as it fights a surge in inflation from rising energy prices even as the U.K. economy slides into an expected recession. The central bank raised its benchmark lending rate to 3% from 2.25%, taking it to the highest level since November 2008. Higher borrowing costs will hurt an already weak economy as consumers brace for a difficult winter of falling real incomes and rising prices.

☆ Eurozone Inflation Rate Rises to 10.7% as Recession Looms
▼ + stars: | 2022-10-31 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

Consumer prices have risen sharply since Russia’s decision to throttle natural gas supplies to Europe. The annual rate of consumer-price inflation in the eurozone increased to double digits in October, reaching a fresh high and highlighting the challenges facing the European Central Bank after it signaled a coming slowdown in the pace of its rate increases. The broad measure of consumer prices has risen sharply since Russia’s invasion of Ukraine and Moscow’s decision to throttle natural gas supplies to Europe to undermine Western support for Kyiv. By mid-September, Russia had cut its supplies to 80% of their year-earlier total.

☆ Russian Economy Expected to Shrink Under Weight of Sanctions
▼ + stars: | 2022-10-28 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

The Bank of Russia left its key interest rate unchanged for the first meeting since March. Russia’s central bank expects the Russian economy to shrink by up to 3.5% this year, with economists forecasting a gloomy future as the country’s huge energy sector struggles to recover from the loss of its lucrative European markets and the windfall of higher oil-and-gas prices starts to fade. The Russian economy is suffering from the impact of sanctions and the withdrawal of Western businesses in the wake of the invasion of Ukraine in February. While Russia has benefited from soaring energy prices this year, economists expect revenue to fall sharply as the global economy slows and the West finds substitutes for Russian energy.

☆ U.K. Prime Minister Rishi Sunak Calms Markets—for Now
▼ + stars: | 2022-10-26 | by ( Paul Hannon | Chelsey Dulaney | ) www.wsj.com time to read: 1 min

LONDON—New U.K. Prime Minister Rishi Sunak has managed to help calm financial markets by convincing investors that he won’t jeopardize the country’s financial stability. But he now faces the more daunting task of convincing them, and ordinary Britons, that he can steer the economy through stagflation and a looming winter of discontent. Mr. Sunak faced Parliament on Wednesday for the first time as prime minister after delaying the announcement of his government’s spending plans to Nov. 17 from Oct. 31 to give him more time to run through the numbers with Treasury chief Jeremy Hunt .

☆ Rishi Sunak Wins Vote to Become U.K.’s Next Prime Minister After Liz Truss Resigns
▼ + stars: | 2022-10-24 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—Former Chancellor Rishi Sunak , who warned that Liz Truss ’ economic plans for Britain were a “fairy tale,” won the contest to succeed her as prime minister on Monday, taking over the world’s sixth-biggest economy at a time of deep financial and political turbulence. Mr. Sunak will formally enter Downing Street after his only remaining rival for the job, former defense minister Penny Mordaunt , said on Twitter she would drop out of the contest. “Rishi has my full support,” she wrote. Mr. Sunak is expected to be formally appointed prime minister by King Charles as soon as Monday afternoon.

☆ Rishi Sunak Wins Vote to Become U.K.’s Next Prime Minister
▼ + stars: | 2022-10-24 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—U.K. Prime Minister Liz Truss ’s resignation is a stark reminder of how high inflation and rising interest rates have changed the game for politicians and narrowed their room to maneuver. For the past decade, low inflation and ultralow interest rates gave governments around the world room to spend more and pile on debt without alarming investors. Those days are over.

☆ U.K. Inflation Reaches 10.1% as Government U-Turns Cloud Outlook
▼ + stars: | 2022-10-19 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

The U.K.’s annual rate of inflation returned to double digits in September, cementing expectations of another rise in the Bank of England’s key interest rate early next month even as the medium-term outlook for prices has been clouded by changes in government policy. The sharp rise in world energy prices since Russia’s invasion of Ukraine has pushed the U.K.’s inflation rate to four-decade highs, and prompted the BOE to raise its key interest rate more aggressively than it had planned before the war.

☆ Bank of England Pushes On With Plan to Start Selling Bonds
▼ + stars: | 2022-10-18 | by ( Paul Hannon | Anna Hirtenstein | ) www.wsj.com time to read: 1 min

The Bank of England is preparing to pivot rapidly from buyer to seller of U.K. government bonds, in a bet that recent market turmoil sparked by the government’s fiscal plans has waned sufficiently for the central bank to start unwinding some of the extraordinary support it provided at the height of the pandemic. Pushing ahead would mark the second time this month that the British central bank has resisted market pressure. On Friday it ended a short bout of emergency bond purchases despite calls from pension funds and others for an extension of that program, which was aimed at soothing markets after the government’s plans to cut taxes sparked a mounting selloff in gilts.

☆ U.K. Treasury Chief Jeremy Hunt Reverses Nearly All Tax Plans to Reassure Markets
▼ + stars: | 2022-10-17 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—New U.K. Treasury Chief Jeremy Hunt said Monday he was reversing nearly all the government’s proposed tax cuts and would pare back an energy price cap as he moves to reassure markets about the stability of the nation’s finances. Mr. Hunt, who took over on Friday after Prime Minister Liz Truss fired his predecessor Kwasi Kwarteng, has acted quickly in his first days on the job to try to repair the damage to Britain’s standing among investors by taking steps to shore up public finances after weeks of turmoil on U.K. financial markets.

☆ U.K. Reverses Nearly All Tax Plans to Reassure Markets
▼ + stars: | 2022-10-17 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—New U.K. Chancellor Jeremy Hunt said Monday he is reversing nearly all the government’s proposed tax cuts and will pare back an energy price cap as he moves to undo Prime Minister Liz Truss ’s debt-fuelled growth plan in an effort to reassure markets about the stability of the nation’s finances. Mr. Hunt, speaking ahead of an emergency statement to parliament on the economy, said “the most important objective for our country right now is stability,” as he announced a revised plan he said would raise around £32 billion a year, equivalent to $36 billion, for the government exchequer.

☆ Britain’s New Chancellor Says Some Taxes Will Rise
▼ + stars: | 2022-10-15 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—The U.K.’s new chancellor, Jeremy Hunt , effectively scrapped Prime Minister Liz Truss ’s signature tax-cutting plan, saying on Saturday that some levies would have to rise and public-spending cuts would need to be made to restore market confidence in the British economy. Mr. Hunt said that Ms. Truss had made mistakes with her plan to boost growth by borrowing money to fund the biggest tax cuts since the 1970s, measures that spooked the markets and sent the Conservative Party crashing in the polls.

☆ New U.K. Chancellor Jeremy Hunt Seen as Moderate in Bid to Appease Markets
▼ + stars: | 2022-10-14 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON— Jeremy Hunt , a quietly spoken veteran Conservative lawmaker, is now the U.K. Chancellor of the Exchequer, given the difficult job of trying to restore the British government’s credibility with investors after weeks of political chaos. Prime Minister Liz Truss on Friday called Mr. Hunt “one of the most experienced and widely respected government ministers and parliamentarians” after firing her longtime allyKwasi Kwarteng from the treasury role.

LONDON—The Bank of England said Wednesday that its program of bond purchases to support pension funds and prevent a potential financial market crisis would end Friday as planned, causing a fresh bond selloff and setting the stage for a tense few days on U.K. markets. The move was seen by investors as a strong signal by the central bank and Gov. Andrew Bailey that its priority remains fighting inflation, even if that raises the likelihood of deeper turmoil in U.K. financial markets in the coming days and weeks, jitters that have also hit some U.S. markets such as junk bonds.

☆ BOE Adds Index-Linked Gilts to Bond Purchase Program
▼ + stars: | 2022-10-11 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

The Bank of England added inflation-linked government bonds to its program of bond purchases after a fresh attempt to extend support to pension funds failed to assuage worried investors. The central bank on Tuesday said it would buy up to £5 billion of index-linked gilts each day through Friday, equivalent to $5.5 billion. On Monday, the bank doubled the total daily amount of bonds it could buy to £10 billion.

LONDON—The Bank of England extended support targeted at pension funds for the second day in a row, the latest attempt to contain a bond-market selloff that has threatened U.K. financial stability. The central bank on Tuesday said it would add inflation-linked government bonds to its program of long-dated bond purchases, after an attempt on Monday to help pension funds failed to calm markets.

☆ Nobel Prize in Economics Winners Include Former Fed Chair Ben Bernanke
▼ + stars: | 2022-10-10 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

The winners of the Nobel Prize in Economic Sciences were announced Monday in Stockholm. The Nobel Prize in Economic Sciences was awarded Monday to former Federal Reserve chief Ben Bernanke and two other U.S. academics whose work helped governments and central bankers navigate the global financial crisis and avoid an economic depression of the kind seen during the 1930s. Mr. Bernanke, who served as chairman of the Fed during the crisis, is currently a distinguished senior fellow at the Brookings Institution. His fellow recipients are Douglas Diamond, an economist at the University of Chicago, and Philip H. Dybvig, an economist at Washington University.

☆ Bank of England Offers Further Support for Pension Funds Amid Crisis
▼ + stars: | 2022-10-10 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—The Bank of England on Monday offered to buy long-dated U.K. government bonds in larger amounts and said it would provide continuing support to pension funds that have been at the heart of the U.K.’s bond-market crisis. On Sept. 28 the U.K.’s central bank launched a series of auctions in which it offered to buy £5 billion of long-dated gilts, as U.K. government bonds are known, equivalent to $5.5 billion. The program was aimed to stanch the damage from a furious selloff in U.K. government debt over previous days in the aftermath of a surprise package of tax cuts announced by the government.

LONDON—A crisis in U.K. government debt markets accelerated after a fresh attempt by the Bank of England to extend support to pension funds failed to assuage worried investors. The U.K.’s central bank said Monday that it would increase the daily amounts it was willing to buy in long-dated bonds before ending the program it established last month as scheduled on Friday. It also unveiled two types of lending facilities aimed at freeing up cash for pension funds beyond the end of the bond buying.

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