Tag Archives: The Budget

‘Why Would Anyone Believe A Word You Say?’ Sky News Presenter Roasts Chancellor Over Tax Rises

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Rachel Reeves has been skewered by a Sky News presenter for massively hiking taxes just months after saying she had “no plans” to do so.

Trevor Phillips asked the chancellor why “a reasonable person would believe a single word you say” in future.

Reeves was shown a video of her from June 11, three weeks before the general election, where she said: “I don’t need to become chancellor to know what a mess the government have made of public finances, of public services and the fact that the tax burden is at its highest level in 70 years.

“We don’t need higher taxes, what we need is growth and I don’t want to, and I have no plan to increase any taxes beyond what we have already set out.”

But last Wednesday, she announced £40 billion worth of tax rises, partly to fill the £22bn “black hole” Labour says it was left by the last Tory government.

Phillips told her: “You specifically said you already knew everything you needed to know, yet on Wednesday you raised taxes by £40 billion.

“Why would a reasonable person believe a single word that you say in the next 15 minutes and that you’ll stick to it?”

Reeves replied: “I was wrong on June 11. I didn’t know everything, because when I arrived at the Treasury on July 5, I was taken into a room by the senior officials and they set out the huge black hole in the public finances, beyond which anybody knew about at the time of the general election.

“The previous government hid it from the country, hid it from parliament and indeed they hid it from the official independent forecaster, the Office for Budget Responsibility.

“And so when I went into that Budget last week I had to put our public finances back onto a firm trajectory because we saw in the previous parliament what happens when government loses control of the public finances, and the first commitment we made in our manifesto was to bring stability back to the economy.”

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Elon Musk Has Reignited His Feud With Keir Starmer And This Time It’s Over The Budget

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Elon Musk has reignited his feud with Keir Starmer by becoming an unlikely champion of Britain’s farmers.

The X owner has taken issue with changes to inheritance tax rules set out in the Budget last Wednesday by Rachel Reeves.

Under the new measures, farms worth more than £1 million will become liable for the tax for the first time when their owner dies.

Responding to a post on X criticising the new policy, Musk wrote: “We should leave the farmers alone. We farmers immense gratitude for making the food on our tables!”

In the summer, the prime minister slapped down the billionaire tech boss for claiming “civil war is inevitable” in the UK in the wake of the far-right riots which have taken place across the country in the past week.

The PM’s official spokesman said: “There’s no justification for comments like that and what we’ve seen in this country is organised illegal thuggery which has no place on our streets or online.”

But responding to a video posted on X by Starmer in which he said the government “will not tolerate attacks on mosques or on Muslim communities”, Musk replied: “Shouldn’t you be concerned about attacks on all communities?”

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How Worried Should We Be About The Way The Markets Are Reacting To The Budget?

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The cost of government borrowing has gone up and the value of the pound has fallen as the money markets react to the Budget delivered by Rachel Reeves on Wednesday.

That has sparked some fears that the UK is heading for a Liz Truss-style economic meltdown triggered by the chancellor’s decision to massively increase taxes and government borrowing.

On Thursday afternoon, bond yields – effectively the interest rate the government pays on its debt – hit 4.568%, the highest it has been since August last year.

That is significant because the more money the government has to pay servicing debt, the less there is available to spend on public services.

Sky News economics editor Ed Conway said voters should be “certainly a bit worried” by what is happening on the money markets.

Posting on X, he said: “There has been a marked rise in UK bond yields following the Budget which is greater than what we’re seeing in other markets.”

But he added: “Perhaps the most important thing to say is: this is NOTHING like the reaction we saw following the Truss mini Budget.

“Even so, there has definitely been SOME reaction. The pound weakened a bit and gilt yields rose. This despite the fact that most of this Budget was pre-briefed long in advance. Investors are actively re-pricing UK debt. And that matters.

“The issue at present isn’t the one Liz Truss had to grapple with – a near financial crisis – but something else. The cost of debt servicing is going up. And if debt interest costs goes up it has a direct bearing on the government’s fiscal plans.”

At the same time, the value of the pound against the dollar has also fallen – further evoking memories of the financial crisis which followed Truss’ disastrous mini-Budget two years ago.

Kathleen Brooks, an analyst at trading firm XTB, said the the Budget “has not been well received” by the markets.

Kyle Chapman, an analyst at trading firm Ballinger Group, said the fall in the pound and rise in gilt yields indicated that the market had decided Labour had “overextended” with its borrowing and spending plans.

However, other analysts insisted the current situation was completely different to when Kwasi Kwarteng, Truss’ chancellor, announced £45bn of unfunded tax cuts.

“Investors feared a new Liz Truss moment, but in the end the announcements do not suggest an uncontrolled surge in debt,” Edmond de Rothschild Asset Management portfolio manager, Nabil Milali, said.

Laith Khalaf, head of investment analysis at AJ Bell, said: “Of course, markets are especially sensitive to the effect chancellors can have on interest rates ever since Kwasi Kwarteng took to the despatch box, and with the ten-year gilt yield now climbing to levels seen in the wake of mini-Budget, it’s fair to ask whether Rachel Reeves’ maiden Budget could cause similar problems.

“The answer is probably, and hopefully, not.”

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Budget Analysis: Voters Could End Up Paying The Price For Rachel Reeves’ Big Gamble

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Rachel Reeves is not, by nature, much of a gambler.

She has managed to become the UK’s first ever female chancellor through a combination of political ability, sound economic judgement and caution.

But in the Budget, she decided to bet everything on the government being able to grow the economy – and the “working people” Labour have sought to protect could end up paying the price.

Reeves stunned the Commons by announcing that she was hiking taxes by £40 billion – an astronomical sum even bigger than what had been predicted and which will take the tax burden to the highest level on record.

Capital gains tax, inheritance tax and – most significantly – employers’ National Insurance are all going up as the chancellor seeks to clear up the financial mess she says the last Tory government left behind.

Tens of billions of pounds will also be borrowed as the government turns on the spending taps.

Much of the cash will be spent on improving the NHS and schools, moves which are likely to be popular with most voters.

But look at the small print and it’s clear to see why economic experts – and plenty of Labour MPs – are nervous.

Economic growth – the government’s number one mission, don’t forget – over the next five years is set to be lower than previously forecast by the Office for Budget Responsibility.

Inflation and interest rates are also set to rise, according to the OBR, further damaging household incomes.

Treasury sources acknowledge this is a sub-optimal situation, but are pleading for patience from voters.

One said: “Do we want those growth forecasts to be higher? Yes. But we’re not going to be able to turn around 14 years in one Budget. This is our first Budget in our first term.

“What the chancellor has set out is an honest Budget in response to the scale of the challenge we face.

“We’ve had to take difficult decisions on tax in order to bring back stability to the economy.

“We’re not immune to the consequences of our decisions, but the consequences of not acting would have been to lose control of economic stability.”

But there was an ominous warning from the highly-respected Institute for Fiscal Studies, whose director Paul Johnson said: “Somebody will pay for the higher taxes – largely working people.”

With the Labour government’s popularity already cratering barely three months after the election, a major financial hit to those who helped put them in office is the last thing Reeves and Keir Starmer need.

The chancellor desperately needs her big Budget gamble to pay off.

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