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The government’s mini-budget has left it facing such a large black hole in the public finances that the most credible way of filling it is severe spending cuts similar to the kinds imposed during the austerity years a decade ago, according to an authoritative new report.

The “Green Budget”, from the Institute for Fiscal Studies (IFS), together with investment bank Citi, warns that the chancellor would have to cut spending or raise taxes by £62bn if he is to stabilise or reduce the national debt, as he has repeatedly promised in recent weeks.

That shortfall is a direct consequence of measures announced since the Truss government took office, including its reversal of various tax increases such as corporation tax and National Insurance, and its Energy Price Guarantee.

There is a chance that hole is filled by economic growth, but the IFS said such an outcome would depend on luck more than judgement.

It said the Office for Budget Responsibility (OBR), the government’s in-house forecaster, was unlikely to assume at the end of the month that the measures in Kwasi Kwarteng’s mini-budget would boost the country’s long-term growth prospects.

The IFS said that even raising working age benefits in line with earnings rather than inflation – one of the big and controversial money-saving measures it is considering – would only save a fraction of the money necessary – about £13bn a year.

It added that Mr Kwarteng would instead have to carry out more dramatic cuts, potentially reducing government investment and slashing public spending on departments already squeezed to the bone during the austerity years.

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The IFS Green Budget found that the amount the government is set to pay on debt interest is set to rise in the next couple of years to the highest level, as a percentage of national income, since at least the late 1940s.

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How might the government balance the books?

This increase in debt interest is one element of a “premium” the government is having to pay at the moment because of fears among investors that it has surrendered some of its credibility.

This “credibility premium” means the cost of borrowing is currently higher in the UK than might have been expected, given the increase in borrowing accounted for by the mini-budget.

Moreover, Citi said that the higher interest rates faced by consumers in their mortgages would also dampen economic growth in the coming years.

The IFS said the “credibility premium” for the public finances was around £10bn; Citi said the premium for economic growth was 0.1 or 0.2 percentage points.

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Labour: ‘Reverse mini-budget’

IFS director, Paul Johnson, said that with so much geopolitical instability there were large uncertainties about the outlook in the coming year, but that Mr Kwarteng was left facing large fiscal challenges.

“The specifics of the UK government’s fiscal strategy are under more scrutiny by financial markets than at any point in the recent past. The chancellor should not rely on over-optimistic growth forecasts or promises of unspecified spending cuts. To do so would risk his plans lacking the credibility which recent events have shown to be so important.

“All that said, we would have sympathy with the chancellor if he decided that the uncertainties of the present moment are too great to be promising specific future action around public spending.

But the same would apply to his recent package of tax cuts. He should not apply that argument asymmetrically.”

Benjamin Nabarro, chief UK economist at Citigroup, added: “With monetary and fiscal policy now working in opposite directions, we think the broader risks around UK monetary-financial stability are growing.

“In the years ahead, ‘supply shocks’ such as those seen in recent months seem likely to grow more frequent. That may require profound changes in the manner macroeconomic policy is conducted if we are to avoid another decade of stagnation.

“The UK can ill afford further policy mistakes,” he concluded.

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What we know about Manchester attacker Jihad al Shamie – as his family condemn ‘heinous act’

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What we know about Manchester attacker Jihad al Shamie -  as his family condemn 'heinous act'

The Manchester synagogue attacker was a British citizen of Syrian descent who came to the UK as a small child and had not previously been on the radar of police or MI5.

Jihad al Shamie, 35, was shot dead by armed officers seven minutes after launching a car and knife attack while wearing what appeared to be a vest with an explosive device, which was later found to be fake.

Manchester attack latest: Police on ‘high alert’ across country

Jihad al Shamie
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Jihad al Shamie

Adrian Daulby, 53, and Melvin Cravitz, 66, were killed after he drove at people outside Heaton Park Hebrew Congregation Synagogue, in Crumpsall, before stabbing a man.

One of the victims killed in yesterday’s attack was shot mistakenly by officers during their attempts to bring the attacker under control, Greater Manchester Police believe.

Three others remain in hospital with serious injuries.

Three people – two men in their 30s and a woman in her 60s – have been arrested on suspicion of the preparation or commission of acts of terrorism.

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Manchester attacker ‘did not stand out’

But Home Secretary Shabana Mahmood said it is “too early” to say if there was a terrorist cell behind the attack on Thursday morning, which took place on Yom Kippur, Judaism’s holiest day.

She said al Shamie, who is of Syrian descent, came to the UK as a “small child” and was naturalised as a British citizen in the mid-2000s.

The home secretary also said he was not known to the security services or police and had not been referred to the government’s Prevent anti-radicalisation scheme.

Asked about the attacker’s name on LBC, which presenter Nick Ferrari translated as “struggle of the Syrian”, she said: “I was very surprised to discover that name myself.

“Actually, as a Muslim, I’ve never heard someone being called Jihad, but it is the name that he was born with – that has always been his name.”

Police presence at a property in Langley Crescent, Prestwich.
Pic: PA
Image:
Police presence at a property in Langley Crescent, Prestwich.
Pic: PA

Al Shamie is believed to have lived in a council house in a quiet cul-de-sac in Langley Crescent, Prestwich, around two miles from the scene.

Videos obtained by Sky News show armed police, with a dog and a chainsaw, raiding the address at around 3.30pm on Thursday.

Read more:
Synagogue terror victims named
How the attack unfolded
Worshippers leaving synagogue hear news of attack

In a post on Facebook, apparently from his family, his relatives said the attack “has been a profound shock to us”.

“The al Shamie family in the UK and abroad strongly condemns this heinous act, which targeted peaceful, innocent civilians,” they said.

“We fully distance ourselves from this attack and express our deep shock and sorrow over what has happened.

“Our hearts and thoughts are with the victims and their families, and we pray for their strength and comfort.”

Seen lifting weights

One of al Shamie’s neighbours said: “We used to see him out in the garden working out, doing weights, press-ups.

“He used to change his clothes. One day he would be wearing the full gown, to the floor and the next jeans and pyjama bottoms.”

Geoff Haliwell, 72, told Sky News the property used to be on his window cleaning round and he believed the al Shamie family, including his mother, father and brothers, had lived there for around 20 years.

“There’s no way I could’ve thought they were in any way involved in anything like this,” he said, describing the family as “nice people”.

He said he had also seen Jihad al Shamie use benches to work out and said he would sometimes wear western clothes and at other times “traditional” Syrian dress, but showed no signs of radicalisation.

“[He was a] smashing lad to talk to, just the same as everyone else. He didn’t stand out in any way,” he added.

Another neighbour, Kate McLeish, said she thought al Shamie was “an odd guy” and said he used to park his battered black Kia “quite badly on the road”.

The Syrian British Consortium, an organisation representing Syrians in the UK, said no one in its community networks has been able to identify him or confirm knowing him personally.

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Grandparents of Ethan Ives-Griffiths jailed for two-year-old’s murder

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Grandparents of Ethan Ives-Griffiths jailed for two-year-old's murder

A couple who murdered their two-year-old grandson have been jailed for life.

Michael Ives, 47, and Kerry Ives, 46, were found guilty of his murder and cruelty to a child in July after a trial at Mold Crown Court.

They were jailed for minimum terms of 23 years and 17 years respectively.

Their grandson Ethan Ives-Griffiths was dangerously dehydrated, severely underweight and had 40 visible bruises or marks when he collapsed with a catastrophic head injury at his grandparents’ home in Flintshire, North Wales, on 14 August 2021.

Kerry and Michael Ives were found guilty of Ethan's murder. Pic: North Wales Police/PA
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Kerry and Michael Ives were found guilty of Ethan’s murder. Pic: North Wales Police/PA

Ethan’s mother, Shannon Ives, 28, who had been staying with her son at her parents’ home, was found guilty of causing or allowing his death and child cruelty.

Ethan's mother Shannon Ives. Pic: North Wales Police/PA
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Ethan’s mother Shannon Ives. Pic: North Wales Police/PA

The court heard Ethan was made to stand with his hands on his head as a punishment when he misbehaved.

CCTV footage shown to jurors during the trial showed Michael Ives carrying his grandson by the top of his arm in a way described by prosecutor Caroline Rees KC “as though Ethan was just a bag of rubbish to be slung out”.

The video, taken from the back garden of the family’s four-bedroom home, showed Ethan appearing unsteady on a trampoline, or lying down, while other children bounced.

Michael Ives carrying Ethan outside the family home in Garden City, Deeside, Flintshire. Pic: North Wales Police/PA
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Michael Ives carrying Ethan outside the family home in Garden City, Deeside, Flintshire. Pic: North Wales Police/PA

Michael Ives carrying Ethan in the back garden. Pic: North Wales Police
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Michael Ives carrying Ethan in the back garden. Pic: North Wales Police

Michael Ives was seen to point a garden hose at him, placed the toddler’s hands on his head, and gestured to another child to punch him.

After watching the video in court, Michael Ives said he felt “ashamed” and admitted being cruel and neglectful but denied mistreating Ethan in other ways.

He said his daughter was “quick-tempered” and would slap Ethan a couple of times a day, but Shannon Ives claimed her parents were “horrible” and abused her as a child.

Ethan Ives-Griffiths. Pic: North Wales Police/PA
Image:
Ethan Ives-Griffiths. Pic: North Wales Police/PA

Michael and Kerry Ives, originally from Wolverhampton, were in the living room with Ethan at the time of his collapse while his mother was on the phone upstairs.

The pair told the jury “nothing” had happened to the toddler before he fainted as they watched television.

Kerry Ives said she immediately called her daughter to come downstairs, but the court heard it was 18 minutes before she called emergency services.

Ethan was taken to the Countess of Chester Hospital and later transferred to Alder Hey Children’s Hospital in Liverpool, where he died two days later.

Michael Ives being interviewed by police officers. Pic: North Wales Police/PA
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Michael Ives being interviewed by police officers. Pic: North Wales Police/PA

Kerry Ives being interviewed by police officers. Pic: North Wales Police/PA
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Kerry Ives being interviewed by police officers. Pic: North Wales Police/PA

He was found to have abdominal injuries likely to have been caused by blows in the days before his collapse, as well as bruises consistent with grip marks on his leg and face.

Experts said Ethan would have died of dehydration within days had he not suffered the head injury, and at the time of his death weighed just 10kg.

Ethan’s fatal head injury was said to have been caused by deliberate force or shaking, and occurred at the time, or in the minutes before, he collapsed.

Ethan with his father Will Griffiths. Pic: North Wales Police/PA
Image:
Ethan with his father Will Griffiths. Pic: North Wales Police/PA

Following the verdicts, Ethan’s father Will Griffiths said: “He will be remembered for the smiley, outgoing, loving child that he was. He can now rest in peace, knowing that justice has been served.”

Child protection register

The court heard the youngster had been placed on the child protection register, requiring him to be seen every 10 days.

But when Shannon Ives last saw her social worker, on 5 August 2021, she spoke to him on the doorstep and told him Ethan was having a nap.

No one answered the door when social worker Michael Cornish went to visit in the days before Ethan’s death and a scheduled appointment with a health visitor on 13 August was cancelled.

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Phones turned off during Yom Kippur, worshippers leaving synagogue hear news of attack

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Phones turned off during Yom Kippur, worshippers leaving synagogue hear news of attack

It’s just gone 7.30pm – and outside a synagogue in north Manchester, we’ve heard the shofar, a ceremonial horn, being blown to mark the end of the long day of prayers.

The streets, which had been so quiet all day, fill with people and families.

We’re just minutes away from where the attack took place.

But people haven’t had their phones on in synagogue – and we find ourselves in the slightly surreal position of having to tell people what happened to members of their community, just a few roads away.

Manchester synagogue latest: Suspect in killing named

Rachel gasped as she heard the news
Image:
Rachel gasped as she heard the news

“Did many people get hurt?” Rachel, in her 70s, asks me.

I tell her two have died.

She gasps and says: “My gosh. It’s the holiest day of the year.

“Very, very frightening. We’re not safe.”

Read more:
Witnesses describe how attack unfolded

What we know about synagogue attack

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Earlier in the day on these streets, we saw additional police patrols, with officers telling us they were here to reassure members of the public.

But people are accustomed to seeing security here.

Both paid and volunteer security staff, in their hi-vis jackets, are a permanent fixture outside every synagogue.

It’s to help protect a community that, even before this attack, has felt under threat.

'The security is not the solution,' this man said
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‘The security is not the solution,’ this man said

“The security is not the solution,” one man tells me as he heads home from prayers. “Those who really want to do [something like this], they will do it with lots of security, it doesn’t matter.”

Among everyone we spoke to, there was a sense of shock at what had happened, but perhaps not necessarily surprise amid rising acts of antisemitism in the UK.

David Yehudi
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David Yehudi

David Yehudi and the rabbi he studied with said it had felt like a long time coming.

“As a grandchild of a Holocaust survivor, I feel as if this is before 1935 again,” he says. “That’s the overwhelming feeling all over the world.”

The rabbi asked 'where is the United Nations?'
Image:
The rabbi asked ‘where is the United Nations?’

The rabbi adds: “The United Nations was set up with the intention of ‘never again’, and where is the United Nations? In terms of the global support against antisemitism. It’s just not there anymore. We are as unsafe as we were before the war.”

It is a shocking thing to hear, on this, the most solemn of days.

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