The autumn statement this month will likely encompass “rough” tax rises as the Treasury seeks to fill a multi-billion “black hole” in the nation’s finances, Sky News has been told.
The warning from a source in the Treasury comes after Chancellor Jeremy Hunt and Prime Minister Rishi Sunak met yesterday morning.
They discussed what is being characterised as an eye-watering black hole, and agreed that tough decisions will be needed on tax rises as well as spending.
The tax rises are likely to be across the board, although the pair agreed those with the “broadest shoulders” should bear the greatest burden, it is understood.
The source said: “It is going to be rough. The truth is that everybody will need to contribute more in tax if we are to maintain public services.
“After borrowing hundreds of billions of pounds through COVID-19 and implementing massive energy bills support, we won’t be able to fill the fiscal black hole through spending cuts alone.”
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The source did not put a figure on the “black hole”, but the Resolution Foundation thinktank have estimated at least £40bn will need to be found as part of the fall-out from Liz Truss’s disastrous mini-budget and warned tax rises are “likely” to come soon.
Mr Hunt will set out his plans in the Autumn Statement on 17 November and is reportedly considering splitting the burden equally between tax rises and spending cuts.
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Ed Conway looks at PM Rishi Sunak’s warning that the country faces a ‘profound’ economic crisis.
Few concrete details have emerged but, according to The Times, public sector workers could face deep real-terms cuts to wages, with The Treasury reportedly looking at an increase of 2% across the board for 2023-24, at a time when inflation is expected to be well above that threshold.
A Treasury source told the PA news agency that “no decisions have been taken” and the “independent pay review body process takes place next year”.
COP26 president Alok Sharma, who was demoted from the cabinet by Mr Sunak, has backed this move, saying: “We need to raise more money from a windfall tax on oil and gas companies and actively encourage them to invest in renewables.”
Rishi Sunak told his Cabinet on Tuesday that the NHS would be “prioritised” as difficult decisions are taken on spending, No 10 said.
A recession next year could be predicted by the government’s independent forecaster the Office for Budget Responsibility, the Resolution Foundation said, and GDP forecasts could be cut by up to 4% by the end of 2024.
Among the “menu” of options open to the chancellor are cuts to investment spending, a move the Resolution Foundation said could save £10bn but would also have a detrimental impact on growth.
The thinktank also suggests the government could try to choose the so-called “austerity option” – but this would require cuts to already-squeezed department budgets.
Meanwhile, £9bn could be saved by choosing not to raise benefits and pensions in line with rising prices next year, but any such move would have a “huge” impact on those already struggling to make ends meet.
Another option would be to re-instate the health and social care levy to raise £15bn by 2026-2027, while around £2bn could be raised by extending the “stealth” freezes in income tax threshold by a further year to 2026-2027.
Donald Trump says a meeting is being set up between himself and Vladimir Putin – and that he and Barack Obama “probably” like each other.
Republican US president-elect Mr Trump spoke to reporters at his Mar-a-Lago resort in Florida on Thursday, saying Russian president Mr Putin “wants to meet, and we are setting it up”.
“He has said that even publicly and we have to get that war over with. That’s a bloody mess,” Mr Trump said.
Kremlin spokesperson Dmitry Peskov said on Friday there was a “mutual desire” to set up a meeting – but added no details had been confirmed yet and that there may be progress once Mr Trump is inaugurated on 20 January.
“Moscow has repeatedly declared its openness to contacts with international leaders, including the US president, including Donald Trump,” Mr Peskov added.
“What is required is a mutual desire and political will to conduct dialogue and resolve existing problems through dialogue. We see that Mr Trump also declares his readiness to resolve problems through dialogue. We welcome this. There are still no specifics, we proceed from the mutual readiness for the meeting.”
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Trump on Obama: ‘We just got along’
Mr Trump also made some lighter remarks regarding a viral exchange between himself and former Democrat President Barack Obamaat Jimmy Carter’s funeral on Thursday.
The pairsat together for the late president’s service in Washington DC on Thursday, and could be seen speaking for several minutes as the remaining mourners filed in before it began.
Mr Obama was seen nodding as his successor spoke before breaking into a grin.
Asked about the exchange, Mr Trump said: “I didn’t realise how friendly it looked.
“I said, ‘boy, they look like two people that like each other’. And we probably do.
“We have a little different philosophies, right? But we probably do. I don’t know. We just got along. But I got along with just about everybody.”
The amicable exchange comes after years of criticising each other in the public eye; it was Mr Trump who spread the so-called “birther” conspiracy theory about Mr Obama in 2011, falsely asserting that he was not born in the United States.
Mr Trump has repeatedly attacked the Obamas, saying the former president was “ineffective” and “terrible” and calling former first lady Michelle Obama “nasty” as recently as October last year.
On Kamala Harris’s campaign trail last year, Mr Obama said Mr Trump was a “78-year-old billionaire who has not stopped whining about his problems since he rode down his golden escalator nine years ago”, while the former first lady said that “the consequences of him ever being president again are brutally serious.”
Last year was the warmest on record, the first to breach a symbolic threshold, and brought with it deadly impacts like flooding and drought, scientists have said.
Two new datasets found 2024 was the first calendar year when average global temperatures exceeded 1.5C above pre-industrial levels – before humans started burning fossil fuels at scale.
What caused 2024 record heat – and is it here to stay?
Friends of the Earth called today’s findings from both the EU’s Copernicus Climate Change service and the Met Office “deeply disturbing”.
The “primary driver” of heat in the last two years was climate change from human activity, but the temporary El Nino weather phenomenon also contributed, they said.
The breach in 2024 does not mean the world has forever passed 1.5C of warming – as that would only be declared after several years of doing so, and warming may slightly ease this year as El Nino has faded.
But the world is “teetering on the edge” of doing so, Copernicus said.
Prof Piers Forster, chair of the UK’s Climate Change Committee, called it a “foretaste of life at 1.5C”.
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Dr Gabriel Pollen, Zambia’s national coordinator for disasters, said “no area of life and the economy is untouched” by the country’s worst drought in more than 100 years.
Six million people face starvation, critical hydropower has plummeted, blackouts are frequent, industry is “decimated”, and growth has halved, he said.
Paris goal ‘not obsolete’
Scientists were at pains to point out it is not too late to curb worse climate change, urging leaders to maintain and step up climate action.
Professor Forster said temporarily breaching 1.5C “does not mean the goal is obsolete”, but that we should “double down” on slashing greenhouse gas emissions and on adapting to a hotter world.
The Met Office said “every fraction of a degree” still makes a difference to the severity of extreme weather.
Copernicus director Carlo Buontempo added: “The future is in our hands: swift and decisive action can still alter the trajectory of our future climate”.
Climate action is ‘economic opportunity’
Copernicus found that global temperatures in 2024 averaged 15.10°C, the hottest in records going back to 1850, making it 1.60°C above the pre-industrial level during 1850-1900.
The Met Office’s data found 2024 was 1.53C above pre-industrial levels.
The figures are global averages, which smooth out extremes from around the world into one number. That is why it still might have felt cold in some parts of the world last year.
Greenpeace campaigner Philip Evans said as “the world’s most powerful climate denier” Donald Trump returns to the White House, others must “take up the mantle of global climate leadership”.
The UK’s climate minister Kerry McCarthy said the UK has been working with other countries to cut global emissions, as well as greening the economy at home.
“Not only is this crucial for our planet, it is the economic opportunity of the 21st century… tackling the climate crisis while creating new jobs, delivering energy security and attracting new investment into the UK.”
Photographs have captured the moments after a baby girl was born on a packed migrant dinghy heading for the Canary Islands.
The small boat was carrying 60 people and had embarked from Tan-Tan – a Moroccan province 135 nautical miles (250km) away.
One image shows the baby lying on her mother’s lap as other passengers help the pair.
The boat’s passengers – a total of 60 people, including 14 women and four children – were rescued by a Spanish coastguard ship.
Coastguard captain Domingo Trujillo said: “The baby was crying, which indicated to us that it was alive and there were no problems, and we asked the woman’s permission to undress her and clean her.
“The umbilical cord had already been cut by one of her fellow passengers. The only thing we did was to check the child, give her to her mother and wrap them up for the trip.”
The mother and baby were taken for medical checks and treated with antibiotics, medical authorities said.
Dr Maria Sabalich, an emergency coordinator of the Molina Orosa University Hospital in Lanzarote, said: “They are still in the hospital, but they are doing well.”
When they are discharged from hospital, the pair will be moved to a humanitarian centre for migrants, a government official said.
They will then most likely be relocated to a reception centre for mothers and children on another of the Canary Islands, they added.
Thousands of migrants board boats attempting to make the perilous journey from the African coast to the Spanish Canaries each year.
In 2024, a total of 9,757 people died on the route, according to Spanish migration charity Walking Borders.
Mr Trujillo said: “Almost every night we leave at dawn and arrive back late.
“This case is very positive, because it was with a newborn, but in all the services we do, even if we are tired, we know we are helping people in distress.”