After Kwasi Kwarteng’s disastrous mini-budget, there is no magic cure

Published

3 years ago

November 14, 2022

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The last time a chancellor of the exchequer appeared on the Sunday morning political shows he helped kick the economy off a cliff-edge.

Seven long weeks ago, Kwasi Kwarteng was still revelling in the aftermath of his not-so-mini budget and its promise of unfunded tax cuts, so much so he promised more to come.

It was that intervention, as much as the cavalier non-budget, that helped markets make up their mind about the UK’s direction under Mr Kwarteng and his mayfly prime minister Liz Truss.

Within hours the pound had slumped and the following day the cost of borrowing soared, a sudden and shocking loss of confidence with long-term consequences for government, business and mortgage holders that is still being felt.

This morning, Mr Kwarteng’s successor used the Sunday platform to try to reassure us, and as importantly the markets, that he is going to clean up the mess.

Jeremy Hunt is only six weeks into the job but he spent as many years as health secretary, and his manner was that of a medic with grave news.

The message from Dr Hunt is that while the patient is very ill, there is a cure, but it’s going to hurt.

“We are going to have to increase taxes and cut public spending to show that we are a country that can pay our way,” he told Sky News’ Sophy Ridge on Sunday programme.

“I’m afraid we are all going to have to pay more taxes.”

These are not words Conservative chancellors go into the job dreaming of uttering, but they are based on a diagnosis of the economy Mr Hunt shares with Rishi Sunak, not long out of the job himself and by some accounts still trying to do it from No 10.

Mr Kwarteng’s tax cuts left a £60bn gap – a “black hole” in political journalese – in government plans to have borrowing as a share of GDP falling over the next three years.

That calculation matters because it demonstrates that the government has a plan to cover its own costs, rather than endlessly borrow to pay for essential services. That gives confidence to investors which in turn makes it cheaper to borrow in the first place.

It should be said that the size and scope of the black hole is itself a political choice rather than economic truism. Governments set the fiscal rules for themselves and can change them any time they like.

Mr Kwarteng’s problem was he presented a plan that did not add up under the rules he said he was sticking to. The Hunt-Sunak challenge is that economic credibility can only be regained by demonstrating a willingness to fill that gap.

That means announcing plans that outwardly look like they will hammer earners from all income brackets as well as public services and the people that work in them.

If that is the economic reasoning behind Mr Hunt’s relentlessly austere messaging since he took the job, how and if he achieves it is political.

Having promised in the 2019 Conservative manifesto not to raise any of the main taxes, he is instead likely to freeze the thresholds above which they are paid, meaning over time more people will pay more tax.

(That’s “stealth taxes” in the journalese, “fiscal drag” in economic jargon, and “less money” in the real world.)

As for the spending cuts they are less clear, and may remain so after Thursday’s autumn statement.

Mr Hunt appeared to again commit to increasing pensions in line with inflation under the “triple-lock” but he was explicit that striking nurses will not get an inflation-proof pay deal.

Beyond that we wait to see how much detail is offered and how much it means even if it is. Mr Hunt will be setting economic expectations for the next five years, with a forecast for the same period from the Office for Budget Responsibility that investors will read as closely as the autumn statement itself.

But three of those years lie beyond the current parliament, meaning a new government, or as we have seen even a new prime minister, can change course should they choose.

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So the measures we will hear next week are politically non-binding. Some may even be intended as a trap for Labour, an attempt to commit the opposition to unpopular decisions in advance.

There is little doubt however that the economic peril is real. Inflation is above 10%, the energy crisis continues, and we are in the foothills of a recession that will see interest rates rise further.

And there is no magic cure.

World

Israel silences more crucial reporting voices from inside Gaza

Published

2 hours ago

August 11, 2025

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Israel silences more crucial reporting voices from inside Gaza

The targeted killing of Al Jazeera journalist Anas Al-Sharif and four other colleagues by the Israel Defence Forces (IDF) late on Sunday silences more crucial reporting voices from inside Gaza.

The IDF wasted no time in releasing a statement claiming it had “eliminated” Al-Sharif, calling him a “terrorist” who “posed” as a journalist for Al Jazeera.

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The Committee to Protect Journalists warned in July that Al-Sharif was the victim of an Israeli smear campaign and that they feared for his safety.

The IDF had previously released documents which they say proved his involvement with Hamas.

No word from them on his colleagues – Mohammed Qreiqeh, Ibrahim Zaher, Mohammed Noufal and Moamen Aliwa – who they also killed. We are chasing.

Al-Sharif’s death – and that of his four colleagues – is a chilling message to the journalistic community both on the ground and elsewhere ahead of Israel’s impending push into Gaza City.

There will now be fewer journalists left to cover that story, and – if it is even possible – they will be that bit more fearful.

This is how journalists are silenced. Israel knows this full well.

It has also not allowed international journalists independent access to enter Gaza to report on the war.

Al-Sharif’s death has sent shockwaves across the region, where he was a household name. He was prolific on social media and had a huge following.

I was watching horrifying footage of the immediate aftermath of the strike in the taxi on my way into the bureau, and the driver told me how he and his family had all cried for Anas when the news came in.

His little daughter cried because of Al-Sharif’s little daughter, Sham, who she knew from social media.

“They call everyone Hamas,” my taxi driver said. “Men, women, children”.

Last month, Al-Sharif wrote this post: “I haven’t stopped covering [the crisis] for a moment in 21 months, and today I say it outright… and with indescribable pain.

“I am drowning in hunger, trembling in exhaustion and resisting the fainting that follows me every moment… Gaza is dying. And we die with it.”

This is what journalists in Gaza are facing, every single day.

World

Israel’s PM tries to get on front foot in propaganda war he knows he is losing

Published

8 hours ago

August 11, 2025

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Israel's PM tries to get on front foot in propaganda war he knows he is losing

Israel’s prime minister added more detail to his deeply controversial plans for military escalation in Gaza at a news conference with foreign media yesterday – despite the condemnation of the UN Security Council, which met in an emergency session and urged him to rethink.

Benjamin Netanyahu spoke of a “fairly short timetable” to establish designated “safe zones” for the one million or so set to be displaced from Gaza City.

He also vowed to seize and dismantle Hamas’s final strongholds there – in the central refugee camps, and in al Mawasi, along Gaza’s southwestern coast.

This, per Netanyahu, is the only way to destroy the terror group, which he claimed “subjugates Gazans, steals their food and shoots them when they try to move to safety”.

Al Mawasi is already home to a significant displaced population, most of whom live in tents cramped up against the Mediterranean Sea, in what is already a designated humanitarian zone.

If members of Hamas live among them, rooting them out will be hugely complicated and will involve significant civilian casualties. If the residents of Gaza City can’t evacuate south to al Mawasi, where will they go?

Netanyahu’s plan is to set up more aid distribution sites through the controversial Gaza Humanitarian Foundation (GHF) and to flood Gaza with food.

He claimed his policy was not one of forced starvation – describing particular photos of starving babies as “fake news”, and accusing the media of painting a false picture.

“The only ones who are being deliberately starved in Gaza are our hostages,” the prime minister claimed.

I asked Netanyahu how he would go about preventing the kinds of daily killings taking place at aid distribution points in the months since GHF has been operating.

Doctors Without Borders has described these incidents as deliberately orchestrated.

The prime minister said increasing the amount of aid heading into the Strip was the answer.

“And by the way, a lot of the firing was done by Hamas seeking to have a response by our forces,” he added. “And very often they didn’t, they held back. They stayed their own fire even though their own lives were on the line.”

This was Israel’s prime minister trying to get on the front foot in a propaganda war he acknowledged he was losing. He was loath to admit the presence of famine in Gaza.

It took two questions before he acknowledged there was “deprivation”, even if he would not be drawn on whether his 11-week total blockade of the strip earlier this year had played any role.

He recognises that the appalled response of the international community to the human cost of this war, and the accusations of war crimes and genocide which Israel so vehemently rejects, are a terrible look.

This was his attempt to reclaim the narrative.

World

Defiant Netanyahu sets out plan for military escalation in Gaza – and describes photographs of starving babies as ‘fake news’

Published

15 hours ago

August 10, 2025