There is so much about today’s autumn statement that hurts the head.
The job of today’s statement – the reason it was urgent and necessary and painful – is because there was a huge black hole in the public finances that was unsettling the markets and pushing up government debt.
Yes, there are big immediate tax rises that many including Tory backbenchers will hate (£7.4bn worth in the next financial year, for example). But this is offset by an incredible £9.4bn of additional spending on energy help, school budgets, social care and the NHS. A jaw-dropping change of tack.
The argument by the chancellor is that a near-term boost to spending is needed to dampen the recession we are now in and keep more people in their jobs. It’s just a very different message from the one we’ve been hearing for the last month.
Incredibly, as Sky News revealed last night, Mr Hunt is even keeping the Liz Truss Energy Price Guarantee and extending it for another year – the very scheme due to be junked in March because it was too risky. That’s quite something, one month after he binned it dramatically on TV.
There is, however, much more theoretical pain, though not yet. In order to calm the markets, the Sunak government is promising an incredible squeeze will begin after an election.
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Yes there will be a small 1% real terms increase in budgets after 2025, but that’s much less than then chancellor Rishi Sunak promised in March, and after a decade of pain.
This creates an accountancy bonanza: it means Mr Hunt is able to say he’s saved a theoretical £27bn in 2027, reducing theoretical future borrowing costs. But is this fantasy, because nobody can make promises about public spending that far ahead, given not a word of either the Labour or Tory manifesto has been written.
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All the key data and analysis
A trap for Labour
So in some regards, today’s autumn statement is a trick, a magician’s prestige, aimed not so much at the public but at the markets.
Will they buy it? Will investment houses upon which the UK depends simply trust the sombre seriously seeming spectacle of Mr Hunt and Mr Sunak more than the Truss-Kwasi double act, even if the actual numbers don’t pass muster? Actually there’s a chance they do, and in that sense it works. But it might not. It’s a gamble.
All of this feels very reminiscent of the way George Osborne would approach his budgets – no wonder he’s been seen going into Downing Street in recent weeks and his old lieutenants are advising Mr Hunt behind the scenes.
The trademark Osborne move embedded in today’s decisions is to set a trap for Labour. By doing a Labour-friendly set of tax rises which focus on the richest, then squeezing spending in the next parliament, Mr Sunak and Mr Hunt want to challenge Labour. If they want to go into the next election promising to spend more on public services, where will they get the cash, they will ask. It’s a dilemma, and it’s unclear how Labour will answer.
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’12 weeks of Conservative chaos’
But again this is a gamble. The short-term tax rises are real – taking us to the highest tax burden since the Second World War – while the increase in the amount people will pay on energy will go up and mortgages are still rising, and public sector pay still squeezed. The Office for Budget Responsibility suggests a 7% real terms drop in living standards next year. This will all feel very real.
Perhaps by the next election, Labour will be put on the spot and have to justify where tax rises will come from. But maybe people will be feeling the squeeze to such a degree they want change without needing to interrogate too much the alternatives.
That’s the battle to be fought out at the next election.
Outgoing US President Joe Biden is set to meet his Chinese counterpart Xi Jinping today for what is likely to be his last time as US president.
The two leaders are expected to hold talks on the sidelines of a meeting of Asia-Pacific leaders in the Peruvian capital, Lima.
It comes against the backdrop of increasing tension in the US-China relationship with a potential trade war looming under a Trump presidency, several China hawks tapped for US cabinet positions and China’s growing status among global south countries as an emerging leader of an alternative world order.
This week China was focused on events in the southern city of Zhuhai.
First there was a car ramming attack at Zhuhai’s sports stadium which left 25 people dead. A shocking event that was heavily censored in China.
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What happened at Zhuhai sports centre?
Less than an hour’s drive away the country was holding its premier air show.
It was a military enthusiast’s dream, and not even intermittent rain could keep the crowds of tens of thousands of people away from relishing in the roar of jets in the skies above Zhuhai.
China’s fighter jet fleet
One of the main drawcards was China’s newest stealth fighter the J-35A. It will join the country’s J-20 in service for the People’s Liberation Army Air Force (PLAAF).
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The J-10C was China’s aerobatics star of the show. There were daily displays of its prowess in sky-high manoeuvres and formations that impressed onlookers, leaving a streak of colours across the cloudy rain-clogged sky.
China’s military modernsiation programme is continuing apace
It boasts the largest navy in the world and the largest armed forces by active-duty personnel.
The People’s Liberation Army (PLA) Airforce is developing fast too.
Dr Nicole Leveringhaus, a China security expert from King’s College London, says: “China started with very little. It was devastated by wars on many fronts in the 30s and 40s. Its defence industry was depleted. In 70-plus years it’s built itself up and now we’re seeing the results.
“It’s an impressive feat to go from a bloated land-based peasant guerrilla army to what it has to today.”
Chinese pride and nationalism on display
Enjoying the air show spectacle, military fan Liu Liansong said: “I think the air show is great. It is a firm manifestation of the air force’s development from scratch. We as Chinese people feel very proud.”
The air show included massive exhibition halls of military hardware, from drones to robotics, firearms and mock missiles. Merely getting from one end of the venue to the other through densely packed crowds was a mission.
Russia in the air
The other crowd puller this week was Russia’s aerobatic air force unit, performing daily theatrics at dizzying speeds.
It is another sign of the deepening ties between China and Russia.
One Russian tourist and recreational pilot, Yulia, told Sky News: “Both sides are looking for good communication in business, aviation and in many spheres including tourism.”
The secretary of Russia’s security council and former defence minister Sergei Shoigu also visited the air show, viewing both Chinese and Russian-made jets.
In Beijing, secretary Shoigu was quoted by Russian state media as saying: “I see the most important task as countering the policy of ‘dual containment’ of Russia and China pursued by the United States and its satellites.”
The West is increasingly frustrated by China’s support of Russia. The US has sanctioned two Chinese companies, accusing them of being involved in the production of Russian aerial drones used on the battlefield.
China insists it is not supplying weapons to Russia.
One of the companies, Xiamen Limbach Aircraft Engine Co, had a small stand in one of the exhibition halls. Its representatives declined Sky News’ request for an interview.
Tariff war brewing
Despite the raw military might on display in Zhuhai, in China there is uncertainty and unease about what an impending Donald Trump presidency will mean for global trade.
President-elect Trump has threatened blanket tariffs of up to 60% on Chinese products exported to the US.
This would be a serious blow to China’s target GDP growth and comes at a time when the country’s economy faces deep-set challenges.
At the other end of the country, in Beijing analysts are weighing up the impact of possible tariffs and the Chinese government’s options to respond.
Senior Asia analyst Chim Lee, from The Economist Intelligence Unit, is not optimistic that a US-China agreement to minimise the damage can be reached.
“I think both sides have recognised that the era of making deals is passed,” Mr Lee said.
“We’re going to see China starting with some targeted measures, tariffs it feels more comfortable to impose,” he explained. “But there are also areas where China is starting to be a bit more aggressive.”
This action could include export controls on China’s production of critical minerals and retaliatory tariffs on US agriculture exports.
Trade competition, military posturing and complicated geo-political alliances have set the stage for a challenging next phase in US-China relations.
New pictures show the moment of impact as an Israeli missile hit a Beirut apartment block and exploded.
The block was one of five buildings destroyed by airstrikes on Friday alone.
Israel launched airstrikes in the southern suburbs of Beirut in a fourth consecutive day of intense attacks.
There were no immediate reports of casualties.
An Associated Press photographer captured a sequence of images showing an Israeli bomb approaching and hitting a multi-storey apartment building in Beirut’s Tayouneh area.
Richard Weir, a senior crisis, conflict and arms researcher at Human Rights Watch, reviewed the close-up photos to determine what type of weapon was used.
“The bomb and components visible in the photographs, including the strake, wire harness cover, and tail fin section, are consistent with a Mk-84 series 2,000-pound class general purpose bomb equipped with Boeing’s joint directed attack munition tail kit,” he told AP.
Deadly strikes as bombardment stepped up
Israel stepped up its bombardment this week – an escalation that has coincided with signs of movement in US-led diplomacy towards a ceasefire.
The Israeli military said its fighter jets attacked munitions warehouses, a headquarters and other Hezbollah infrastructure. It issued a warning on social media identifying buildings ahead of the strikes.
Meanwhile, an Israeli airstrike killed five members of the same family in a home in Ain Qana in the southern province of Nabatiyeh, Lebanon’s state media said.
The report said a mother, father and their three children were killed but didn’t provide their ages.
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Three other Israeli strikes killed six people and wounded 32 in different parts of Tyre province on Friday, also in south Lebanon, the report said.
Video footage also showed a building being struck and turning into a cloud of rubble and debris that billowed into Horsh Beirut, the city’s main park.
More than 3,200 people have been killed in Lebanon during 13 months of fighting between Israel and Hezbollah – most of them since mid-September.
About 27% of those killed were women and children, according to Lebanon’s health ministry.
Israel dramatically escalated its bombardment of Lebanon from September, vowing to cripple Hezbollah and end its barrages in Israel.
Friday’s strikes come as Lebanon’s caretaker prime minister has asked Iran to help secure a ceasefire in the war between Israel and Hezbollah.
The prime minister appeared to urge Ali Larijani, a top adviser to Iran’s supreme leader, Ali Khamenei, to convince the militant group to agree to a deal that could require it to pull back from the Israel-Lebanon border.
Iran is a main backer of Hezbollah and for decades has been funding and arming the Lebanese militant group.
On Thursday, Eli Cohen, Israel’s energy minister and a member of its security cabinet, said that prospects for a ceasefire with Lebanon were the most promising since the conflict began.
The Washington Post reported Israel’s Prime Minister Benjamin Netanyahu was rushing to advance a Lebanon ceasefire to deliver an early foreign policy win to his ally, US President-elect Donald Trump.
“Super high-IQ revolutionaries” who are willing to work 80+ hours a week are being urged to join Elon Musk’s new cost-cutting department in Donald Trump’s incoming US government.
The X and Tesla owner will co-lead the Department Of Government Efficiency (DOGE) with former Republican presidential candidate Vivek Ramaswamy.
In a reply to an interested party, Mr Musk suggested the lucky applicants would be working for free.
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“Indeed, this will be tedious work, make lost of enemies & compensation is zero,” the world’s richest man wrote.
“What a great deal!”
When announcing the new department, President-elect Donald Trump said Mr Musk and Mr Ramaswamy “will pave the way for my administration to dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies”.
Mr Musk has previously made clear his desire to see cuts to “government waste” and in a post on his X platform suggested he could axe as many as three-quarters of the more than 400 federal departments in the US, writing: “99 is enough.”