If you’re feeling a bit disorientated by the chancellor’s autumn statement, you’re not alone.
In just eight weeks, the government has shifted from wanting to roll out the biggest tax cuts in 50 years to taking the country’s tax burden to its highest level since the Second World War.
Liz Truss and her chancellor Kwasi Kwarteng wanted to slash taxes – announcing £45bn of unfunded tax cuts in September – only for their replacements Rishi Sunak and Jeremy Hunt to swing the pendulum the other way, with an autumn statementtargeting £55bn of fiscal consolidation, plus tax rises of £25bn and spending cuts at £30bn.
We’ve lurched from the zeal of Ms Truss’s low tax, small state, trickle-down economics to the pragmatism of Mr Sunak, who claims he’s instinctively a fiscal Conservative but on Thursday oversaw an autumn statement that borrowed much from the opposition front bench.
There were windfall taxes on energy companies (raising £5.6bn by 2027/8), a freeze on National Insurance thresholds for extra money for employers (£5.8bn), a cut to the 45p rate of tax threshold to £125,000 (£855m), changes to capital gains and dividends tax (£1.4bn), and a reversal of Kwarteng’s stamp duty cuts (£1.6bn).
Tax rises paid for by business and the wealthy had all the hallmarks of a Labour budget.
On spending, too, the Tories are prioritising extra money for the NHS (£6.6bn) and for schools (£4.6bn) over the next two years, paid for in part from the overseas aid budget.
And while public services will feel the squeeze in the coming year as inflation gallops ahead of allocated spending, most of the £30bn of spending cuts will be kicked into the next parliament, when the Tories might not even be in power, with day-to-day departmental spending £21.5bn less in 2027/8 than under previous plans.
“They’ve shot Labour’s fox,” is how one senior economist put it to me, as Mr Hunt borrowed some of Sir Keir Starmer’s tax plans, put more money into public services and saved the spending cut pain until after the general election.
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Mr Hunt also threw the gauntlet down to Labour as to how they’d pay for improved public services.
But the political skill of Thursday’s statement can’t detract from the hard reality of what people are about to face as the UK tips into recession and energy bills and inflation remain high.
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Pledge to increase NHS budget
UK households are set to suffer a 7.1% fall in living standards over the next two years.
It’s the largest decline in six decades and will take household disposable incomes back to levels not seen since 2013. A decade of growth wiped out.
That, coupled with below inflationary pay rises for public sector workers and tight budgets as inflation outpaces funding settlements for much of our public services, is going to hurt voters and no doubt test their relationship with a Conservative Party already more than 20 points behind in the polls.
A YouGov poll in The Times says 45 per cent of voters blame higher borrowing levels on the Conservative government, despite Mr Hunt’s best attempts to blame it on global factors.
And then there is the Tory party itself.
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Energy price cap to rise again in 2023
Mr Sunak was pilloried back in the summer by his then-leadership rival Ms Truss as the Conservative chancellor who lifted the country’s tax burden to a 70-year high. On Thursday, he went further, lifting it to a near 80-year high.
The signs of discontent rippled through the backbenches on Thursday. Richard Drax made the point, shared by many of his colleagues, that raising taxes risks stifling growth.
Bill Cash complained about the cost of HS2 and Therese Villiers asked the chancellor to cut taxes quickly if current forecasts about economic recovery and inflation proved to be overly pessimistic.
This an autumn statement from a chancellor and prime minister insisting it’s time to “face the storm”.
On Thursday, both will be relieved that the announcement didn’t unsettle the markets, but the economic outlook is nothing but grim for the public and the government. The coming months could be very bumpy indeed.
The Israel Defence Forces (IDF) said it carried out a “precise strike” on Hezbollah’s “central headquarters”, which it claimed was “embedded under residential buildings in the heart of the Dahieh in Beirut”.
The first wave of attacks shook windows across the city and sent thick clouds of smoke billowing into the air.
While Israel stressed it had been a “precise” strike, preliminary figures from Lebanon’s health ministry confirmed at least six other people were killed and 91 were wounded.
Israel said Nasrallah was the intended target and initially there were claims he had survived.
However, after several hours of confusion, his death was confirmed by Israel.
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“Hassan Nasrallah will no longer be able to terrorise the world,” the IDF said.
Hours later, a defiant Hezbollah confirmed Nasrallah’s death but vowed their fight with Israel would continue after confirming they had fired upon sites in northern Israel.
“The leadership of Hezbollah pledges to the highest, holiest, and most precious martyr in our path full of sacrifices and martyrs to continue its jihad in confronting the enemy, supporting Gaza and Palestine, and defending Lebanon and its steadfast and honourable people,” they said.
Alongside claiming to have killed Nasrallah, the IDF said it had killed a number of other commanders, including Ali Karaki, the commander of the southern front.
The country’s military said the strike was carried out while Hezbollah leadership met at their underground headquarters in Dahieh.
In the aftermath of the most recent attacks, an Israeli military spokesperson declined to comment on whether US-made Mark 84 heavy bombs were used in the strike against Nasrallah.
“The strike was conducted while Hezbollah’s senior chain of command were operating from the headquarters and advancing terrorist activities against the citizens of the State of Israel,” Lieutenant Colonel Nadav Shoshani said in a media briefing.
He continued: “We hope this will change Hezbollah’s actions.”
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Hezbollah leader killed says IDF
He added the number of civilian casualties was unclear but blamed Hezbollah for positioning itself in residential areas.
“We’ve seen Hezbollah carry out attacks against us for a year. It’s safe to assume that they are going to continue carrying out their attacks against us or try to,” he said.
Meanwhile, Iran said it was in constant contact with Hezbollah and other allies to determine its “next step”, but Reuters reported the country’s supreme leader was transferred to a secure location in light of the latest attack.
Speaking after the attack, Ayatollah Ali Khamenei called on Muslims “to stand by the people of Lebanon and the proud Hezbollah” and said: “The fate of this region will be determined by the forces of resistance, with Hezbollah at the forefront,” state media reported.
Nasrallah’s death will be a blow to Hezbollah as it continues to reel from a campaign of escalating Israeli attacks.
Nasrallah is latest Hezbollah leader to fall
While Nasrallah’s death is certainly the most high-profile of recent attacks, it continues a trend of Israel targeting Hezbollah’s leadership structure.
Also on Saturday, in the early hours of the morning, the commander of the group’s missile unit and his deputy were killed in another Israeli attack in southern Lebanon.
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A Swiss teenage cyclist with “a bright future ahead of her” has died a day after suffering a serious head injury at the world championships.
Muriel Furrer crashed while competing on rain-slicked roads in the junior women’s road race in her home country.
The 18-year-old rider fell heavily on Thursday in a forest area south of the city of Zurich and was airlifted to hospital by helicopter, reportedly in a critical condition.
Race organisers announced on Friday she had died.
They said in a statement: “Muriel Furrer sadly passed away today at Zurich University Hospital.”
The UCI governing body for world cycling paid tribute to her in a statement on its website, entitled “The cycling world mourns the loss of Muriel Furrer”.
It read: “It is with great sadness that the Union Cycliste Internationale (UCI) and the Organising Committee of the 2024 UCI Road and Para-cycling Road World Championships today learned the tragic news of the death of young Swiss cyclist Muriel Furrer.
“With the passing of Muriel Furrer, the international cycling community loses a rider with a bright future ahead of her. We offer sincere condolences to Muriel Furrer’s family, friends and her Federation Swiss Cycling.”
Swiss Cycling said in a post on X: “Our hearts are broken, we have no words. It is with a heavy heart and infinite sadness that we have to say goodbye to Muriel Furrer today.
“We are losing a warm-hearted and wonderful young woman who always had a smile on her face. There is no understanding, only pain and sadness.”
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Furrer is the second Swiss cyclist to die in just over a year after crashing on home roads.
At the Tour de Suisse in June 2023, Gino Mader went off the road and down a ravine during a descent. The 26-year-old died from his injuries the next day.
“Obviously it is another tragic death,” Mr Senn said. “There are a lot of similarities, similar feelings. Today is about Muriel.”
Over the past 18 years Nasrallah has grown Hezbollah in his image, expanding its forces, building its infrastructure and significantly expanding its arsenal.
He wasn’t just the leader of Hezbollah, he was a global figurehead of anti-Israel resistance.
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With Iran’s help, Hezbollah became one of the best armed non-state militaries in the world.
It is now decapitated and in disarray.
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During the past decades Israel has also been at work, steadily gathering intelligence on Nasrallah and Hezbollah, building a vast database of information, an effort which arguably distracted them from better understanding the intentions of Hamas.
The intelligence successes of the past days have helped restore Israel’s reputation after the stunning failures on October 7.
Iran and Hezbollah must choose
This is a pivotal moment.
Iran and Hezbollah must now decide how to respond: fight, or backdown.
The strike also killed Ali Karaqi, commander of Hezbollah’s southern front and labelled as the second most wanted by the IDF.
It is still unclear who else died in the strike, but given the location and the presence of top officials, it seems likely that other senior figures would have been eliminated too.
Nasrallah will be replaced.
The assassination of enemy leaders can prove to be a short-term victory because they are often succeeded by someone more formidable than before, as witnessed by the killing of the former Hezbollah leader Abbas al Moussawi in 1992.
He was succeeded by Nasrallah.
The working assumption is that the group will respond with barrages of missiles into Israel, probably targeting Tel Aviv.
But Hezbollah’s command structure has been severely degraded by Israel.
Nasrallah had become isolated as the IDF had steadily killed commanders over a fortnight of scything airstrikes on their compounds in Beirut and elsewhere.
It will probably take time to co-ordinate a response and it will probably be done with Iranian guidance.
Nasrallah might be dead, but Hezbollah isn’t
Hezbollah is badly wounded, not just as a paramilitary force but in the eyes of the Lebanese people, many of whom are angry their country is now facing another period of devastating violence.
This might be a moment for more moderate voices within Lebanon, including the national armed forces, to step in.
As the war escalated over recent weeks, noticeable divisions emerged between Tehran and Nasrallah.
He remained an important ally, however, a trusted advisor to Iran’s Supreme Leader, and this will come as a personal blow to him.
Having resisted the opportunity to get involved so far, Iran might decide the time has come to take the gloves off and deploy what is left of the thousands of missiles they’ve provided Hezbollah with.
Alternatively, after such a difficult ten days, Tehran might conclude that this round of fighting needs to end and pull back with its main proxy still in some shape to rebuild and fight another day.
With such momentum behind Israel, Iran will also be concerned about its own fate and that of its smaller proxies in Iraq and Syria.
Ultimately, the reason for Hezbollah’s existence – to act as insurance against an Israeli attack on Iran’s nuclear facilities – hasn’t changed, but if Tehran calculates its proxies can no longer act as that shield it might try to accelerate its nuclear programme.
Could a ground invasion follow?
The Israeli government has choices of its own: order a ground invasion of southern Lebanon or continue with an air campaign that has delivered such dramatic successes.
There will be strong and compelling voices in Netanyahu’s cabinet urging him to take advantage of the situation and send troops in, but Hezbollah is not defeated, thousands of its soldiers remain and they are likely hiding in the vast tunnel network under the hills across the border.
Even a limited ground invasion risks large loss of life, on both sides, and the potential Israel will be lured into something more prolonged than it intended.
Nasrallah’s death might change the dynamic in Gaza too.
Yahya Sinwar, the leader of Hamas, has clung on and rejected ceasefire attempts in the hope that Hezbollah and Iran would go to war with Israel, dragging its enemy into a multi-front and unwinnable conflict.
That might still happen, but just as Nasrallah became isolated, so too is Sinwar.
The much trumpeted “unity of arenas” has failed to join up.
The Middle East might often look chaotic to outsiders, but there are unspoken rules generally acknowledged and followed by belligerents.
For years Hezbollah and Israel acted within the unwritten but understood parameters of a shadow war.
Then, eleven months ago on 8 October, Hezbollah attacked Israel out of solidarity with Hamas.
Nasrallah tied Lebanon’s fate to Hamas, insisting that Hezbollah would only stop when the fighting ended in Gaza.
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The rules shifted as the crossfire escalated, but it remained broadly contained within boundaries understood by both sides.
Until two weeks ago, 17 September, when thousands of pagers started exploding across Beirut and Lebanon.
It is possible Nasrallah had concluded that Israel was war-weary, and he overestimated the domestic and international pressure Netanyahu was under to end the fighting.
He might have believed that Netanyahu had neither the will nor the support to open up another front.
He, like so many of us, maybe assumed US influence on Israel would prevail.