Next two years will be ‘challenging’, says Chancellor Jeremy Hunt – as disposable incomes are set to fall to record lowest level

Published

3 years ago

November 18, 2022

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The UK’s economic outlook will be “challenging” for the next two years, Jeremy Hunt says.

The chancellor presented his autumn statement to parliament on Thursday, littered with stealth taxes and curbs on government spending amounting to £55bn in an attempt to plug the black hole in the public finances.

But the independent Office for Budget Responsibility (OBR) warned the disposable incomes of UK households would fall by 7.1% over the next two years – the lowest level since records began in 1956/7, and taking incomes down to 2013 levels.

Politics live: Tax burden reaches highest level since WWII

Speaking to Sky News, Mr Hunt said it was “a difficult time for everyone” but tax hikes and spending cuts are needed to get the economy “on an even keel”.

“Over the next two years it is going to be challenging,” he said.

“But I think people want a government that is taking difficult decisions, has a plan that will bring down inflation, stop those big rises in the cost of energy bills and the weekly shop, and at the same time is taking measures to get through this difficult period.”

The chancellor insisted that his autumn statement is a “very Conservative package” following criticism from some Tory MPs.

“The Office for Budgetary Responsibility said yesterday that what we’re doing is actually recession shallow, it’s saving jobs,” he said.

“But what I would say to my Conservative colleagues is there is nothing Conservative about spending money that you haven’t got, there is nothing Conservative about not tackling inflation, there is nothing Conservative about ducking difficult decisions that put the economy on track.

“And we’ve done all of those things and that is why this is a very Conservative package to make sure we sort out the economy.

“None of this is easy, but it’s the right thing to do.”

Former business secretary Jacob Rees-Mogg accused the chancellor of taking the “easy option” in Thursday’s autumn statement rather than bearing down harder on public spending.

He said the country needed lower taxes to drive up growth.

Probed on how it can be fair that pensions will go up by inflation when public sector workers will not see pay increase alongside prices, Mr Hunt said the elderly do not have the ability to work more to improve their take home pay.

“Well, I think the truth is, first of all, pensioners have retired. They don’t have the ability to work more or work longer hours in the way that people of working age do,” the chancellor said.

“But I think it is wrong to say that only the poorest pensioners are feeling the squeeze at the moment.

“I think this is something that’s affecting everyone and I think it’s right.

“Having made that promise to pensioners in our manifesto that we would have this triple lock, I think this is exactly the kind of tough time that people want it to kick in.

“And so that’s why I think it’s the right thing to do.”

The chancellor added: “We’re not pretending that this isn’t going to be a difficult time for everyone. But what we have is a plan.”

In yesterday’s autumn statement, Mr Hunt announced economic policies which the government hopes will help to rebalance the nation’s finances after the economic turmoil which followed former chancellor Kwasi Kwarteng’s mini-budget.

These included:

• Income tax thresholds being frozen for two more years until April 2028

• Top level of income tax now being paid on earnings over £125,140 instead of £150,000

• Pensions triple lock will remain – with pensioners to see a 10.1% increase in weekly payments in line with inflation

• Benefits to also rise in line with inflation – by 10.1%

• Energy cap to rise from £3,000 a year to £2,500 a year beyond April

• UK minimum wage to rise from £9.50 to £10.42 an hour for those aged over 23

• Windfall tax on oil giants’ profits to rise from 25% to 35% and be extended by two years until March 2028

• Additional cost of living payments of £900 for those on benefits and £300 for pensioners

• Spending on public services in England to rise slower than planned

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As a result of Mr Hunt’s announcements, the tax burden in the UK will also now be at its highest since the Second World War, and there are stark warnings about increased bills and higher unemployment as the recession takes hold – as well as predictions the economy will still shrink 1.4% in 2023.

But most of the difficult decisions on spending have been postponed until after the next general election, due in 2024.

Treasury analysis suggests around 55% of households will be worse off as a result of the measures.

Labour has blamed “12 weeks of Conservative chaos” and “12 years of Conservative economic failure” for the bleak outlook.

Shadow chancellor Rachel Reeves accused the government of forcing the UK economy into a “doom loop where low growth leads to higher taxes, lower investments and squeezed wages, with the running down of public services”.

Ms Reeves told Sky News she is “really worried about what’s going to happen to people’s living standards next year from April” and said a Labour government would have done more “to alleviate some of that pressure on the ordinary working person”.

As Mr Hunt took part in the broadcast round Friday morning, economic think-tank the Resolution Foundation published analysis suggesting his autumn statement’s tax rises would deliver a 3.7% income hit to typical households.

The foundation said the statement had piled further pressure on the “squeezed middle” and that the focus on “stealthy” tax threshold freezes to raise revenue would extend far beyond high earners.

The think tank also found that the budget would reverse much of the government’s levelling up agenda.

“The £15 billion of cuts to capital investment announced yesterday will undo 80% of the remaining increases in public investment announced by previous chancellor Rishi Sunak, which underpinned the levelling-up agenda,” it said.

World

Lifting sanctions on Putin for Trump meeting is a massive victory for Moscow

Published

3 hours ago

August 9, 2025

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Lifting sanctions on Putin for Trump meeting is a massive victory for Moscow

The location of Alaska is unexpected.

Although close to Russia geographically – less than three miles away at the narrowest point – it’s a very long way from neutral ground.

The expectation was they would meet somewhere in the middle. Saudi Arabia perhaps, or the United Arab Emirates. But no, Vladimir Putin will be travelling to Donald Trump’s backyard.

Follow latest: Zelenskyy says Ukraine will not give up land

It’ll be the first time the Russian president has visited the US since September 2015, when he spoke at the UN General Assembly. Barack Obama was in the White House. How times have changed a decade on.

The US is not a member of the International Criminal Court, so there’s no threat of arrest for Vladimir Putin.

But to allow his visit to happen, the US Treasury Department will presumably have to lift sanctions on the Kremlin leader, as it did when his investment envoy Kirill Dmitriev flew to Washington in April.

And I think that points to one reason why Putin would agree to a summit in Alaska.

Instead of imposing sanctions on Russia, as Trump had threatened in recent days, the US would be removing one. Even if only temporary, it would be hugely symbolic and a massive victory for Moscow.

The American leader might think he owns the optics – the peace-making president ordering a belligerent aggressor to travel to his home turf – but the visuals more than work for Putin too.

Shunned by the West since his invasion, this would signal an emphatic end to his international isolation.

Donald Trump has said a ceasefire deal is close. The details are still unclear but there are reports it could involve Ukraine surrendering territory, something Volodymyr Zelenskyy has always adamantly opposed.

Either way, Putin will have what he wants – the chance to carve up his neighbour without Kyiv being at the table.

And that’s another reason why Putin would agree to a summit, regardless of location. Because it represents a real possibility of achieving his goals.

It’s not just about territory for Russia. It also wants permanent neutrality for Ukraine and limits to its armed forces – part of a geopolitical strategy to prevent NATO expansion.

In recent months, despite building US pressure, Moscow has shown no intention of stopping the war until those demands are met.

It may be that Vladimir Putin thinks a summit with Donald Trump offers the best chance of securing them.

World

It’s been four years since a US president met Putin – and Trump will have a lot of ice to break

Published

6 hours ago

August 9, 2025

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It's been four years since a US president met Putin - and Trump will have a lot of ice to break

Donald Trump and Vladimir Putin will meet where their countries brush shoulders.

But why Alaska and why now?

A US-Russia summit in Alaska is geography as metaphor and message.

Alaska physically bridges both countries across the polar expanse.

Follow latest: Ukraine war live updates

Choosing this location signals strategic parity – the US and Russian leaders face to face in a place where their interests literally meet.

Alaska has surged in geopolitical importance due to its untapped fossil fuels.

Trump has aggressively pushed for more control in the Arctic, plans for Greenland and oil access.

Holding talks there centres the conversation where global energy and territorial stakes are high, and the US president thrives on spectacle.

A dramatic summit in the rugged frontier of Alaska plays into his flair for the theatrical.

It is brand Trump – a stage that frames him as bold, unorthodox and in command.

It was 2021 when a US president last came face-to-face with a Russian president.

The leaders of the two countries haven’t met since Russia invaded Ukraine.

But Trump is in touch with all sides – Russia, Ukraine and European leaders – and says they all, including Putin, want “to see peace”.

He’s even talking up the potential shape of any deal and how it might involve the “swapping of territory”.

Volodymyr Zelenskyy has repeatedly insisted he will not concede territory annexed by Russia.

Moscow has sent the White House a list of demands in return for a ceasefire.

Trump is attempting to secure buy-in from Zelenskyy and other European leaders.

He styles himself as “peacemaker-in-chief” and claims credit for ending six wars since he returned to office 200 days ago.

There’s much ice to break if he’s to secure a coveted seventh one in Alaska.

World

UK joins four countries in condemning Israel’s plan for new operation in Gaza

Published

6 hours ago

August 9, 2025

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UK joins four countries in condemning Israel's plan for new operation in Gaza

The UK and four allies have criticised Israel’s decision to launch a new large-scale military operation in Gaza – warning it will “aggravate the catastrophic humanitarian situation” in the territory.

The foreign ministers of Britain, Australia, Germany, Italy and New Zealand said in a joint statement that the offensive will “endanger the lives of hostages” and “risk violating international humanitarian law”.

It comes a day after Israel’s security cabinet approved an operation to take military control of Gaza City – and concluded a full takeover of the enclave is required to end the conflict.

It marks another escalation in the war in Gaza, sparked by the Hamas attack of 7 October 2023.

In their joint statement, the UK and its allies said they “strongly reject” the decision, adding: “It will endanger the lives of the hostages and further risk the mass displacement of civilians.

“The plans that the government of Israel has announced risk violating international humanitarian law. Any attempts at annexation or of settlement extension violate international law.”

The countries also called for a permanent ceasefire as “the worst-case scenario of famine is unfolding in Gaza”.

It comes as Sky News analysis has found that airdrops of aid are making little difference to Gaza’s hunger crisis, and pose serious risks to the population – with a father-of-two killed by a falling package.

Meanwhile, France, Canada, Qatar, the United Arab Emirates and the United Nations all criticised Israel’s plan for a full occupation of Gaza.

Israeli Prime Minister Benjamin Netanyahu “expressed his disappointment” with German Chancellor Friedrich Merz’s in phone call on Friday after Berlin decided it would stop selling arms to Israel.

In a post on X, the Israeli prime minister’s office added: “Instead of supporting Israel’s just war against Hamas, which carried out the most horrific attack against the Jewish people since the Holocaust, Germany is rewarding Hamas terrorism by embargoing arms to Israel.”

US ambassador hits out at Starmer

Earlier on Friday, the US Ambassador to Israel, Mike Huckabee, criticised Sir Keir Starmer after he said Israel’s decision to “escalate its offensive” in Gaza is “wrong”.

Mr Huckabee wrote on X: “So Israel is expected to surrender to Hamas & feed them even though Israeli hostages are being starved? Did UK surrender to Nazis and drop food to them? Ever heard of Dresden, PM Starmer? That wasn’t food you dropped. If you had been PM then UK would be speaking German!”

In another post around an hour later Mr Huckabee wrote: “How much food has Starmer and the UK sent to Gaza?

“@IsraeliPM has already sent 2 MILLION TONS into Gaza & none of it even getting to hostages.”

Sir Keir has pledged to recognise a Palestinian state in September unless the Israeli government meets a series of conditions towards ending the war in Gaza.

The UK and its allies criticised Israel as US President JD Vance and UK Foreign Secretary David Lammy met at Chevening House in Kent on Friday.

Mr Vance described a “disagreement” about how the US and UK could achieve their “common objectives” in the Middle East, and said the Trump administration had “no plans to recognise a Palestinian state”.

He said: “I don’t know what it would mean to really recognise a Palestinian state given the lack of functional government there.”

Mr Vance added: “There’s a lot of common objectives here. There is some, I think, disagreement about how exactly to accomplish those common objectives, but look, it’s a tough situation.”

The UN Security Council will meet on Saturday to discuss the situation in the Middle East.

Ambassador Riyad Mansour, permanent observer of the State of Palestine to the United Nations, said earlier on Friday that a number of countries would be requesting a meeting of the UN Security Council on Israel’s plans.