Jeremy Hunt has been accused of “picking the pockets of working people” after announcing billions worth of tax hikes in his Autumn Statement – as Britons face the biggest fall in disposable income on record.
The Office for Budget Responsibility (OBR), which checks the government’s fiscal plans and provides economic forecasts to go alongside them, has given a bleak assessment of the UK’s economic outlook.
The country is now in a recession, with more than half a million people forecast to lose their jobs while living standards crash as a result of rising prices.
Politics live: Britons face ‘staggering’ fall in disposable income
The spiralling cost of living will erode real wages and reduce living standards by 7% in total over the next two years, the OBR’s assessment said, wiping out the previous eight years’ growth, despite over £100bn of additional government support.
Paul Johnson, the head of the Institute for Fiscal Studies, said the figures were “simply staggering”.
“Simply staggering numbers in OBR report,” he said on Twitter.
“Real Household Disposable Income per person to fall more than 7% over next two years. Biggest fall on record. Taking incomes down to 2013 levels.”
In his Autumn statement, Mr Hunt set out a package of around £30bn of spending cuts and £24bn in tax rises over the next five years.
The measures will see around 55% of households worse off, according to the Treasury’s own analysis.
Among the “difficult decisions” Mr Hunt said he was forced to make to curb inflation, he announced the cap on average household energy bills would increase from £2,500 to £3,000 from April.
Please use Chrome browser for a more accessible video player
Sky’s economics and data editor Ed Conway takes a look at the key figures from the chancellor’s autumn statement.
But Mr Hunt said “this still means an average of £500 support for every household”, while there would also be additional cost-of-living payments for people on means-tested benefits, pensioner households and those on disability benefits.
In addition to rising energy bills, millions more Britons will pay more tax due to a freeze on income tax personal allowance, national insurance and inheritance tax thresholds.
Sometimes known as a “stealth tax”, the measure will drag more people into higher tax brackets, so is effectively a tax rise.
The Federation of Small Businesses (FSB) slammed the move, calling the budget “high on stealth-creation and low on wealth-creation”.
Some of the other main announcements from the Autumn Statement include:
- The higher rate of tax threshold reduced to £125,140
- Benefits and state pension to rise in line with inflation
- Windfall tax extended until March 2028 and increased to 35%
- Electric cars no longer exempt from car tax from April 2025
- An extra £2.4bn per year on schools
- NHS to get £3.3bn and adult social care £1bn next year and £1.7bn in 2024
- Government spending will continue to increase in real terms every year for the next five years, but at a slower rate than previously planned.
- Freeze on income tax personal allowance, national insurance and inheritance tax thresholds
A former Labour economist and policymaker, Torsten Bell, who was in the Treasury during the last financial crisis, has said the autumn statement could have been announced by the opposition.
But Labour branded it an “invoice to the economic carnage the government has created”.
Hunt a ‘scrooge who has not cancelled Bankers’ Christmas’
Shadow chancellor Rachel Reeves questioned the fairness of not abolishing nom-dom status, which she called a “tax-free income for millionaires”, and of lifting the cap on bankers’ bonuses while “urging wage restraint for everybody else”.
“He’s asking working people to take the hit with less money in their pockets in the run-up to Christmas, but also for years to come,” she said.
“But if you’re a banker, a non-dom, or a private equity manager, don’t worry – Scrooge hasn’t cancelled your Christmas.
“In the last hour, the Conservatives have picked the pockets of purses and wallets of the entire country as the chancellor has deployed a raft of stealth taxes taking billions of pounds from ordinary working people.
Please use Chrome browser for a more accessible video player
Rachel Reeves said all the country got today was an invoice to the ‘carnage’ created by the government
“The country is sick of being ripped off by the Tories, we want our money back.”
Mr Hunt sought to blame Russia’s invasion of Ukraine for the “global energy crisis, a global inflation crisis and a global economic crisis” and said “we have risen to bigger challenges before”.
“We aren’t immune to these headwinds, but with this plan for stability, growth and public services, we will face into the storm,” he said.
But Green Party MP Caroline Lucas said the chancellor did not acknowledge the “elephant in the room”, which she said was “the economic catastrophe of Brexit”.
SNP Treasury spokeswoman Alison Thewlis also told MPs: “This is a UK so weak that no one would wish to join it. Scotland cannot be forced to stay in broke, broken, Brexit Britain.”
The OBR said in its forecast that the withdrawal from the EU had a “significant adverse impact” on UK trade, while a former Bank of England economist said this week that it had “permanently damaged” the economy and was the ultimate reason for many of the austerity measures announced today.
Read More:
Energy bills help, pensions up and other key announcements from chancellor at a glance
Public support for Brexit at all-time low
The assessments from the OBR have been long awaited after the official forecasting body was not used during the tax-slashing September mini-budget, which spooked the markets, pushed up the cost of borrowing, sent the pound falling and forced the Bank of England to intervene to stop pension funds from collapsing.
Mr Hunt’s package is in stark contrast to his predecessor’s ill-fated plan, which analysis released on Monday found cost the UK £30bn – doubling the sum the Treasury said would have to be raised to plug the “black hole”.
But the pound has still dropped sharply against the US dollar as financial markets fret over warnings the UK is already in recession.
The Lib Dems blamed the problems on government incompetence, calling today’s announcement a “cost of chaos budget (that) will cause untold pain for everyone”.
But some of the measures announced have been welcomed.
Martin Lewis, the money saving expert, said: “I am very pleased that both benefits and the state pension are being increased by the 10.1% September inflation rate.
“It only happens from next April, and it will still be hard for many, but if it was less than this it would’ve been devastating.”
World
Asianmarkets bounce back after Trump pauses higher tariffs for most countries – despite increasing those on China to 125%
Asian markets have reacted positively after Donald Trump paused his so-called “reciprocal” tariffs on most of America’s trading partners for 90 days, despite the US president increasing those on China to 125%.
There have been fears of a global recession and stock markets around the world had plummeted after Mr Trump announced his “Liberation Day” tariffs on Wednesday 2 April.
However, Japan’s Nikkei share average was up 8.2% by 3.50am BST, while the broader Topix had risen 7.5%.
Similarly, the S&P 500 stock index had jumped 9.5% and global markets bounced back following Mr Trump’s announcement on Wednesday that the increased tariffs on nearly all trading partners would now be paused.
Tariffs latest: Trump gives reasons for pausing some tariffs
In a post on his Truth Social platform, Mr Trump said the “90-day pause” was for the “more than 75 countries” who had not retaliated against his tariffs “in any way”.
He added that during this period they would still have to pay a “substantially lowered” 10% tariff, which is “effective immediately”.
It is lower than the 20% tariff that Mr Trump had set for goods from the European Union, 24% on imports from Japan and 25% on products from South Korea.
The UK was already going to face a blanket 10% tariff under the new system.
Mr Trump said the increased 125% tariff on imported goods from China was “effective immediately”.
He added: “At some point, hopefully in the near future, China will realise that the days of ripping off the USA, and other countries, is no longer sustainable or acceptable.”
Hours after Mr Trump announced the pause on tariffs for most countries, a White House official clarified that this did not apply to the 25% duties imposed on some US imports from Mexico and Canada.
The tariffs were first announced in February and Mexico and Canada were not included in the “Liberation Day” announcements.
Please use Chrome browser for a more accessible video player
Donald Trump says China ‘wants to make a deal’
Hours before the 125% tariff on China was revealed, Beijing said it was increasing tariffs on US goods by 50%.
It meant tariffs of 84% would be enforced on US goods – up from the 34% China had previously planned.
Mr Trump spoke to reporters in the Oval Office. Pic: Reuters
China ‘want to make a deal’
Asked why he posted “BE COOL” on Truth Social hours before announcing his tariff pause, Mr Trump told reporters at the White House: “I thought that people were jumping a little bit out of line.”
“They were getting yippy, you know, were getting a little bit yippy, a little bit afraid,” he added.
Mr Trump continued: “China wants to make a deal, they just don’t know how to go about it.
“[They’re] quite the proud people, and President Xi is a proud man. I know him very well, and they don’t know quite how to go about it, but they’ll figure it out.
“They’re in the process of figuring out, but they want to make a deal.”
Read more:
Why Trump finally blinked
Is there method to madness amid market chaos?
Who’s most likely to see pensions hurt
White House press secretary Karoline Leavitt said the walk back was part of a grand negotiating strategy by Mr Trump.
“President Trump created maximum negotiating leverage for himself,” she said, adding that the news media “clearly failed to see what President Trump is doing here”.
US Treasury Secretary Scott Bessent also insisted Mr Trump had strengthened his hand through his tariffs.
“President Trump created maximum negotiating leverage for himself,” he said.
Listen to Sky News Daily on your podcast app 
Mr Bessent said Mr Trump decided to raise tariffs on China because Beijing hadn’t reached out to the US and instead increased its own levies on US goods.
Downing Street said that the UK will “coolly and calmly” continue its negotiations with the US.
A Number 10 spokeswoman said: “A trade war is in nobody’s interests. We don’t want any tariffs at all, so for jobs and livelihoods across the UK, we will coolly and calmly continue to negotiate in Britain’s interests.”
Along the thin strip of beach and woodland known as the Vistula Spit which marks the northernmost demarcation between Poland and the Russian exclave of Kaliningrad, there is not much in the way of a border.
Just some torn wire fencing and a few rotten posts which seem to stagger drunkenly into the shallows of the Baltic Sea.
Beneath a sign barring entry, we find a couple of empty bottles of Russian cognac and vodka.
It doesn’t feel like the edge of NATO territory.
This doesn’t feel like the edge of NATO territory
“I don’t see much protection. It’s not good,” says Krzysztof from Katowice, who has come to inspect the border himself.
“We have to have some kind of scare tactic, something to show that we are trying to strengthen our army,” says Grzegorz, who lives nearby.
“At the same time I think I would not base the defence of our country solely on our army. I am convinced that Europe or America, if anything were to happen, will help us 100%.”
Poland is investing massively in its defence, with military spending set to hit 4.7% of GDP in 2025, more than any other NATO country.
Polish Prime Minister Donald Tusk has said he will introduce voluntary military training for men of any age, and women too should they wish, so the army has a competent reserve force in the event of war.
Border between EU and the Russian Federation
He is investing $2.5bn in stronger border fortifications between Russia and Belarus, a project called East Shield which will include anti-tank obstacles, bunkers and potentially minefields too.
Along with its Baltic neighbours, Poland is withdrawing from the Ottawa convention against the use of land mines. It hasn’t committed to using them, but it wants to have that option.
We’ve been granted access to one of the cornerstones of Polish, and European defence, which is a couple of hours drive from the Vistula spit at the Redowicze military base.
Aegis Ashore Poland
Aegis Ashore Poland, together with its sister site in Romania, are the land-based arms of NATO’s missile defence shield over Europe, which is run by the US navy.
They are symbols of the US commitment to NATO and to the protection of Europe.
The control room at Aegis Ashore Poland
And despite changes at the top of the Pentagon it is “business as usual”, says Captain Michael Dwan who oversees air and missile defence within the US Sixth Fleet.
“Our mission to work with NATO forces has been unchanged. And so our commitment from the United States perspective and what capability we bring to ballistic missile defence and the defence of NATO is championed here in Poland.”
The control room at Aegis Ashore Poland
As far as Russia is concerned, NATO’s two missile defence bases in Romania and Poland represent a NATO threat on their doorstep and are therefore a “priority target for potential neutralisation”, per Russia’s foreign ministry.
NATO says the installations are purely defensive and their SM-3 interceptor missiles are not armed and are not intended to carry warheads. Russia counters they could easily be adapted to threaten Russia.
Not the case, Captain Dwan says.
Aegis Ashore Poland
Aegis Ashore Poland
Read more from Sky News:
King and Queen meet Pope at the Vatican
British passports are about to get more expensive
“It’s not a matter of moving offensive weapons here into the facility, the hardware and the infrastructure is simply not installed.
“It would take months or years to change the mission of this site and a significant amount of money and capability and design.”
With so much marked “secret” on the site, it seems amazing to be granted the access.
But for NATO, transparency is part of deterrence. They want potential adversaries to know how sophisticated their radar and interception systems are.
They know that if they carried warheads on site, that would make them a target so they don’t.
Deterrence also depends on whether potential adversaries believe in the US’s commitment to NATO and to Europe’s defence.
On an operational level, as far as the troops are concerned, that commitment may still be iron-clad.
But as far as its commander-in-chief goes, there is still – as with so much around Donald Trump’s presidency – a great deal of uncertainty.
In the Oval Office on Wednesday afternoon President Trump suggested he might bundle a potential US troop drawdown in Europe together with the issue of EU trade and tariffs.
“Nice to wrap it up in one package,” he said, “it’s nice and clean”.
Probably not the way Europe sees it, not with a resurgent Russia on their doorstep, economic tailwinds breeding animosity and the notion of Pax Americana crumbling at their feet.
The defence secretary will urge “coalition of the willing” nations to increase pressure on Russia to end its war in Ukraine as plans to support peace ramp up.
John Healey and French defence minister Sebastien Lecornu will lead about 30 defence ministers in Brussels on Thursday as they discuss operational plans for a multinational peacekeeping force in Ukraine as part of the “coalition of the willing”.
They will look at each nation’s capabilities and how they could be best used to support Ukraine’s long-term defence and security as part of what the Ministry of Defence called a “reassurance force”.
UK and French military chiefs discussed planning with Ukrainian President Volodymyr Zelenskyy and his military chiefs in Kyiv last weekend.
Peace negotiations are ongoing between the US and Russia, however, US officials appear to be growing increasingly impatient with the lack of progress after Donald Trump publicly suggested a month ago Vladimir Putin wants to end the war.
Read more: Who’s in and who’s out of the coalition of the willing?
Leaders of nations part of the coalition of the willing at a summit in Paris on 27 March. Pic: AP
Last Tuesday, the Kremlin described the latest US peace proposal as unacceptable in its current form because it does not solve the “root causes” of the conflict.
Mr Putin wants to dismantle Ukraine as an independent, functioning state and has demanded Kyiv recognise Moscow’s annexation of Crimea and other partly occupied areas and pull its forces out, as well as a pledge for Ukraine to never join NATO and to demilitarise.
Secretary of State Marco Rubio said on Friday Mr Trump is not “going to fall into the trap of endless negotiations” with Moscow.
Read more:
Two Chinese citizens ‘fighting for Russia’ captured in Ukraine
Zelenskyy makes dig at US over response to Russian attack
Please use Chrome browser for a more accessible video player
Children killed in Russian missile strike
Despite the apparent impasse in talks, the coalition of the willing – which does not include the US – is continuing with its plans for when peace is agreed.
Mr Healey is expected to tell his fellow defence ministers: “We cannot jeopardise the peace by forgetting about the war, so we must put even more pressure on Putin and step up our support for Ukraine – both in today’s fight and the push for peace.
“Our commitment is to put Ukraine in the strongest position to protect Ukraine’s sovereignty and deter future Russian aggression.”
On Friday, the defence secretary and his German counterpart, Boris Pistorius, will chair the 27th meeting of the Ukraine Defence Contact Group at NATO’s headquarters in Brussels.
The group is an alliance of about 50 countries – all 32 NATO member states, including the US, and about 20 other countries – that has been supporting Ukraine by sending military equipment since Russia invaded in April 2022.
A Ukraine Defence Contact Group meeting – including the US defence secretary – in March. Pic: AP
Mr Healey and Mr Pistorius will “drive forward additional military support” as Russia continues to attack Ukraine.
The latest development in the war has seen Mr Zelenskyy say Ukraine has intelligence there are at least 155 Chinese citizens fighting for the Russian military.
On Tuesday, Mr Zelenskyy released a video of a Chinese soldier taken by Ukrainian forces, with another captured by Ukrainian forces, he said.
Chinese foreign ministry spokesperson Lin Jian denied claims there were “many more” Chinese citizens fighting alongside Russians in Ukraine.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway