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Labour has pledged to bolster the power of the UK’s economic watchdog to prevent a repeat of the “disastrous mistakes” of Liz Truss’s mini-budget.

Labour leader Sir Keir Starmer has vowed to introduce legislation that would allow the Office for Budget Responsibility (OBR) to independently publish their own impact assessment of any major and permanent tax and spending changes.

His shadow chancellor, Rachel Reeves, said it meant that “never again” can the “disastrous mistakes” of the former prime minister be repeated, ahead of the first anniversary of her “fiscal event”.

Tories accuse Starmer of wanting to ‘return to agonies of the past’ – politics latest

The mini-budget last September spooked the markets and sparked a huge economic fallout, pushing up government borrowing costs and putting certain pension funds on the brink of collapse.

One of the reasons for the markets’ reaction was that Ms Truss and her chancellor, Kwasi Kwarteng, refused to publish the OBR’s independent forecasts for the public finances alongside the plans.

The party said under its plans, ministers would be forced to open their books to the forecasters – though any government wanting to disregard them could seek to reverse the legislation.

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It said families and businesses are “still paying the price” for her “crashing the economy” – with households coming off fixed rate mortgages paying an average of £220 more a month and inflation forecast to be the highest in the G7.

They have billed their proposal as a “fiscal lock” which would ensure fiscal stability by:

  • Amending the legal framework governing the OBR to guarantee that where a fiscal event makes permanent tax and spending changes over a certain threshold, the fiscal watchdog can independently publish a forecast of the impact
  • Setting out the threshold in a revised charter of budget responsibility, that would be voted on in Parliament
  • Ensuring that in the event of an emergency where changes must be introduced at speed and a forecast cannot be produced in time, the OBR would be allowed to set a date for when it can publish its forecast
  • Setting out a fixed timetable for budgets that would say major fiscal decisions are announced by the end of November each year, allowing businesses and families four months to prepare for the new tax year and avoiding major changes to policy at the last minute
  • Annual autumn budgets would be followed by a spring update in early March providing an updated forecast and minor policy changes

James Murray, Labour’s shadow financial secretary to the Treasury, told Sky News this morning it was “absolutely crucial to legislate because we all remember what happened a year ago”.

He accused the Tories of having “set the economy on fire” with the mini-budget that “sidelined the OBR”.

“Never again should a prime minister and a chancellor be able to play fast and loose with public finances and damage the economy and household budgets in the way they have,” he added.

Speaking ahead of a visit with the Labour leader to the London Stock Exchange on Friday, the shadow chancellor said: “The economic damage done by the Conservatives’ mini-budget was nothing short of disastrous and Britain is still paying the price, with higher mortgages, higher energy bills and higher prices in the shops.

“As chancellor, my mission will be to bring stability back to our economy because that is the only way we can bring growth back. Never again can a prime minister or chancellor be allowed to repeat the disastrous mistakes of last year’s mini-budget.

“Labour will introduce a new fiscal lock to strengthen the UK’s financial stability to prevent the turmoil we witnessed this time last year. Labour will ensure stability returns to our economy and on that rock of stability working people will be better off.”

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Truss ‘tried to fatten and slaughter the pig’

Labour has been seeking to pitch itself as fiscally prudent, prioritising stabilising the economy over big spending commitments in a move that has angered some unions and those on the left.

They have sought to weaponise the anniversary of the Truss mini-budget to hammer home their message of fiscal responsibility, while highlighting the government’s record on the economy.

Ms Truss’ £45bn package of unfunded tax cuts, which she admitted would primarily have benefited the wealthy, sent the pound tumbling, interest rates soaring and culminated with the Bank of England having to intervene to prevent pension markets from collapsing.

Although she rowed back on her measures and sacked her chancellor, Kwasi Kwarteng, it was not enough to save her administration from collapsing and she resigned after just 49 days in the job – making her the shortest serving prime minister in British history.

She is still facing criticism over her actions, with the former Bank of England governor Mark Carney this week accusing her of turning Britain into “Argentina on the Channel” instead of “Singapore on the Thames”.

But Ms Truss has remained unrepentant, blaming “institutional bureaucracy” for her downfall.

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Cost of Christmas dinner set to rise in ‘record-breaking’ festive grocery spree

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Cost of Christmas dinner set to rise in 'record-breaking' festive grocery spree

The cost of a traditional Christmas dinner will rise on last year, according to a closely-watched report that is also forecasting record sales for supermarkets over the festive season.

Kantar Worldpanel, which tracks sales and prices at supermarket chains, said its annual measure for the cost of the typical main meal stood at £31.71 for a family of four.

The value of the list of goods, which comprises a frozen turkey along with vegetables – including potatoes and sprouts – and a Christmas pudding, was 1.3% higher compared to the lead-up to Christmas 2022.

While up, the figure is well below the UK’s rate of inflation which currently stands at 5.6%.

The Christmas dinner item which has shot up the most in price was cranberry sauce, Kantar said, which is more than 26% more expensive than last year.

The sparkling wine element of the meal was almost 6% lower than in 2022, with sprouts and the pudding also cheaper.

The report said that discounting by supermarkets in the run-up to the festive season, aimed at locking in customer loyalty for the big Christmas shop, continued to help push its measure of grocery inflation to ease over the four weeks to 26 November.

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It stood at 9.1% compared to 9.7% over the previous month.

The report said that chains could collectively rake in more than £13bn for the first time over Christmas – a consequence of the higher prices we are being asked to bear.

Shoppers in a supermarket
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Potatoes, carrots and parsnips are more expensive ahead of this Christmas, Kantar says.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “The scene is set for record-breaking spend through the supermarket tills this Christmas.

“The festive period is always a bumper one for the grocers with consumers buying on average 10% more items than in a typical month.

“Some of the increase, of course, will also be driven by the ongoing price inflation we’ve seen this year.

“While the rate at which grocery prices are rising is still well above the norm, the good news for shoppers is that inflation is continuing to come down.”

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Nov: ‘People are starting to spend a bit less’

The Kantar report was released as industry body the British Retail Consortium (BRC) expressed further concern about sales volumes more widely in the run-up to Christmas, fearing that cost of living pressures are taking their toll on budgets.

After official figures showed sales at COVID lockdown levels during October, the BRC suggested that encouraging signs for spending in early November did not hold up for the month as a whole despite widespread early Black Friday discounting.

Its latest Retail Sales Monitor showed total sales by value were 2.7% up last month, easily lagging the rate of inflation.

Food and drink, health, personal care and beauty products continued to drive growth, while jewellery and watches saw the biggest decline in sales on the high street.

BRC chief executive Helen Dickinson said: “Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November.

“While this had the desired effect initially, the momentum failed to hold throughout the month, as many households held back on Christmas spending.

“Retailers are banking on a last-minute flurry of festive frivolity in December and will continue working hard to deliver an affordable Christmas for customers so everyone can enjoy some Christmas cheer.”

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It may not be all bad news for stores and the wider economy, though.

Separate data from Barclays showed confidence in spending on non-essential items reached its highest level since April last month.

Its latest report on card spending pointed to strong demand for fashion on the high street.

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Thames Water reveals leap in pollution incidents

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Thames Water reveals leap in pollution incidents

Thames Water has revealed an 18% rise in pollution incidents during the first half of its financial year.

The country’s largest household supplier reported 257 category one – the most serious – to category 3 pollutions over the six months to the end of September.

It said that action to prevent these incidents was a core part of a three-year action plan to improve customer service that had been approved by its board.

Thames, which is looking to raise bills to help pay for much-needed investment in its ageing infrastructure, said: “Our turnaround plan addresses and mitigates the major drivers of pollutions across our wastewater network and sewage treatment works, including more proactive network cleaning and monitoring, and better prioritised reactive responses.

“Consequently, blockages, which cause over 40% of network pollutions, reduced by 5% in the first half of the year.

“As we look ahead, changes our regulators are making to the definition of pollutions are expected to increase the overall number of pollutions we report, even if there is no change in the impact we have on the environment.

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July: ‘Get rid of this lot’

“Notwithstanding this, we are committed to tackle the root causes of pollutions to meet the expectations of our communities and the needs of the environment.”

UK water firms have faced a backlash following a spate of sewage discharges.

In the case of Thames, it was fined more than £3m in the summer over an incident that saw human waste flow into rivers for more than six hours un-noticed.

Performance at Thames has been under particular scrutiny.

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Water outage hits Surrey

In June, Sky News revealed how fears that Thames could be swept away under the weight of its £14bn debt pile had prompted the government to ready a rescue plan.

Its investors later agreed a further £750m of investment.

Earlier this autumn, regulator Ofwat fined the company £51m for failure to reach its performance targets.

That money will be paid back through reductions to customer bills.

Thames is pushing for the watchdog to allow an increase in bills from 2025 to help fund its investment plans, with the focus on six key areas including tackling leaks, customer complaints, supply interruptions and pollution.

Interim co-chief executives Cathryn Ross and Alastair Cochran warned the turnaround would take time.

“Whilst business resilience remains fragile with frequent failures in our ageing infrastructure, we have taken a risk-based approach to improve reliability by more closely managing core assets and we have started to bring greater rigour to maintenance practices.

“We have also developed long-term asset plans to build resilience and redundancy that will ultimately restore operations to a level our customers expect.”

Thames revealed an 11% rise in revenues to £1.2bn over the six month period.

While underlying profits rose 22% to £627m, its bottom line profit before tax came in more than 50% lower at £246.4m.

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Traders were told of Hamas attack on Israel in advance and ‘profited from tragic events’, researchers claim

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Traders were told of Hamas attack on Israel in advance and 'profited from tragic events', researchers claim

Israeli authorities are investigating claims some investors may have known in advance about the Hamas plan to attack Israel on 7 October and used that information to make hundreds of millions of pounds.

Research by US law professors Robert Jackson Jr and Joshua Mitts, from New York University and Columbia University respectively, found significant short-selling of shares leading up to the massacre, which triggered a war that has raged for nearly two months.

“Days before the attack, traders appeared to anticipate the events to come,” the authors wrote, citing short interest in the MSCI Israel Exchange Traded Fund (ETF) they say “suddenly, and significantly, spiked” on 2 October.

“And just before the attack, short selling of Israeli securities on the Tel Aviv Stock Exchange (TASE) increased dramatically,” they added.

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Heavy bombing in northern Gaza

The Israel Securities Authority told Reuters: “The matter is known to the authority and is under investigation by all the relevant parties.”

The researchers said short-selling prior to 7 October “exceeded the short-selling that occurred during numerous other periods of crisis”, including the recession following the financial crisis of 2008, the 2014 Israel-Gaza war and the COVID-19 pandemic.

They gave the example of Leumi, Israel’s largest bank, which saw 4.43 million new shares sold short over the 14 September to 5 October period, yielding profits of 3.2bn shekels (£680m) on that additional short-selling.

“Although we see no aggregate increase in shorting of Israeli companies on US exchanges, we do identify a sharp and
unusual increase, just before the attacks, in trading in risky short-dated options on these companies expiring just after the attacks,” they said.

Read more:
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Gaza ‘split into three’ as Israel pushes deeper into south
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What is shorting?

Short sellers are investors who bet on a fall in the price of a security, in this case a stock.

They typically do this by borrowing shares in a particular company and then selling them.

If the share price falls, they will then buy those shares back at the lower price, sealing in their profit.

The shares are then returned to the original investor from whom they were borrowed.

Traders ‘profited from these tragic events’

The value of the MSCI Israel ETF fell by 6.1% on 11 October, the first day the American market was open for business after the attack, and later dropped by 17.5% over the 20 days following the massacre.

The researchers – who did not name the traders – identified two large transactions on 2 October, adding: “On these two transactions alone, the trader made several million dollars in profit (or in losses avoided).”

They also identified similar patterns in April, when it was reported Hamas was initially planning its attack on Israel.

While the researchers do not identify Hamas as being behind the trades, their paper suggests the information originated from the terror group: “Our findings suggest that traders informed about the coming attacks profited from these tragic events.”

Their paper, Trading on Terror?, was published on the Social Science Research Network (SSRN) on Sunday.

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