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It’s autumn statement time.

Once upon a time, these winter budgets used to be brief updates on the fiscal forecasts, never overshadowing the far more substantial main budget in the spring. Or at least so we’re told.

In practice, for as long as I’ve been covering economics, the autumn statement (or, as Gordon Brown used to call it, the pre-budget report) has simply been the chancellor’s second bite of the fiscal apple – a budget in all but name.

In other words, these statements are quite a big deal.

They have been used to raise taxes and cut them, to lift spending and lower it.

Indeed, it was at Jeremy Hunt’s first autumn statement last year that he introduced some of the tough measures designed to clear up the economic mess following predecessor Kwasi Kwarteng’s mini-budget – freezing income tax and national insurance thresholds all the way until 2028, consigning millions of families to higher taxes.

This time around, we’re all being told that the story will be very different – in particular that tax cuts are now imminent.

We’ll get to those cuts in a moment – and the bizarre pantomime of a government claiming it is cutting taxes even as it does precisely the opposite – but let’s start by getting the “headroom” stuff out of the way.

If you’ve been following any of the coverage of the impending autumn statement, you’ll doubtless have read about how the chancellor may now be ready to start cutting taxes, because he’s been told he has enough “headroom” to do so.

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Chancellor Jeremy Hunt has said

It all sounds rather scientific, doesn’t it – as if a universal measure of fiscal probity has determined that now would be a sensible point to reduce taxation. Except, of course, it isn’t.

Actually in this case, “headroom” means something very specific indeed.

This government, like most of its predecessors since Gordon Brown, has set itself some fiscal rules designed to shore up confidence in its policymaking.

The main rule facing Mr Hunt is that he has committed to getting the national debt falling as a percentage of gross domestic product (GDP) within five years.

This is, I can’t emphasise enough, a self-imposed rule. Sure: in the light of what happened to the previous Tory government (which briefly eschewed fiscal rules) there’s a strong argument for these rules. But they are not, by any means, tablets of stone.

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Labour’s plans for the economy

Regardless, the debt rule is where that notion of “headroom” comes from. By the end of the five-year forecast horizon mapped out in March (the budget – the last time these figures wreak havoc updated) the UK’s net debt was falling ever so slightly. The fall was equivalent to roughly £6.5bn. Voila: that’s the headroom!

Roll on another six months and a few things have changed.

First, the economy looks a bit bigger than it did in March. This is partly because it has grown a little faster than expected, but mostly because the Office for National Statistics has reassessed its opinion of the size of the economy.

Also, because inflation was higher than expected, the cash size of the economy looks a bit bigger, while the national debt’s size is less changed.

Tot it all up and, due to these mostly statistical artefacts, all of a sudden the national debt as a percentage of that GDP figure looks a bit smaller. The upshot is the apparent “headroom” against this rule is significantly larger: possibly £15bn or maybe even over £20bn.

These sums are, it’s worth underlining, quite arbitrary. They mostly don’t reflect either that the economy is much healthier than it was back in March, or indeed that the government’s decisions have made much difference to the scale of the national debt. They are marked against an entirely self-written fiscal rule. And anyway, the “headroom” the chancellor is left with is still smaller than his predecessors tended to enjoy.

Despite all of those provisos, the government is likely to use these rules as a justification to start cutting taxes.

Yet there’s a big proviso here too. The total tax burden (the amount of taxes we as a country pay as a percentage of our national income) is rising.

Indeed, on the basis of the latest Office for Budget Responsibility numbers, it’s far higher now than it was before Rishi Sunak became prime minister, and is set to rise to the highest level since comparable records began in 1948.

These are the pieces of context it’s worth bearing in mind ahead of this event.

The economy is flatlining. The scale of Britain’s total debt is now far, far higher than before the pandemic. And it’s hard to envisage a scenario where the overall tax burden ends the coming year lower than when this chancellor took over.

None of this will stop Mr Hunt and Mr Sunak putting as positive a gloss on the economic update as they can. But their task will not be easy.

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Daily Mail-owner Rothermere eyes minority Telegraph stake in RedBird deal

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Daily Mail-owner Rothermere eyes minority Telegraph stake in RedBird deal

The publisher of the Daily Mail has held talks in recent days about taking a minority stake in the Telegraph newspapers as part of a deal to end the two-year impasse over their ownership.

Sky News has learnt that Lord Rothermere, who controls Daily Mail & General Trust (DMGT), was in detailed negotiations late last week which would have seen him taking a 9.9% stake in the Telegraph titles.

It was unclear on Monday whether the talks were still live or whether they would result in a deal, with one adviser suggesting that the discussions may have faltered.

One insider said that if DMGT did acquire a stake in the Telegraph, the transaction would be used as a platform to explore the sharing of costs across the two companies.

They would, however, remain editorially independent.

Sources said that RedBird and IMI, whose joint venture owns a call option to convert debt secured against the Telegraph into equity, were hoping to announce a deal for the future ownership of the media group this week, potentially on Thursday.

However, the insider suggested that a transaction could yet be struck without any involvement from DMGT.

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The progress in the talks to seal new ownership for the right-leaning titles comes days after the government said it would allow foreign state investors to hold stakes of up to 15% in British national newspapers.

That would pave the way for Abu Dhabi royal family-controlled IMI to own 15% of the Daily and Sunday Telegraph – a prospect which has sparked outrage from critics including the former Spectator editor Fraser Nelson.

The decision to set the ownership threshold at 15% follows an intensive lobbying campaign by newspaper industry executives concerned that a permanent outright ban could cut off a vital source of funding to an already-embattled industry.

RedBird Capital, the US-based fund, has already said it is exploring the possibility of taking full control of the Telegraph, while IMI would have – if the status quo had been maintained – been forced to relinquish any involvement in the right-leaning broadsheets.

Other than RedBird, a number of suitors for the Telegraph have expressed interest but struggled to raise the funding for a deal.

The most notable of these has been Dovid Efune, owner of The New York Sun, who has been trying for months to raise the £550m sought by RedBird IMI to recoup its outlay.

On Sunday, the Financial Times reported that Mr Efune has secured backing from Jeremy Hosking, the prominent City investor.

Another potential offer from Todd Boehly, the Chelsea Football Club co-owner, and media tycoon David Montgomery, has failed to materialise.

RedBird IMI paid £600m in 2023 to acquire a call option that was intended to convert into ownership of the Telegraph newspapers and The Spectator magazine.

That objective was thwarted by a change in media ownership laws – which banned any form of foreign state ownership – amid an outcry from parliamentarians.

The Spectator was then sold last year for £100m to Sir Paul Marshall, the hedge fund billionaire, who has installed Lord Gove, the former cabinet minister, as its editor.

The UAE-based IMI, which is controlled by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan, extended a further £600m to the Barclays to pay off a loan owed to Lloyds Banking Group, with the balance secured against other family-controlled assets.

Other bidders for the Telegraph had included Lord Saatchi, the former advertising mogul, who offered £350m, while Lord Rothermere, the Daily Mail proprietor, pulled out of the bidding for control of his rival’s titles last summer amid concerns that he would be blocked on competition grounds.

The Telegraph’s ownership had been left in limbo by a decision taken by Lloyds Banking Group, the principal lender to the Barclay family, to force some of the newspapers’ related corporate entities into a form of insolvency proceedings.

DMGT, RedBird and IMI all declined to comment.

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Energy bills set for series of falls as price cap due to be lowered, says forecaster

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Energy bills set for series of falls as price cap due to be lowered, says forecaster

Energy bills are set to fall from this July and will continue to drop in the autumn and winter, a forecaster has said.

Households will be charged £129 less for a typical annual bill from July as the energy price cap is due to fall, according to energy consultants Cornwall Insight.

From July, an average dual fuel bill will be £1,720 a year, 7% below the current price cap of £1,849 a year.

The price cap limits the cost per unit of energy and is revised every three months by the energy regulator Ofgem.

The official announcement from Ofgem will be made on Friday.

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Bills had already been made more expensive for three three-month periods, or quarters, in a row, in October, January, and April, as wholesale gas prices rose and European stores of the fossil fuel were depleted due to cold weather.

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Electricity prices are tied to gas prices.

The UK is also heavily reliant on gas for home heating and uses a significant amount for electricity generation.

Drops when the cap is next changed in October and January will be “modest”, Cornwall Insight said.

Price falls are not a certainty, however, as weather patterns, gas storage rules, the war in Ukraine, and tariffs could all change pricing.

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Which bills rose in April?

Bills still high since Ukraine war

Energy costs have remained elevated following Russia’s full-scale invasion of Ukraine, and bills are still “well above” the levels seen at the start of the decade, said Cornwall Insight’s principal consultant, Dr Craig Lowrey.

“Prices are falling, but not by enough for the numerous households struggling under the weight of a cost-of-living crisis.

“As such, there remains a risk that energy will remain unaffordable for many,” he said.

“If prices can go down, they can bounce back up, especially with the unsettled global economic and political landscape we are experiencing. This is not the moment for complacency.”

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The government was called on by Mr Lowrey to explore options such as social tariffs, where vulnerable customers could pay less.

Proposals, including zonal pricing, which would see different regions of the country pay different rates, based on local supply and demand levels, are important but must be balanced with the urgent affordability crisis people are facing now, he said.

The continued growth of domestically produced renewable energy is “a positive step forward” and a cause for optimism as it helps protect against global energy price shocks and improves energy security, Mr Lowrey added.

“That progress needs to continue at pace, not just for the net zero transition, but to help build a more stable and secure energy future for all.”

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UK-EU trade deal: What is in the Brexit reset agreement?

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UK-EU trade deal: What is in the Brexit reset agreement?

The UK and the EU have agreed a new trade deal – five years after Brexit kicked in.

Following six months of talks after Sir Keir Starmer promised a fresh deal when he became prime minister last July, the two sides have come to an agreement.

Here are the details:

eGates

British passport holders will be able to use more eGates in Europe to avoid the long border control queues that have become the norm since Brexit in many EU countries.

Pet travel

Pet passports will be brought back so cats and dogs coming from the UK will no longer need pricey animal health certificates for every trip. After Brexit, pet owners had to get a certificate from a vet in the UK then a vet in the EU before returning.

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Pic: iStock
Image:
Pets will now be allowed to travel on a pet passport instead of having to have a health certificate every time they travel. Pic: iStock

Red tape on food and drink sales

A new sanitary and phytosanitary (SPS) deal has been agreed to reduce red tape currently needed to import and export food and drink between the UK and the EU.

There is no time limit to this part of the deal, which the government says will reduce the burden on businesses and reduce lorry queues at the border.

The “vast majority” of routine checks and certificates for animal and plant products will be removed completely, including between Great Britain and Northern Ireland.

The government says this could lower food prices and increase choice on supermarket shelves.

Some British foods that have been prevented from being sold in the EU since Brexit will be allowed back in again, including burgers and sausages.

Fishing rights

The current fishing deal agreed in 2020 will continue for 12 years.

There will be no increase in fish quotas.

The Cornish fishing village of Padstow.
Image:
British fishing rights will continue for 12 years. Pic: PA

EU fishing vessels can fish in UK waters, but they require a valid licence, and there are annual negotiations on access and share of stock.

The UK government has announced a £360m investment into the fishing industry to go towards new technology and equipment to modernise the fleet, train the workforce, help revitalise coastal communities, support tourism and boost seafood exports.

Defence

A new security and defence partnership has been agreed so the UK defence industry can participate in the EU’s plan for a £150bn defence fund called Security Action for Europe (SAFE). This will support thousands of British jobs.

The UK and EU will also enhance cooperation over maritime security and accident reporting.

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Reeves: ‘Today is a really big day’

Carbon tax

The deal will see closer co-operation on emissions by the UK and the EU, linking their own emissions trading systems.

The UK’s scheme sets a cap on the total amount of greenhouse gas emissions allowed from the power generation sector, energy-intensive industries and aviation, with companies issued allowances that they can trade with each other.

Under the deal, UK businesses will avoid being hit by the EU’s carbon tax, due to come in next year, which would have handed £800m to the EU.

Steel

British steel exports will be protected from new EU rules and tariffs to save UK steel £25m a year.

Further talks:

Youth mobility scheme

The UK and the EU have agreed to more negotiations on a youth mobility scheme to allow people aged 18-30 in the UK and the EU to move freely between countries for a limited period.

The scheme would include visas for young people working, studying, volunteering, travelling and working as au pairs.

Erasmus

The EU and the UK have agreed they should work towards an Erasmus programme, the student exchange programme which was scrapped when Brexit took place.

Catching criminals

The two sides have agreed to enter talks about the UK having access to EU facial images data to help catch dangerous criminals.

Migration

The two sides have agreed to further work on finding solutions to tackle illegal migration, including on returns and a joint commitment to tackle Channel crossings.

Electricity

The UK and the EU said they should explore the UK’s participation in the EU’s internal electricity market, including in its trading platforms.

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