Autumn statement unlikely to put big dent in tax burden – here’s why

Published

2 years ago

November 21, 2023

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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.

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.

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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Post Office scandal: Daughter has had ‘panic attacks’ since mum was accused of stealing

Published

6 hours ago

July 8, 2025

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Post Office scandal: Daughter has had 'panic attacks' since mum was accused of stealing

The daughter of a Post Office victim has told Sky News she suffered “dark thoughts of suicide” in the years after her mother was accused of stealing.

Kate Burrows was 14 years old when her mother, Elaine Hood, was prosecuted and subsequently convicted in 2003.

The first public inquiry report on the Post Office – examining redress and the “human impact” of the scandal – is due to be published today.

“I’ve suffered with panic attacks from about 14, 15 years old, and I still have them to this day,” Kate said.

“I’ve been in and out of therapy for what feels like most of my adult life and it absolutely categorically goes back to [what happened].”

Kate, along with others, helped set up the charity Lost Chances, supporting the children of Post Office victims. She hopes the inquiry will recognise their suffering.

“It’s important that our voices are heard,” she said. “Not only within the report, but in law actually.

“And then maybe that would be a deterrent for any future cover-ups, that it’s not just the one person it’s the whole family [affected].”

Her sister, Rebecca Richards, who was 18 when their mother was accused, described how an eating disorder “escalated” after what happened.

“When my mum was going through everything, my only control of that situation was what food I put in my body,” she said.

She also said that seeing her mother at court when she was convicted, would “stay with me forever”.

“The two investigators were sat in front of my dad and I, sniggering and saying ‘we’ve got this one’.

“To watch my mum in the docks handcuffed to a guard… not knowing if she was going to be coming home… that is the most standout memory for me.”

The sisters are hoping the inquiry findings will push Fujitsu into fulfilling a promise they made nearly a year ago – to try and help the children of victims.

Last summer, Kate met with the European boss of the company, Paul Patterson, who said he would look at ways they could support Lost Chances.

Despite appearing at the inquiry in November last year and saying he would not “stay silent” on the issue, Kate said there has been little movement in terms of support.

“It’s very much a line of ‘we’re going to wait until the end of the inquiry report to decide’,” she said.

“But Mr Patterson met us in person, looked us in the eye, and we shared the most deeply personal stories and he said we will do something… they need to make a difference.”

Fujitsu, who developed the faulty Horizon software, has said it is in discussions with the government regarding a contribution to compensation.

The inquiry will delve in detail into redress schemes, of which four exist, three controlled by the government and one by the Post Office.

Victims of the scandal say they are hoping Sir Wyn Williams, chair of the inquiry, will recommend that the government and the Post Office are removed from the redress schemes as thousands still wait for full and fair redress.

A Department for Business and Trade spokesperson said they were “grateful” for the inquiry’s work, describing “the immeasurable suffering” victims endured and saying the government has “quadrupled the total amount paid to affected postmasters”, with more than £1bn having now been paid to thousands of claimants.

Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK. In the US, call the Samaritans branch in your area or 1 (800) 273-TALK

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Trade war: Trump reveals first two nations to pay delayed ‘liberation day’ tariffs

Published

19 hours ago

July 7, 2025

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Trade war: Trump reveals first nations to pay delayed 'liberation day' tariffs

Donald Trump has warned that all goods from Japan and South Korea will face tariffs of 25% from 1 August.

The announcement, via his Truth Social platform, marks the restart of the threatened “liberation day” escalation that was paused in April, for 90 days, to allow for negotiations to take place with all US trading partners.

The president showed off copies of letters to the leaders of both Japan and South Korea informing them of the tariff rates. Those duties will come on top of sector-specific tariffs – such as 50% rates covering steel – already in force.

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He warned the rates could be adjusted “upward or downward, depending on our relationship with your country”.

Country-specific tariffs had been due to take effect from Wednesday this week but Mr Trump had earlier revealed that nations would start to get letters instead, setting out the US position.

Duties would take effect from 1 August, without any subsequent deal being agreed, it was announced.

The letters sent to Japan and South Korea cited persistent trade imbalances for the rates and included the sentence: “We invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far.”

He ended both letters by saying, “Thank you for your attention to this matter!”

The European Union – the biggest single US trading partner – is among those set to get a letter in the coming days.

Mr Trump has also threatened an additional 10% tariff on any country aligning itself with the “anti-American policies” of BRICS nations – those are Brazil, Russia, India, China and South Africa and whose members also include Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.

The UK, bar a massive shock U-turn, should be exempt.

The country was the first to be granted a trade deal, of sorts, in May and the Trump administration has claimed many others had been offering concessions since the clock ticked down to 9 July.

The UK is not expected to face any changes to its current 10% rate due to the trade truce, which came into effect last week.

While UK-made cars aerospace products face no duties under a new quota arrangement, it still remains to be seen whether 25% tariffs on UK-produced steel and aluminium will be cancelled.

They could, conceivably, even be raised to 50%, as is currently the case for America’s other trading partners, because no agreement on eliminating the rate was reached when the government struck its deal in May.

It all amounts to more uncertainty for the UK steel sector.

A No 10 spokesman said on Monday: “Our work with the US continues to get this deal implemented as soon as possible.

“That will remove the 25% tariff on UK steel and aluminium, making us the only country in the world to have tariffs removed on these products.

“The US agreed to remove tariffs on these products as part of our agreement on 8 May. It reiterated that again at the G7 last month. The discussions continue, and will continue to do so.”

China and Vietnam have also secured some US concessions.

The dollar strengthened but US stock markets lost ground in the wake of the letters to Japan and South Korea being made public, with the broad-based S&P 500 down by 1%.

Stock markets in both Japan and South Korea were closed for the day but US-traded shares of SK Telecom and LG Display were down 7.5% and 5.8% respectively.

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Tesla shares sink as Musk launches political party

Published

21 hours ago

July 7, 2025

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Tesla shares sink as Musk launches political party

Shares in Elon Musk’s Tesla have reversed sharply over renewed concerns about his focus on the company’s recovery as he plots against Donald Trump.

Shares in the electric car firm plunged by more than 7% at the start of trading on Wall Street – taking about $71bn (£52bn) off its market value.

The stock has often come under pressure since Musk started his association with the president, latterly helping bring down federal government costs through a new department known as DOGE (Department of Government Efficiency).

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But it is now suffering as their political relationship has soured.

Musk has publicly opposed the so-called “big, beautiful bill” – Mr Trump’s flagship tax cut and spending plans that received Congressional approval last week – since he left his DOGE role.

Musk wrote in a post on his X platform on 30 June: “It is obvious with the insane spending of this bill, which increases the debt ceiling by a record FIVE TRILLION DOLLARS that we live in a one-party country – the PORKY PIG PARTY!!”

Once the bill was passed, he created a poll on X, asking people if they would want him to launch the America Party.

He wrote on 4 July: “Independence Day is the perfect time to ask if you want independence from the two-party (some would say uniparty) system!”

The vote ended with 65.4% in favour of creating the party.

The formation of the America Party was announced the following day.

“By a factor of 2 to 1, you want a new political party and you shall have it! When it comes to bankrupting our country with
waste & graft, we live in a one-party system, not a democracy.”

“Today, the America Party is formed to give you back your freedom,” Musk posted.

Trump responded on his Truth Social account: “I am saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks.

“He even wants to start a Third Political Party, despite the fact that they have never succeeded in the United States –
The System seems not designed for them.”

Trump has previously threatened to go after Tesla‘s government subsidies and contracts through the DOGE department to save “big” as their relationship deteriorated.

Such threats have also pressured the share price at Tesla.

It has suffered throughout Trump 2.0 and, in fact, has trended lower since last December – shortly after Mr Trump’s election win was confirmed.

The possibility of tariff hits to the business, followed by actual tariff disruption, along with a consumer and investor backlash against Musk’s previous DOGE role have contributed to a 35% decline on the December peak.

The very absence of Tesla’s CEO dragged on the shares.

Tesla sales suffered globally as the trade war ramped up due to the imposition of tariffs by a government he supported, until the public row between him and the president began in early June.

Musk had only just renewed his 100% focus on Tesla and his other business interests by that time.

Tesla sales were down during the presidential election campaign last year and continued to decline, on a quarterly basis, during the first half of 2025.

Neil Wilson, UK investor strategist at Saxo Markets, said of the company’s share price woes: “Investors are worried about two things – one is more Trump ire affecting subsidies and the other more importantly is a distracted Musk.

“Investors had cheered Musk stepping back from frontline politics but are now worried he’s going to sucked back in and take his eye off Tesla.”