Jeremy Hunt’s hopes for budget tax cuts get a boost
Government borrowing came in sharply lower than expected last month, boosting the chancellor’s aim of pre-election giveaways in his March budget.
Data from the Office for National Statistics (ONS) showed public sector net borrowing at £7.8bn in December.
That was £8.4bn less than in the same month a year earlier and the lowest in any December since 2019.
Economists had forecast a figure above £11bn but debt interest payments fell by more than expected.
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That was due to October’s sharp drop in the retail price index measure of inflation to which many government bonds are linked.
The cost of servicing student loan debt also fell sharply.
The borrowing sum took the total for the first nine months of the financial year to £119.1bn.
While that figure is £11.1bn up on the April-December period a year earlier, it is almost £5bn less than the Office for Budget Responsibility forecast for the period.
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Chancellor aims to cut taxes
Jeremy Hunt told Sky News last week, while attending the World Economic Forum in Davos, that he wants to cut taxes in his 6 March budget as it would be the quickest route to getting the economy growing again.
The UK, like many of its European rivals, is flat-lining as the effects of inflation and the battle to get the pace of price rises down hold back demand.
The chancellor faces a delicate balancing act as he faces demands from Conservative MPs to bolster the party’s popularity in the run-up to the election, expected later this year.
The UK tax burden is running near highs last seen since the wake of the Second World War but he will be anxious to do nothing to diminish the likelihood of interest rate cuts in the months ahead.
A big giveaway would risk stoking inflation, forcing the Bank of England to potentially delay the start of reversing its interest rate hikes which financial markets see from May.
Such a delay could force a halt to falling borrowing costs, particularly for mortgages in the current price war.
The latest inflation data showed an unexpected increase – blamed on a rise in tobacco duties imposed by Mr Hunt in the autumn statement.
The big question is how much wiggle room Mr Hunt will have given the challenges across the global and domestic economy.
At the time of his budget update in November, he was judged to have about £13bn to play with without diverting from his target for bringing down the public debt burden.
Ruth Gregory, an economist with Capital Economics, said that figure was now likely to be around the £20bn area.
“That will probably allow him to unveil a freeze in fuel duty in April 2024 [costing about £6bn a year] but perhaps
also to announce more crowd-pleasing measures, such as a 1p cut to income tax [costing £6.9bn a year], while still maintaining fiscally prudent appearances,” she wrote.
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Does Labour’s spending plan add up?
Chief secretary to the Treasury Laura Trott said: “Protecting millions of lives and livelihoods during Putin’s energy shock and a once-in-a-century pandemic has created economic challenges.
“However, it is right that we pay back these debts so future generations are not left to pick up the tab.
“Because of this government’s decisive action, the economy is now beginning to turn a corner. Inflation has more than halved.
“Debt is on track to fall as a share of the economy. And we have been able to afford tax cuts for 27 million working people, and an £11bn tax cut to drive business investment.”
Her Labour shadow, Darren Jones, said: “Rishi Sunak failed to grow the economy and now we know he failed to get debt falling.
“National debt his now at the highest level since the 1960s – and has more than doubled since 2010.
“Britain cannot afford another five years of this low growth, high tax Conservative government that is leaving working people worse off. It’s time for change.”
Donations being held by Zarah Sultana will be transferred over to Your Party in tranches from this week, Sky News has been told, but the party stand-off remains.
Ms Sultana has sole control of over £800,000 of Your Party donations following an internal fallout.
Her spokesperson told Sky News £600k would be transferred over in three tranches starting with £200k from Wednesday, and the rest “once the company’s costs, expenses and liabilities are settled in full”.
But a Your Party source told Sky News she should transfer the full £800k worth of donations now.
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It follows a major row over finances behind the scenes of the new left-wing party, which Ms Sultana co-launched with Jeremy Corbyn in July.
At the time, a company called MOU Operations was used to collect donations, with the idea this would be transferred over to Your Party once it was formally registered with the Electoral Commission.
The registration happened on 30 September, but no transfer of funds has been made – despite Ms Sultana stepping in to take ownership of MOU last month after its previous three directors quit.
MOU is holding around £800k of donations in total, as well as around £500k in fees collected as part of Ms Sultana’s unauthorised membership launch, Sky News understands.
Ms Sultana’s spokesperson said £600k would be transferred over in three tranches, and the rest “once the company’s costs, expenses and liabilities are settled in full”.
The Your Party source told Sky News that Ms Sultana has been told Your Party can’t accept the money related to her membership launch due to legal risks and accused her of trying to “offload” it.
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Can Your Party get it together?
Ms Sultana agreed to take over MOU to break a standoff between Your Party and the company’s previous three directors – former Labour MP Beth Winter, former Labour mayor Jamie Driscoll and former South African politician Andrew Feinstein.
The trio set up MOU in April to assist with a new left-wing party centred around Mr Corbyn but resigned on 29 October, claiming the role of holding donations had been “thrust upon” them and raising concerns about a “lack of appropriate governance” within Your Party.
The statement said they hadn’t transferred over the funds because they were worried about legal liabilities and wanted Your Party to take over the company instead – but five of the six founding MPs refused.
Ms Sultana said her stepping in would “bring the chapter to a close” and “these resources will now be used for Your Party, as was always intended”.
However that angered some within Your Party who say this is a mess of her own making because of the membership fiasco, which is still being investigated by the Information Commissioner’s Office.
‘Low trust environment’
While Mr Corbyn and Ms Sultana have since patched things up, one Your Party source described operating in a “low trust environment”.
Senior Your Party figures have accused Ms Sultana of deliberately withholding MOU’s funds for political leverage despite privately and publicly committing to the transfer. Organisers expressed frustration at operating on a “shoestring” ahead of the founding conference at the end of this month.
However, allies close to the Coventry South MP have dismissed the “hostile briefings” and insist she has been conducting “due diligence” before sending the money over.
Sky News understands Ms Sultana has been seeking Your Party’s constitution and financial scheme as registered with the Electoral Commission, to help her understand the party’s governing structures.
A source close to her claims there has been an unwillingness to share the documents from within Your Party, so she has requested them from the elections watchdog directly.
It is not clear who wrote the documents and who is controlling access to them – or why one of the party’s founders should not be able to see them.
A spokesperson for Ms Sultana said: “Zarah did not choose to become the sole director of MOU Operations Limited, but was prepared to take on this responsibility to ensure funds are transferred as quickly as possible and preparations for the founding conference can progress.
“As sole director, she is legally responsible for ensuring the company’s costs, liabilities and expenses are settled, and this process may take some time. To ensure funds are available for the founding conference, she will transfer £600k in tranches over the next couple of weeks. The first £200k is scheduled to be sent 12 November.
“All remaining funds will be transferred once the company’s costs, expenses and liabilities are settled in full.”
A Your Party spokesperson said: “We are completely focused on putting together a successful founding conference for our members, so they can democratically decide Your Party’s structures and programme, and Britain can get the socialist alternative it so badly needs. Hundreds of volunteers are working tirelessly on a shoestring budget to make this a reality, a testament to the grassroots power of our mass movement.”
Excitement in the crypto community is growing over the potential launch of XRP funds, as the US Senate advances a deal aimed at ending the longest-ever government shutdown.
The Senate reportedly reached a deal on a budget bill to end the government shutdown on Sunday, sending a bullish signal to numerous markets, including crypto.
The XRP (XRP) community is anticipating multiple XRP exchange-traded funds (ETFs) to launch shortly, with several already appearing on the Depository Trust and Clearing Corporation (DTCC) website ahead of a possible launch this month.
The price of XRP has rallied more than 12% on the bullish news over the past 24 hours, with the token trading at $2.56 at the time of publication, according to CoinGecko.
11 XRP products listed on DTCC
As of Monday, the DTCC website featured 11 XRP ETF products on its “active and pre-launch” listing, including those by 21Shares, ProShares, Bitwise, Canary Capital, Volatility Shares, REX-Osprey, CoinShares, Amplify and Franklin Templeton.
Although a DTCC listing does not equal actual launch and does not guarantee regulatory approval, it signals that the ETF infrastructure is ready to be traded on US markets.
It’s worth noting that Grayscale’s XRP Trust (GXRP) has not yet appeared on the DTCC website, and the list also does not currently include an XRP fund from WisdomTree.
“Government shutdown ending = spot crypto ETF floodgates opening,” ETF expert Nate Geraci wrote in an X post on Sunday, adding: “In the meantime, could see first ‘33 Act spot xrp ETF launch this week.”
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Bloomberg ETF analyst Eric Balchunas also posted on X on Sunday, noting that the “shutdown is over” and highlighting a subsequent uptick in US equity futures.
“The SEC had open litigation against Ripple for the past five years, up until three months ago. IMO, the launch of spot XRP ETFs represents the final nail in the coffin for the previous wave of anti-crypto regulators,” he wrote in an X post on Nov. 2.
He also highlighted a post from Canary Capital, which claimed last Friday that its XRP ETF is “coming soon,” speculating that the product could go live by the end of this week.
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Acting Chair of the US Commodity Futures Trading Commission (CFTC) Caroline Pham is in talks with regulated US crypto exchanges to launch leveraged spot crypto products as early as next month.
In a Sunday X post, Pham confirmed that she is pushing to allow leveraged spot crypto trading in the US and that she is in talks with regulated US crypto exchanges to launch leveraged crypto spot products next month.
Pham also confirmed that she continued meeting with industry representatives despite the government shutdown. The regulator is also currently considering issuing guidance for leveraged spot crypto products.
The news comes after the CFTC launched an initiative in early August to enable the trading of “spot crypto asset contracts” on exchanges registered with the regulator. In an announcement at the time, Pham invited comment on the rules that governed “retail trading of commodities with leverage, margin, or financing.”
According to the Federal Register, the Commodity Exchange Act “provides that a retail commodity transaction entered into with a retail person which is executed on a leveraged or margined basis” is “subject to the Commission’s jurisdiction, unless the transaction results in actual delivery of the commodity within 28 days of the transaction.” Consequently, leveraged crypto spot positions would only be allowed if their duration were limited to 28 days or they would be illegal.
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Crypto pushes forward despite shutdown
A US government shutdown occurs when Congress fails to pass an annual spending bill or a short-term continuing resolution, blocking much of the federal government’s spending. In such situations, non-essential services are paused, some workers are furloughed, and others work without pay.
The current shutdown started on Oct. 1. However, Sunday reports suggest that the shutdown is likely nearing its end as the Senate moves to consider a continuing resolution to fund the government.
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The report follows speculation about the impact of the government shutdown on progress in US crypto regulation. Early October reports noted that the SEC began its shutdown by announcing that it would “not engage in ongoing litigation,” except for emergency cases.
Despite this, at the end of October, many US senators reportedly moved to advance a bill on crypto market structure rules, despite the shutdown. Reports from earlier this month also suggest that meetings on the bill are still taking place in the US Senate despite the shutdown.
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