Could Rachel Reeves’s budget ‘jiggery-pokery’ scare investors?

Published

8 months ago

October 30, 2024

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Budgets are all about numbers.

In the coming 24 hours, we’ll be engulfed with all sorts of figures – about the state of the economy, about the size of the deficit, about the fiscal rules the new chancellor is planning to introduce in the coming months.

But in fact most budgets, this one included, can really be boiled down to the difference between two big numbers.

Politics live blog: Budget 2024 latest developments

Total government spending and total government receipts.

Right now the UK government is spending just over £1.2trn a year and bringing in just over £1.1trn in taxes and receipts.

In other words, this country is spending more than it generates in tax receipts.

So it has to borrow the difference.

That borrowing, also known as the deficit, is (as you’ve already probably worked out from the above numbers) around £100bn a year.

And politicians, including the chancellor, spend rather a lot of time fretting about the deficit.

Indeed, the main objective of the various different fiscal rules they’ve imposed on themselves in recent decades has been to narrow the gap between those two big numbers.

Broadly speaking, the easiest way to do this is to cut something few people notice in the short run – government investment.

When he came into office in 2010, George Osborne cut a lot of parts of public spending, but he absolutely slashed the amount the public sector spent on buildings, infrastructure and machinery – capital spending.

Having lifted the total briefly after the pandemic, Jeremy Hunt was planning a similar fall in investment in the coming years.

Rachel Reeves has said repeatedly ahead of the budget that she plans to invest far more in the coming years.

This is a noble goal, given investment tends to benefit future generations, however, it will not be cheap in the short run.

Indeed, keeping investment spending at current levels will cost roughly £30bn a year by the end of this decade.

So how does the chancellor square that with her fiscal rules?

Well, one part of the answer is that she’s planning to increase the revenues coming into the Exchequer, reportedly via higher national insurance charges for insurers.

But the other part of the answer is that she’s changing her fiscal rules as well.

Budget 2024: Rachel Reeves vs the fiscal rules

The long and the short of it is that Ms Reeves looks likely to choose a set of fiscal rules that ignore investment spending.

Both her updated debt rule and her current budget rule essentially omit capital spending – although they include debt interest costs, so she can’t just borrow willy-nilly.

That might sound like fiscal jiggery-pokery, and some in the market fret that investors will soon take fright as a result.

Indeed, some suggest they already are, and point to the fact the UK’s cost of government borrowing – as measured by the benchmark 10-year bond yield – has risen from under 4% to nearly 4.3% in the past month alone.

However, this is a slight misreading of this market, which is as affected by global economic factors and central bank action as much as by UK budgetary policy.

Indeed, compare the recent changes in the UK’s borrowing rates with those in Germany and the US and British government bond yields are close to where they usually trade in the run up to a budget.

And they are far, far below where they were in the run-up to Liz Truss’s mini-budget.

Even so, there are bound to be a few unexpected surprises and some relevant new data points in this fiscal event.

It is a budget after all.

UK

GPs can prescribe weight loss jabs on the NHS from today – but strict eligibility criteria in place

Published

54 mins ago

June 23, 2025

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GPs can prescribe weight loss jabs on the NHS from today - but strict eligibility criteria in place

GPs will be able to prescribe weight loss jabs on the NHS from today.

About 220,000 people with the “greatest need” are set to receive Mounjaro – with strict criteria for the first year of the rollout.

Initially, only those with a body mass index of over 40 who have at least four other health problems linked to obesity will be eligible.

Some doctors have raised concerns about the additional workload this new programme will bring, while pharmacists fear it could lead to supply shortages.

While an estimated 1.5 million people are now taking weight loss drugs across the UK, they could previously only be accessed through specialist services or private prescriptions.

Dr Claire Fuller from NHS England said: “We urgently need to address rising levels of obesity and prioritise support for those who are experiencing severe ill health – and greater access to weight loss drugs will make a significant difference to the lives of those people.”

She added: “While not everyone will be eligible for weight loss drugs, it’s important that anyone who is worried about the impact of their weight on their health discusses the range of NHS support available with their healthcare professional.”

The chairwoman of the Royal College of GPs welcomed NHS England’s decision to pursue a phased rollout, and said current workloads must be factored in to ensure the jabs can be prescribed safely.

Professor Kamila Hawthorne went on to say: “While weight loss medications have a lot of potential benefits for patients who are struggling to lose weight and who meet all the clinical criteria for a prescription, they mustn’t be seen as a ‘silver bullet’ to aid weight loss.

“We also need to see a focus on prevention, stopping people becoming overweight in the first place so they don’t require a medical intervention later.”

Her remarks were echoed by the National Pharmacy Association’s chairman Olivier Picard, who says “prescribing these medications alone misses the point”.

He argued that they need to be part of a comprehensive strategy that includes lifestyle coaching, exercise and nutritional guidance – but many GPs currently “lack the bandwidth” to provide this support.

“As a result, we could end up in a situation where patients are prescribed the medication, lose weight, and then experience rebound weight gain once the course ends – simply because the foundational lifestyle changes weren’t addressed,” Mr Picard added.

Estimates suggest about 29% of the adult population is obese.

Health Secretary Wes Streeting says the government “is determined to bring revolutionary modern treatments to everyone who needs them, not just those who can afford to pay”.

UK

Met Police chief ‘frustrated’ at planned protest to support Palestine Action – as government moves to ban the group

Published

3 hours ago

June 23, 2025

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Met Police chief 'frustrated' at planned protest to support Palestine Action - as government moves to ban the group

Metropolitan Police Commissioner Sir Mark Rowley says he is “shocked and frustrated” at a planned protest in support of Palestine Action.

The demonstration, due to take place in Westminster later, comes as the government moves to ban the group under anti-terror laws.

Activists from Palestine Action hit the headlines last week after targeting RAF Brize Norton and damaging two military aircraft in a significant security breach.

Home Secretary Yvette Cooper will update MPs on the move to proscribe the organisation, which would make it a criminal offence to belong to or support it.

Sir Mark said that – until this happens – the force has “no power in law” to prevent the protest from taking place, but lawbreakers will be “dealt with robustly”.

He added: “This is an organised extremist criminal group, whose proscription as terrorists is being actively considered.

“Members are alleged to have caused millions of pounds of criminal damage, assaulted a police officer with a sledgehammer and last week claimed responsibility for breaking into an airbase and damaging aircraft.

“Multiple members of the group are awaiting trial accused of serious offences.”

He added that – while the right to protest is essential – “actions in support of such a group go beyond what most would see as a legitimate protest”.

Over the weekend, Business Secretary Jonathan Reynolds said he could not rule out the possibility of a foreign power being behind Palestine Action.

Any move to proscribe the group must be debated and approved by MPs and peers.

Speaking to Sunday Morning With Trevor Phillips on Sky News, former justice secretary Lord Charlie Falconer suggested that vandalising aircraft would not solely provide legal justification for such a move.

Lord Falconer said: “I am not aware of what Palestine Action has done beyond the painting of things on the planes in Brize Norton, they may have done other things I didn’t know.

“But generally, that sort of demonstration wouldn’t justify proscription so there must be something else that I don’t know about.”

Palestine Action has staged a series of protests in recent months – spraying the offices of Allianz Insurance in London, and vandalising Donald Trump’s golf course in Ayrshire.

UK

‘Stability in Middle East is priority,’ says Starmer – as world reacts to strikes

Published

1 day ago

June 22, 2025

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'Stability in Middle East is priority,' says Starmer - as world reacts to strikes

Sir Keir Starmer has said stability in the Middle East is “a priority” following US strikes on Iran’s nuclear facilities, as the world has reacted to the attack.

The prime minister also called on Iran to “return to the negotiating table” to “reach a diplomatic solution to end this crisis”.

Follow latest: Iran considering ‘all options’ after US strikes

In a statement, Sir Keir said: “Iran’s nuclear programme is a grave threat to international security.

“Iran can never be allowed to develop a nuclear weapon, and the US has taken action to alleviate that threat.

“The situation in the Middle East remains volatile and stability in the region is a priority.

“We call on Iran to return to the negotiating table and reach a diplomatic solution to end this crisis.”

The UK was not involved in the strikes but was informed about them in advance by the US, Business Minister Jonathan Reynolds told Sky News’ Sunday Morning with Trevor Phillips.

Sir Keir and Foreign Secretary David Lammy had been pushing for a diplomatic solution. On Thursday, the prime minister warned of a “real risk of escalation” in the conflict.

The US struck three sites in Iran early on Sunday morning, with Donald Trump boasting the country’s key nuclear sites were “completely and fully obliterated” in an address to the nation from the White House and warned there could be further strikes if Iran retaliates.

Netanyahu praises Trump

Israel‘s Prime Minister Benjamin Netanyahu praised Mr Trump for the strikes, saying: “Your bold decision to target Iran’s nuclear facilities with the awesome and righteous might of the United States will change history…

“History will record that President Trump acted to deny the world’s most dangerous regime the world’s most dangerous weapons.”

UN secretary-general ‘gravely alarmed’ by US attack

But UN secretary general Antonio Guterres said he was “gravely alarmed by the use of force” by the US against Iran.

“This is a dangerous escalation in a region already on the edge – and a direct threat to international peace and security. There is a growing risk that this conflict could rapidly get out of control – with catastrophic consequences for civilians, the region, and the world.”

European Union foreign policy chief Kaja Kallas urged all sides to step back and return to the negotiating table. “Iran must not be allowed to develop a nuclear weapon,” she said in a post on X.

“I urge all sides to step back, return to the negotiating table and prevent further escalation,” she said, adding that EU foreign ministers will discuss the situation tomorrow.

How the world reacted to the strikes

Cuba’s President Miguel Diaz-Canel said on X: “We strongly condemn the US bombing of Iran’s nuclear facilities, which constitutes a dangerous escalation of the conflict in the Middle East.

“The aggression seriously violates the UN Charter and international law and plunges humanity into a crisis with irreversible consequences.”

Venezuela’s foreign minister Yvan Gil said his country’s government “condemns US military aggression” and “demands an immediate cessation of hostilities”.

In a statement, an Australian government spokesperson said Iran’s nuclear and ballistic missile programme “has been a threat to international peace and security”.

Japan’s Prime Minister Shigeru Ishiba said it is “crucial that there be a quick de-escalation of the conflict”.

Italy’s foreign minister Antonio Tajani said after the attack that his country’s government hopes “a de-escalation can begin and Iran can sit down at the negotiating table”.

The US attack came after more than a week of strikes by Israel, which have significantly degraded Iran’s air defences and offensive missile capabilities, and damaged its nuclear enrichment facilities.

Israel’s strikes on Iran have killed at least 865 people and wounded 3,396 others, according to the Washington-based group Human Rights Activists. The group said of those killed, 365 were civilians and 215 were security force personnel.