What we got from Rachel Reeves today was, in economic terms, a major departure from economic policy as we’ve known it in this country for the past decade-and-a-half.
We got the single biggest increase in taxes in any fiscal event since 1993. The tax burden itself is now heading up to the highest level in history. We got a significant departure from the policies and promises laid out in the Labour manifesto.
Only a few months ago, Labour pledged not to make dramatic changes to Britain’s economic policy – no significant tax rises, no dramatic changes to public spending. But today the chancellor delivered significant changes.
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The old fiscal rules are out and now this government plans to borrow many billions of pounds more. It plans to increase investment considerably.
It plans to raise taxes on those with investments, on those with assets who could previously pass them on to their children (including business owners and farmers). In the meantime, it plans to spend considerably more on the health service and on public investment than previously slated.
It’s worth saying: while the government inherited the public finances in a worse condition than they looked before the election, even the Treasury’s “black hole” of £22bn cannot explain the dramatic change in economic policy here.
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Reeves refuses to rule out future tax hikes
It does not explain the dramatic increase in borrowing, spending and taxes – these are policy decisions by the current government. And, many would say, quite right too. Surveys suggest the British public support higher taxes, especially if they are used to improve the National Health Service.
Many think the UK should be spending more on its public services, even if that means we all have to contribute more (though they are generally less enthusiastic if asked whether they would be happy to pay higher taxes themselves). And there is little dispute that this country’s investment levels have been too low for too long and could afford to be higher.
However, that wasn’t the pitch Reeves and Keir Starmer made at the election. They promised, in their manifesto, only slight economic changes and only small increases in taxes. They promised to spend much of their time in office cleaning up the mess from the last government. Reeves promised to be the iron chancellor of fiscal discipline.
But this budget is considerably less disciplined with the public finances than expected. But what will worry the chancellor is that despite this extra largesse with both investment and current spending, the UK economy is not going gangbusters as a result.
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The Office for Budget Responsibility actually cut its forecasts for long term growth. That promise made by Starmer to achieve the highest economic growth in the G7 looks highly unlikely – even after the implementation of all these policies.
And in the hours after the speech, markets reacted in a way that will cause nerves in the Treasury. It’s nothing like the lurches in government debt yields we saw after Liz Truss’s mini budget in 2022. But the pound fell and the interest rates investors charge the UK government rose. That’s not something any chancellor would like to see after their first budget.
The next few days promise to be very interesting both in politics and in markets.
The US Securities and Exchange Commission and crypto exchange Gemini have asked to pause the regulator’s suit over the exchange’s Gemini Earn program, saying they want to discuss a potential resolution.
In an April 1 letter to New York federal court judge Edgardo Ramos, lawyers representing the SEC and Genesis requested a 60-day hold on the case and that all deadlines be pulled “to allow the parties to explore a potential resolution.”
“In this case, the parties submit that it is in each of their interests to stay this matter while they consider a potential resolution and agree that no party or non-party would be prejudiced by a stay,” the letter states.
The lawyers added that a stay was in the court’s interest as “a resolution would conserve judicial resources” and proposed that a joint status report be submitted within 60 days after the entry of the stay.
The SEC sued Gemini and crypto lending firm Genesis Global Capital in January 2023, alleging they offered unregistered securities through the Gemini Earn program.
In March 2024, Genesis agreed to pay $21 million to settle charges related to the lending program, but the enforcement case against Gemini remains outstanding.
Letter from SEC and Genesis Global requesting extension of stay. Source: CourtListener
The letter did not specify what a possible resolution would entail, but the SEC has dropped several lawsuits it launched against crypto companies under the Biden administration, including against Coinbase, Ripple and Kraken.
In February, Gemini said the SEC closed a separate investigation into the firm as the regulator winds back its crypto enforcement under President Donald Trump.
“The SEC cost us tens of millions of dollars in legal bills alone and hundreds of millions in lost productivity, creativity, and innovation. Of course, Gemini is not alone,” Gemini co-founder Cameron Winklevoss said at the time.
OpenSea, Crypto.com and Uniswap, among others, have also recently reported that the SEC had closed similar probes into their companies that were investigating alleged breaches of securities laws.
Two Republicans who received a combined $1.5 million from the crypto-backed political action committee (PAC) Fairshake will enter the US House after winning special elections in Florida.
Republican Jimmy Patronis won the vacant seat in Florida’s 1st Congressional District to replace Matt Gaetz, taking 57% of the vote to defeat Democrat Gay Valimont, according to AP News data.
Randy Fine also took Florida’s 6th Congressional District with 56.7% of the vote to beat his Democratic rival, public school teacher Josh Weil, and fill a seat left vacant by Mike Waltz, who took a job as White House national security adviser.
Florida’s 1st and 6th Congressional Districts — located in Florida’s western panhandle and along the state’s northeast coast — have been controlled by Republicans for roughly 30 years, but their lead has narrowed in recent years.
Fairshake, a PAC backed by crypto industry giants including Coinbase, Ripple and Andreessen Horowitz, gave Fine around $1.16 million in advertising spending and funneled $347,000 to Patronis to support his campaign.
Both Republicans have expressed support for the crypto industry, with Fine stating in a Jan. 14 X post that “Floridians want crypto innovation!”
Fairshake and its affiliates poured around $170 million into the 2024 US presidential and congressional elections to back candidates who committed to supporting the crypto industry.
The wins by Patronis and Fine increased Republican representation in the House to 220 seats, with the Democrats holding 213 seats.
There are two vacant seats to be filled after Texas and Arizona Democrats Sylvester Turner and Raúl Grijalva died on March 5 and March 13, respectively.
Florida can expect to see a crypto-friendly regulatory environment
The victories for Patronis and Fine likely mean that crypto legislation will continue to see support in the US capital.
The Republican Party would have maintained its House majority even if it lost both seats in Florida, but it would have made it more difficult for some of the recently introduced Republican-backed crypto bills to pass through the House and Senate.
Bills that could eventually make their way to the House include the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which passed the Senate Banking Committee in an 18-6 vote on March 13.
Senator Cynthia Lummis also reintroduced a Bitcoin reserve bill about a week after the Trump administration announced the establishment of a Strategic Bitcoin Reserve on March 6, with the legislation referred to the Senate Banking Committee on March 11.
Several British trade associations have asked Prime Minister Keir Starmer’s office to appoint a special envoy dedicated to crypto and for a dedicated action plan for digital assets and blockchain technology.
In a March 31 letter, the coalition of six UK digital economy trade bodies urged Starmer’s special adviser on business and investment, Varun Chandra, for a “greater strategic focus and alignment to deliver investment, growth and jobs” for the crypto industry.
The group, which consisted of the UK Cryptoasset Business Council, Global Digital Finance, The Payments Association, Digital Currencies Governance Group, the Crypto Council for Innovation and techUK, noted the US policy shift on crypto under President Donald Trump and his appointment of a crypto czar.
Britain’s commitment to an economic trade deal focused on technological cooperation with the US “presents a significant opportunity to mirror the United States’ ambition in fostering leadership in blockchain, digital assets, and other emerging financial technologies,” the letter stated.
The group recommended that the UK appoint a blockchain special envoy, similar to the US, to coordinate policy, foster innovation, and position the country competitively in global markets.
The trade bodies also called for the development of a dedicated government action plan for crypto and blockchain technology, including a concierge service to attract high-potential firms.
They added that the government should acknowledge and leverage the commonalities between blockchain, quantum computing and artificial intelligence technologies, including potential applications for government services.
Another recommendation was to create a high-level industry-government-regulator engagement forum to ensure informed decision-making and cross-sector collaboration.
The UK crypto and tech associations lobbying the government for a policy shift. Source: LinkedIn
“With deep pools of talent, access to capital, world-class academic institutions, and sophisticated regulators, the UK provides an environment where digital assets and blockchain innovation can thrive,” they stated.
The coalition argues that crypto and blockchain technology could boost the UK economy by 57 billion British pounds ($73.6 billion) over the next decade, with the sector potentially increasing global gross domestic product by 1.39 trillion pounds ($1.8 trillion) by 2030.
Tom Griffiths, the co-founder and managing partner of crypto compliance advisory firm BitCompli, said in response to the letter on LinkedIn that the Financial Conduct Authority “has a lot of talent and a good sight of future plans, but the UK is definitely losing pace with Dubai, Singapore, and other EU jurisdictions.”
“Now is the time for the FCA to act, or the UK will lose out on this huge opportunity, which is digital assets and all the benefits this sector can bring, not only now but over the next 20 years,” he added.