Reeves promised to be the iron chancellor – but her first budget brings dramatic change

Published

8 months ago

October 30, 2024

admin

The 2024 Autumn Budget in one word? Big.

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.

Budget latest: Experts react to Labour’s ‘massive’ tax plans

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.

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.

👉 Listen to Sky News Daily on your podcast app 👈

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.

Politics

Jingye and Whitehall officials hold talks over British Steel future

Published

3 hours ago

July 9, 2025

admin

Jingye and Whitehall officials hold talks over British Steel future

The Chinese owner of British Steel has held fresh talks with government officials in a bid to break the impasse over ministers’ determination not to compensate it for seizing control of the company.

Sky News has learnt that executives from Jingye Group met senior civil servants from the Department for Business and Trade (DBT) late last week to discuss ways to resolve the standoff.

Whitehall sources said the talks had been cordial, but that no meaningful progress had been made towards a resolution.

Money blog: €1 home goes on sale – but there are T&Cs

Jingye wants the government to agree to pay it hundreds of millions of pounds for taking control of British Steel in April – a move triggered by the Chinese group’s preparations for the permanent closure of its blast furnaces in Scunthorpe.

Such a move would have cost thousands of jobs and ended Britain’s centuries-old ability to produce virgin steel.

Jingye had been in talks for months to seek £1bn in state aid to facilitate the Scunthorpe plant’s transition to greener steelmaking, but was offered just half that sum by ministers.

British Steel has not yet been formally nationalised, although that remains a probable outcome.

Jonathan Reynolds, the business secretary, has previously dismissed the idea of compensating Jingye, saying British Steel’s equity was essentially worthless.

Last month, he met his Chinese counterpart, where the issue of British Steel was discussed between the two governments in person for the first time.

Jingye has hired the leading City law firm Linklaters to explore the recovery of hundreds of millions of pounds it invested in the Scunthorpe-based company before the government seized control of it.

News of last week’s meeting comes as British steelmakers face an anxious wait to learn whether their exports to the US face swingeing tariffs as part of US President Donald Trump’s trade war.

Sky News’s economics and data editor, Ed Conway, revealed this week that the UK would miss a White House-imposed deadline to agree a trade deal on steel and aluminium this week.

Jingye declined to comment, while a spokesman for the Department for Business and Trade said: “We acted quickly to ensure the continued operations of the blast furnaces but recognise that securing British Steel’s long-term future requires private sector investment.

“We have not nationalised British Steel and are working closely with Jingye on options for the future, and we will continue work on determining the best long-term sustainable future for the site.”