Connect with us

Published

on

First things first: don’t panic.

What you need to know is this. The budget has not gone down well in financial markets. Indeed, it’s gone down about as badly as any budget in recent years, save for Liz Truss’s mini-budget.

The pound is weaker. Government bond yields (essentially, the interest rate the exchequer pays on its debt) have gone up.

That’s precisely the opposite market reaction to the one chancellors like to see after they commend their fiscal statements to the house.

In hindsight, perhaps we shouldn’t be surprised.

After all, the new government just committed itself to considerably more borrowing than its predecessors – about £140bn more borrowing in the coming years. And that money has to be borrowed from someone – namely, financial markets.

But those financial markets are now reassessing how keen they are to lend to the UK.

More on Budget 2024

The upshot is that the pound has fallen quite sharply (the biggest two-day fall in trade-weighted sterling in 18 months) and gilt yields – the interest rate paid by the government – have risen quite sharply.

This was all beginning to crystallise shortly after the budget speech, with yields beginning to rise and the pound beginning to weaken, the moment investors and economists got their hands on the budget documentation.

Please use Chrome browser for a more accessible video player

Chancellor challenged over gilt yield spike

But the falls in the pound and the rises in the bond yields accelerated today.

This is not, to be absolutely clear, the kind of response any chancellor wants to see after a budget – let alone their first budget in office.

Indeed, I can’t remember another budget which saw as hostile a market response as this one in many years – save for one.

That exception is, of course, the Liz Truss/Kwasi Kwarteng mini-budget of 2022. And here is where you’ll find the silver lining for Keir Starmer and Rachel Reeves.

The rises in gilt yields and falls in sterling in recent hours and days are still far shy of what took place in the run up and aftermath of the mini-budget. This does not yet feel like a crisis moment for UK markets.

But nor is it anything like good news for the government. In fact, it’s pretty awful. Because higher borrowing rates for UK debt mean it (well, us) will end up paying considerably more to service our debt in the coming years.

Rachel Reeves and Chief Secretary to the Treasury Darren Jones prepare to leave 11 Downing Street
Image:
Rachel Reeves leaving 11 Downing Street before the budget. Pic: PA

And that debt is about to balloon dramatically because of the plans laid down by the chancellor this week.

And this is where things get particularly sticky for Ms Reeves.

In that budget documentation, the Office for Budget Responsibility said the chancellor could afford to see those gilt yields rise by about 1.3 percentage points, but then when they exceeded this level, the so-called “headroom” she had against her fiscal rules would evaporate.

Read more:
Chancellor defends £40bn tax rises
Hefty tax and spending plans a huge gamble – analysis

In other words, she’d break those rules – which, recall, are considerably less strict than the ones she inherited from Jeremy Hunt.

Which raises the question: where are those gilt yields right now? How close are they to the danger zone where the chancellor ends up breaking her rules?

Short answer: worryingly close. Because, right now, the yield on five-year government debt (which is the maturity the OBR focuses on most) is more than halfway towards that danger zone – only 56 basis points away from hitting the point where debt interest costs eat up any leeway the chancellor has to avoid breaking her rules.

Now, we are not in crisis territory yet. Nor can every move in currencies and bonds be attributed to this budget.

Follow Sky News on WhatsApp
Follow Sky News on WhatsApp

Keep up with all the latest news from the UK and around the world by following Sky News

Tap here

Markets are volatile right now. There’s lots going on: a US election next week and a Bank of England decision on interest rates next week.

The chancellor could get lucky. Gilt yields could settle in the coming days. But, right now, the UK, with its high level of public and private debt, with its new government which has just pledged to borrow many billions more in the coming years, is being closely scrutinised by the “bond vigilantes”.

A Halloween nightmare for any chancellor.

Continue Reading

UK

Second-largest population increase in England and Wales in over 75 years – mainly fuelled by migration

Published

on

By

Second-largest population increase in England and Wales in over 75 years - mainly fuelled by migration

The population of England and Wales has grown by more than 700,000 in the year to June 2024 – the second-largest increase in over 75 years.

The change was largely fuelled by international migration, with natural change – the difference between births and deaths – accounting for only a small proportion.

According to the Office for National Statistics, there were an estimated 61.8 million people in England and Wales in mid-2024, up from 61.1 million the year before.

It is the second-largest numerical jump since at least 1949, when comparable data began.

And it is behind only the rise of 821,210 that took place in the preceding 12 months from mid-2022 to mid-2023.

Nigel Henretty of the ONS said the population of the two countries has increased each year since mid-1982, but said the rate of population increases has been higher in recent years.

“Net international migration continues to be the main driver of this growth, continuing the long-term trend seen since the turn of the century,” he said.

Net international migration – the difference between people moving to the country and leaving – accounted for 690,147 of the estimated population increase of 706,881 people, or 98% of the total.

There were slightly more births than deaths in the most recent year, which added 29,982 to the population.

There was also a net decrease in internal migration – the number of people moving from England and Wales to elsewhere in the UK.

Continue Reading

UK

‘Simmering’ division in town where hotel for asylum seekers is beacon for unrest

Published

on

By

'Simmering' division in town where hotel for asylum seekers is beacon for unrest

In Altrincham near Manchester, two opposing groups have gathered to throw insults at each other across the A56.

“Fascists! Racists!” shouts one lot.

On the opposing verge, they shout back: “Shame on you!”

Then both sides chant: “Whose streets? Our streets!”

Cars flash between them, some adding hoots to the noise.

It’s 5pm on Sunday and much of the nation is united watching the Lionesses in the Euro finals.

Yet here is a dual carriageway of division formed in front of what has become a beacon for unrest – a hotel housing asylum seekers.

Anti-migration protesters on opposite the hotel in Altrincham
Image:
Anti-migration protesters opposite the hotel in Altrincham

Caption
Image:
Counter-protesters show their support for the refugees

Sky News has been testing the mood in Altrincham since locals were first informed last November that the Cresta Court Hotel was being repurposed from accommodating short business stays and local events into lodgings for hundreds of male asylum seekers who crossed the Channel on small boats.

Over the course of eight months there have been angry town meetings, regular low-level protests and last Sunday around 80 people from each side turned up outside the hotel with banners, flags and loudspeakers.

“We stopped the Germans, why can’t we stop dinghies,” says local man Dave Haydock under a St George’s cross cap.

“We’re paying for them to be in there and there’s British people out on the streets,” added local businessman Steve, who is waving a Union Flag. “They’re not fleeing a war to come to Britain – they’re coming from France – they are coming because of all the benefits – and everyone in the UK now knows that.”

Dave Haydock speak to Sky's Jason Farrell
Image:
Dave Haydock speak to Sky’s Jason Farrell

The demonstrators on either side of the A56
Image:
The demonstrators on either side of the A56

Cost, benefits and risk to women are recurring themes.

“These people coming over without any documentation,” says local Clare Jones as she points in the direction of two schools. “I’m not a racist. I’m just a concerned mum. I don’t feel safe in my own community.”

A man behind a mask who didn’t want to appear on camera says the media “sneers” at these protests because the media is middle class and “this is a working-class movement”.

Altrincham is one of Manchester’s most affluent towns, but there are much poorer areas close by.

The social demographic at the protests was mixed.

On either side of the A56 I met business owners, nurses, teachers and pensioners.

Both groups were also largely made up of locals.

Read more:
Protest outside hotel housing asylum seekers was peaceful. Suddenly, it all changed

Home Office threatens asylum seekers with homelessness

Caption

A handful of social media “professional” protesters also turned up, pointing cameras at anything they could film – making selfie videos for their TikTok and YouTube followers.

A small line of police officers was in place to keep the peace.

The counter-protesters forming a line to protect the hotel. Described as “lefties” by the anti-migrant demonstrators, the counter-protesters feel that the people opposite are either “far right, fascists” or “being manipulated by the far right”.

Altrincham resident Alison O’Connell said “this is very frightening” as she pointed at the anti-migrant demonstrators. “We are just here to show support for the refugees in the hotel,” she added.

Caption
Image:
Alison O’Connell

Counter-protester Steph Phoenix said: “Knowing personally people in the hotels, I know they are not coming for our money. These people are desperate. They don’t come over for a laugh, they are coming over because they are escaping something terrible in their own country.”

Nahella Ashraf, co-chair of Greater Manchester Stand Up To Racism, said: “There needs to be an honest conversation about what the problems are in society. Refugees are not to blame. People are worried about the cost of living crisis, but it’s not caused by refugees. By housing people in these hotels, we’ve not taken accommodation away from anyone in Britain.”

Caption
Image:
Steph Phoenix, right, says the asylum seekers are ‘desperate’

Migrants disappeared into their rooms during the protest, some peering out of their bedroom windows.

Their voices are rarely heard in this debate.

The next day, hotel security advised them not to talk to us.

Those we did speak to all had stories of fleeing instability and threat. Some had just arrived, others had been here months.

Many were anxious about the protests, but equally not put off from their decision to come.

One said he had recently told a local who had been abusive: “I struggled to get here. It was just luck you were born here.”

The fears of increased crime expressed by residents in November don’t appear to have transpired. But Conservative councillor Nathan Evans, who called the first town meeting, says groups of men in the park, men praying in the public library and warning letters from schools to parents about groups of men near the school gates have all caused “an unease across the town”. He says he has warned the police of a “simmering issue”.

Protesters on either side don’t agree on much but both see the hotel as a symbol of broken promises from successive governments – a failure to manage migration in a way that doesn’t inflame communities. What remains is anger.

Managing and containing that anger is a growing challenge.

Continue Reading

UK

How is Starmer’s government doing? Here’s what ‘end-of-term’ report from voters says

Published

on

By

How is Starmer's government doing? Here's what 'end-of-term' report from voters says

One year on, how’s Keir Starmer’s government going? We’ve put together an end-of-term report with the help of pollster YouGov.

First, here are the government’s approval ratings – drifting downwards.

It didn’t start particularly high. There has never been a honeymoon.

But here is the big change. Last year’s Labour voters now disapprove of their own government. That wasn’t true at the start – but is now.

And remember, it’s easier to keep your existing voter coalition together than to get new ones from elsewhere.

So we have looked at where voters who backed Labour last year have gone now.

YouGov’s last mega poll shows half of Labour voters last year – 51% – say they would vote for them again if an election was held tomorrow.

Around one in five (19%) say they don’t know who they’d vote for – or wouldn’t vote.

But Labour are also leaking votes to the Lib Dems, Greens and Reform.

These are the main reasons why.

A sense that Labour haven’t delivered on their promises is top – just above the cost of living. Some 22% say they’ve been too right-wing, with a similar number saying Labour have “made no difference”. Immigration and public services are also up there.

Now, YouGov asked people whether they think the cabinet is doing a good or a bad job, and combined the two figures together to get a net score.

John Healey and Bridget Phillipson are on top, but the big beats of Angela Rayner, Keir Starmer and Rachel Reeves bottom.

But it’s not over for Labour.

Here’s one scenario – 2024 Labour voters say they would much prefer a Labour-led government over a Conservative one.

But what about a Reform UK-led government? Well, Labour polls even better against them – just 11% of people who voted Labour in 2024 want to see them enter Number 10.

Signs of hope for Keir Starmer. But as Labour MPs head off for their summer holidays, few of their voters would give this government an A*.

Continue Reading

Trending