Former Bank of England governor Lord King says income taxes must rise

Published

9 months ago

February 27, 2025

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Income taxes will have to rise in order to plug Britain’s financial blackhole and allow for reforms, the former Bank of England governor has told Sky News.

Lord Mervyn King told Sophy Ridge’s Politics Hub programme we should all recognise “the very difficult position” that Chancellor Rachel Reeves has “inherited”, as he pointed to slow growth, a high budget deficit, large national debt and interest rates rising.

But he suggested rather than employers’ national insurance contributions, employees’ income tax is what should have been hiked when Ms Reeves announced her budget in October.

Lord King said increasing taxes would be needed in order to accommodate both a rise in defence spending and public services reform, adding: “The obvious tax to raise is the basic rate of income tax, we will all contribute to it.”

Following the budget, the chancellor received backlash after announcing employers’ national insurance contributions would be increased.

“I think it would have been better to have said in the budget, ‘look, the previous government was irresponsible in cutting employees’ national insurance contributions, but let’s be frank, we were pretty irresponsible in saying we wouldn’t reverse it’,” Lord King said.

Lord King nonetheless thinks it is still possible for the government to say to people “maybe we said some silly things before the election” but “this is the situation Britain finds itself in, this is what we have to do over the next four to five years”.

He says the public wants politicians to be “honest”, even if that means raising taxes.

“But in the long run, to raise enough money, I think we will have to raise the basic rate of income tax. And I see no harm in doing that.”

Politics

Prediction markets bet on Coinbase-linked Hassett as top Fed pick

Published

3 hours ago

December 1, 2025

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Prediction markets bet on Coinbase-linked Hassett as top Fed pick

Prediction markets Polymarket and Kalshi view Kevin Hassett, US President Donald Trump’s National Economic Council director, as the favorite to replace Jerome Powell as the next Federal Reserve chair.

The odds of Hassett filling the seat have spiked to 66% on Polymarket and 74% on Kalshi at the time of writing. Hassett is widely viewed as crypto‑friendly thanks to his past role on Coinbase’s advisory council, a disclosed seven‑figure stake in the exchange and his leadership of the White House digital asset working group.

Founder and CEO of Wyoming-based Custodia Bank, and a prominent advocate for crypto-friendly regulations, Caitlin Long, commented on X:

“If this comes true & Hassett does become Fed chairman, anti-#crypto people at the Fed who still hold positions of power will finally be out (well, most of them anyway). BIG changes will be coming to the Fed.”

Kevin Hassett’s crypto credentials

Hassett is a long-time Republican policy economist who returned to Washington as Trump’s top economic adviser and has now emerged as the market-implied frontrunner to lead the Fed.

His financial disclosure reveals at least a seven‑figure Coinbase stake and compensation for serving on the exchange’s Academic and Regulatory Advisory Council, placing him unusually close to the crypto industry for a potential Fed chair.

Still, crypto has been burned before by reading too much into “crypto‑literate” resumes. Gary Gensler arrived at the Securities and Exchange Commission with MIT blockchain courses under his belt, but went on to preside over a wave of high‑profile enforcement actions, some of which critics branded as “Operation Chokepoint 2.0.”

A Hassett-led Fed might be more open to experimentation and less reflexively hostile to bank‑crypto activity. Still, the institution’s mandate on financial stability means markets should not assume a one‑way bet on deregulation.

Supervision pushback inside the Fed

The Hassett odds have jumped just as the Fed’s own approach to bank supervision has received pushback from veterans like Fed Governor Michael Barr, who earned his reputation as one of Operation Chokepoint 2.0’s key architects.

According to Caitlin Long, while he Barr “was Vice Chairman of Supervision & Regulation he did Warren’s bidding,” and he “has made it clear he will oppose changes made by Trump & his appointees.”

On Nov. 18, the Fed released new Supervisory Operating Principles that shift examiners toward a “risk‑first” framework, directing staff to focus on material safety‑and‑soundness risks rather than procedural or documentation issues.

In a speech the same day, Barr warned that narrowing oversight, weakening ratings frameworks and making it harder to issue enforcement actions or matters requiring attention could leave supervisors slower to act on emerging risks, arguing that gutting those tools may repeat pre‑crisis mistakes.

Days later, in Consumer Affairs Letter 25‑1, the Fed clarified that the new Supervisory Operating Principles do not apply to its Consumer Affairs supervision program (an area under Barr’s committee as a governor).

If prediction markets are right and a crypto‑friendly Hassett inherits this landscape, his Fed would not be writing on a blank slate but stepping into an institution already mid‑pivot on how hard (and where) it leans on banks.