Does the government have the power to push through unpopular decisions?
Back in June, it was the U-turn on welfare that raised eyebrows. Now it’s a perceived volte-face on tax.
After weeks of suggestions that income tax may have to rise in the forthcoming budget, government sources have confirmed that Chancellor Rachel Reeves will do no such thing.
The government is flip-flopping in a febrile environment. Markets are sensitive to levels of government debt, which climbed by 17.9% between 2019 and 2024.
In the context of an ageing population, slow growth and comparatively high inflation, there are concerns that UK debt is on an unsustainable path. Markets want consolidation – for the chancellor to get a grip on tax and spending.
Ms Reeves, with her insistence on iron-clad fiscal rules, promised discipline. But flip-flopping doesn’t look like discipline. Markets are letting their thoughts be known – and their thoughts matter because the government borrows from them.
Government bond yields, the interest rate demanded on UK debt, jumped amid fears that the government is not prepared to face down opposition from its own backbenchers, from political opponents or the public.
The 30-year gilt was up 16 basis points after its worst day since July, when the chancellor was seen crying in the Commons. The 10-year gilt was up 13 points.
Borrowing costs are already costing the country more than £100bn a year – about 10% of total spending. The more money the government is spending on interest, the less flexibility it has to spend more in other areas, like schools or hospitals.
Chancellor of the Exchequer Rachel Reeves. Pic: PA
It appears that Ms Reeves has changed tack because official forecasts from the Office for Budget Responsibility (OBR), whose forecasts underpin the budget, show the fiscal black hole is closer to £20bn, rather than the £30bn first feared. It means she can take less radical steps to raise money.
Markets are pleased that the chancellor is sticking to her rules, but they are viewing this move with scepticism.
Many view the OBR forecasts as overly optimistic. These are smaller tax rises to tackle a smaller problem on paper, but is what’s written on that paper credible?
Andrew Goodwin, of Oxford Economics, said: “If investors suspect the government is leaning on convenient assumptions, they may assume more trouble ahead – and yields could rise further.”
Then there’s the speculation over which taxes could rise. Markets have a clear preference towards income tax because, unlike the increase in national insurance contributions on businesses in the last budget, it’s not inflationary.
And alternative sources, such as tweaks to stamp duty or EV taxes, are less dependable revenue raisers. “Avoiding the politically sensitive income tax lever implies less willingness to tackle the structural deficit later,” said Gordon Shannon, of TwentyFour Asset Management.
Read more:
‘Staggering’ 20-year fall in domestic UK flights
Doctors in England begin five-day strike
Traders are eyeing the long-term trajectory of the UK, and they are bristling at short-term fixes and tweaks that don’t address the fundamental fiscal position.
There are those in policy who are also frustrated at the approach, which has seen the government pick and drop policies to meet fiscal rules by fine margin.
It is difficult to find any political vision in it all.
Police are investigating after a “number of people” were believed to have been attacked with pepper spray by a group of men who then fled.
Officers were called at 8.11am to a multi-storey car park at Terminal 3 following reports of multiple people being assaulted, said the Metropolitan Police.
A statement by the force said: “A number of people were sprayed with what is believed to be a form of pepper spray by a group of men who then left the scene.”
What we know so far
• Several assaulted with ‘pepper spray’
• One arrest – police hunt for more suspects
• Incident said to involve people known to each other
• Incident not being treated as terrorism
• 21 people treated by ambulance service – five taken to hospital
• Injuries not believed to be life-threatening
• Traffic disruption reported – but train lines since reopened
Live updates on Heathrow incident
Fire engines responding to the incident at Heathrow Airport. Pic: @_umarjaved
Armed police attended and one man was arrested on suspicion of assault. He remains in custody and enquiries continue to trace further suspects.
Police are not treating the Heathrow incident as terrorism.
London Ambulance Service also attended the scene and treated 21 people, including five who were taken to hospital. Their injuries are not believed to be life-changing or life-threatening.
There is currently some disruption to traffic in the area and Terminal 3 remains open.
Increased police presence
Commander Peter Stevens said: “At this stage, we believe the incident involved a group of people known to each other, with an argument escalating and resulting in a number of people being injured.
“Our officers responded quickly and there will be an increased police presence at Heathrow Airport throughout the morning, to continue enquiries and ensure the safety of those in the area.
“We are not treating this incident as terrorism. I understand the public’s concerns and would like to thank those in the area for their cooperation this morning.”
A person is detained at the airport. Pic: @_umarjaved
‘Significant incident’
The London Ambulance Service said a “significant incident” was declared.
There was a “full deployment” of resources and the ambulance service is treating it as ongoing.
A London Fire Brigade spokesperson said: “We were called at 8.14am today to assist emergency service colleagues at an incident near Terminal 3 at Heathrow Airport. Firefighters remain at the scene.”
Heathrow is advising passengers to allow extra time when travelling to the airport and to check with their airline for any queries.
There was disruption to train and Tube services, with some delays on the Elizabeth Line and the Piccadilly Line.
National Rail said on its website that lines had been reopened allowing trains to call at Heathrow “following the emergency services dealing with an incident at the airport”.
It said: “Although lines have now reopened, disruption is expected to continue whilst services return to normal, delays of up to 10 minutes and cancellations can be expected until 11.45am.”
National Highways East said on X: “A serious incident within the @HeathrowAirport Tunnel has resulted in the closure of the #M4 spur road southbound between M4 and J4A.
“@metpoliceuk responding. We’ll keep you updated.”
It later said: “Incident has been resolved and all closures lifted on the #M4 southbound @HeathrowAirport spur road between #M4 and J4A.”
People on social media have reported vehicles were being searched at the airport.
A user on X said there was a “major backlog of cars unable to leave the vicinity or enter the drop-off zone” at Terminal 3.
In footage on X, several armed police were seen in a car park.
England and Scotland fans have found out where their World Cup group games will be played when the tournament kicks off in June.
England, who are in Group L, will begin their tournament against Croatia in Dallas at 4pm EST (9pm BST) on 17 June. They will then go on to face Ghana in Boston at 4pm EST (9pm BST) on 23 June and Panama in New Jersey, New York, at 5pm EST (10pm BST) on 27 June.
Scotland are in Group C, and their first match will be against Haiti in Boston at 9pm EST on 13 June (2am GMT the following morning).
They will go up against Morocco also in Boston at 6pm EST (11pm GMT) on 19 June and then Brazil in Miami at 6pm EST (11pm GMT) on 24 June.
Fans are expected to rush to sort their travel and accommodation plans now that they know where and when the matches take place.
Read more: Unapologetically political – a World Cup draw like no other
Please use Chrome browser for a more accessible video player
England and Scotland learn World Cup fate
Wales and Northern Ireland have yet to find out if they will qualify.
Wales must face a play-off against Bosnia and Herzegovina in Cardiff, then either Italy or Northern Ireland, if they are victorious.
If they beat these play-off opponents, they will secure their place in Group B alongside Canada, Qatar and Switzerland.
However, Northern Ireland will also be vying to guarantee their spot in the same group if they can beat Italy and then either Wales or Bosnia and Herzegovina.
This breaking news story is being updated and more details will be published shortly.
Please refresh the page for the latest version.
You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow us on WhatsApp and subscribe to our YouTube channel to keep up with the latest news.
UK
World Cup 2026 – who England, Scotland, Wales, Northern Ireland and the Republic of Ireland will play
Scotland and England now know who they will face in the group stage of the next summer’s world cup.
But the fates of Northern Ireland, the Republic of Ireland and Wales won’t be determined until they compete in pre-tournament play-off matches in March.
England are in Group L along with Croatia, Panama and Ghana. Their first match will be against Croatia, who beat them in the semi-finals of the 2018 World Cup in Russia.
Pic: Reuters
Scotland’s first match will be against Haiti, in Group C.
Brazil and Morocco are the other Group C teams – both countries were also in the same opening group as Scotland in the 1998 World Cup in France.
Trump and Infantino at the World Cup draw
Wales have yet to find out if they will qualify as they must face a play-off against Bosnia and Herzegovina in Cardiff, and then either Italy or Northern Ireland, if they are victorious.
Read more:
EasyJet staff at Luton Airport to strike over Christmas
If they can overcome these play-off opponents then they will secure their place in Group B along with Canada, Qatar and Switzerland. But Northern Ireland will also be vying and hoping to guarantee their spot in the same group if they can beat Italy and then either Wales or Bosnia and Herzegovina.
Please use Chrome browser for a more accessible video player
‘Bring it on!’: Scotland fans react to World Cup draw
The Republic of Ireland also need to get through the play-offs first and are paired against the Czech Republic for their semi-final. Should Ireland win that match, they will need to beat either North Macedonia or Denmark to get to the finals where an opening group containing joint hosts Mexico, South Africa and South Korea awaits.
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024