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Rachel Reeves has admitted she was “wrong” to say higher taxes were not needed during the election campaign – but businesses will have to make less money or pay staff less to cover their tax increase.

A month before Labour won the July election, the chancellor said “we don’t need higher taxes, what we need is growth”.

On Wednesday, the chancellor raised taxes by £40bn – the highest amount since 1993.

She told Sky News’ Sunday Morning with Trevor Phillips: “I was wrong on 11 June, I didn’t know everything, because when I arrived at the Treasury on July 5, so just under a month after I said those words, I was taken into a room by the senior officials at the Treasury and they set out the huge black hole in the public finances beyond which anybody knew about at the time of the general election.”

She accused the previous government of having “hid it from the country, they hid it from parliament and indeed, they hid it from the official independent forecaster, the OBR”.

Follow live: Chancellor admits she was ‘wrong’

The lion’s share of the £40bn in tax rises will be shouldered by businesses as employers’ national insurance (NI) will go up by 1.2 percentage points to 15% from April, while the earnings threshold at which employers start paying NI has been slashed from £9,100 to £5,000.

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Ms Reeves said this will raise £25bn over the next five years.

The tax rise has been heavily criticised but the chancellor defended her decision as she said the government “made a choice” to get employers to pay the rise instead of employees.

She told Trevor Phillips: “Yes, businesses will now have to make a choice, whether they will absorb that through efficiency and productivity gains, whether it will be through lower profits or perhaps through lower wage growth.”

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Gensler’s imminent exit triggers wave of crypto ETF submissions

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Gensler’s imminent exit triggers wave of crypto ETF submissions

As Gary Gensler’s last day as SEC Chair approaches, the crypto industry floods the commission with a wave of ETF filings.

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Wyoming proposes bill for Strategic Bitcoin Reserve

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Wyoming proposes bill for Strategic Bitcoin Reserve

Wyoming has become the latest US state to propose a bill for a Strategic Bitcoin Reserve, just days before Donald Trump’s US presidential inauguration.

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Was Tusk doing Brussels’s bidding with his ‘Breturn’ plea?

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Was Tusk doing Brussels's bidding with his 'Breturn' plea?

When Nigel Farage’s Reform UK is just one point behind you in the opinion polls, the last thing you want to be reminded about is Brexit.

If you’re Sir Keir Starmer, that is.

No doubt Poland’s prime minister, Donald Tusk, was trying to be friendly. After all, as Sir Keir said, they share a passion for Arsenal Football Club.

But when Mr Tusk declared at their joint news conference in Warsaw that his dream was “instead of a Brexit, we will have a Breturn”, Sir Keir visibly cringed.

Was it an ambush? Not quite. But it was certainly awkward for the UK prime minister. He stood stiffly and didn’t respond, not once uttering the word “Brexit”.

Mr Tusk, however, has form for bemoaning Brexit. He was, after all, the president of the European Council when the UK voted to leave the EU in 2016.

He might now be in his second spell as Poland’s PM, but his five years at the EU make him the ultimate Brussels insider, who’s never made any attempt to hide his feelings on Brexit.

Prior to the UK referendum, in September 2015, he said Brexit “could be the beginning of the destruction of not only the EU but also of western political civilisation in its entirety”.

His most outspoken attack on the UK’s Eurosceptics came in 2019 when the-then prime minister Theresa May was struggling to get a deal. He spoke of “what the special place in hell looks like for those who promoted Brexit“.

Keir Starmer and Volodymyr Zelenskyy arrive to lay wreaths at The Wall of Remembrance .
Pic: PA
Image:
Sir Keir also visited Ukraine on his trip to Eastern Europe. Pic: PA


Standing alongside Sir Keir, he revealed that “for obvious reasons” they discussed co-operation between the UK and the EU. He recalled that his emotional reaction to the referendum in 2016 was “I already miss you”.

He went on: “This is not just about emotions and sentiments – I am aware this is a dream of mine, that instead of a Brexit we will have a Breturn.

“Perhaps I’m labouring under an illusion. I’d rather be an optimist and harbour these dreams in my heart – sometimes they come true in politics.”

Read more:
Badenoch says Tories made ‘mistakes’ on Brexit
Labour MPs told to back EU youth mobility scheme

A dream? Or a calculated move? As a Brussels insider, was Mr Tusk speaking for the EU as a whole? Was he doing Brussels’ bidding?

He may have returned to lead his homeland, but he remains a key player in Brussels.

On becoming Poland’s PM in 2023, he ended a dispute with Brussels which unlocked billions of frozen EU funds for his country.

He also orchestrated the return of his centre-right ally Ursula von der Leyen as European Commission president.

And Poland has just taken over the rotating presidency of the EU, which means Mr Tusk will be hugely influential once again, chairing meetings and setting agendas.

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Poland is back in the European mainstream. It’s where Mr Tusk would like the UK to be as well.

It’s where, privately, Sir Keir would like the UK to be. It’s just that with Reform UK almost neck and neck with Labour in the polls, he daren’t say so.

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