Connect with us

Published

on

Here are the key points from Chancellor Rishi Sunak’s budget speech:

Economy - graphic for rolling budget coverage 27 October

• The chancellor says there are “challenging” months ahead, adding that inflation in September was 3.1% and is likely to rise further – the OBR expect it to average 4% over the next year

• Pressures caused by supply chains and energy crisis will “take months to ease”.

• Economy to return to its pre-COVID level at the turn of the year – an improvement on OBR forecasts revealed in March

• Economy expected to grow by 6% in 2022, and 2.1%, 1.3% and 1.6% over the next three years

• In July last year, at the height of the pandemic, unemployment was expected to peak at 12% but the OBR now expect it to peak at 5.2%

• Compared to 2020, wages have grown by 3.4%

Debt and borrowing - graphic for rolling budget coverage 27 October

• Underlying debt is forecast to be 85.2% of GDP this year

• It will reach 85.4% in 2022-23, before peaking at 85.7% in 2023-24

• It then falls in the final three years of the forecast from 85.1% to 83.3%

• Total departmental spending over this parliament will increase by £150bn, growing by 3.8% a year in real terms

NHS - graphic for rolling budget coverage 27 October

• Spending on healthcare to increase by £44bn to over £177bn by the end of this parliament

• Extra revenue from health and social care levy will go towards NHS and social care as promised

• Health budget will be the largest since 2010, with record investment in research and development, better screening, 40 new hospitals and 70 hospital upgrades

Crime - graphic for rolling budget coverage 27 October

• Mr Sunak says the budget funds an ambition to recruit 20,000 new police officers

• Extra £2.2bn for courts, prisons and probation services, including £500m to reduce the backlog in courts

• Programmes to tackle neighbourhood crime, reoffending, county lines crimes, violence against women and girls, victims’ services, and improved response to rape allegations

• £3.8bn for the “largest prison-building programme in a generation”

Housing - graphic for rolling budget coverage 27 October

• £11.5bn to build up to 180,000 affordable home – 20% more than the previous programme

• £1.8bn to bring 1,500 hectares of brownfield land into use

• £640m a year to help those who are rough sleepers and homeless

Cladding - graphic for rolling budget coverage 27 October

• £5bn to remove unsafe cladding from the highest risk buildings, partly funded by a residential property developers’ tax, which will be levied on developers with profits over £25m at the rate of 4%

Transport - graphic for rolling budget coverage 27 October

• £21bn for roads as part of a larger investment in transport

• £2.6bn for upgrades of over 50 local roads

• More than £5bn for road maintenance – enough to fill one million more potholes a year

• More than £5bn for buses, cycling and walking improvements

• HGV levy (previously suspended until August) will now be suspended until 2023

• Vehicle excise duty for heavy goods vehicles to be frozen

• Funding to improve lorry park facilities

Rail - graphic for rolling budget coverage 27 October

• £46bn investment in railways, with an integrated rail plan to be published soon

• £5.7bn for London-style transport settlements in Greater Manchester, Liverpool City Region, Tees Valley, South Yorkshire, West Yorkshire, West Midlands, West of England

Child services - graphic for rolling budget coverage 27 October

• £300m for parenting programmes for families, tailored services to help with perinatal mental health

• £150m to support training and development for early years workforce

• £200m for Supporting Families programme which helps families with varied needs

• Over £200m to continue the holiday activity and food programme

• £560m for youth services – enough to fund up to 300 youth clubs in England

• More than £200m to build or transform up to 8,000 community football pitches in the UK

• £2bn new funding to help schools and colleges, bringing total support (some already announced) to almost £5bn

• Restoring per pupil funding to 2010 levels in real terms, equivalent to a cash increase for every pupil of more than £1,500

• 30,000 new school places for children with special needs and disabilities

Business support - graphic for rolling budget coverage 27 October

• New 50% business rates discount for businesses in the retail, hospitality and leisure sectors, including pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms

• This will mean any eligible business can claim a discount up to a maximum of £110,000 – a tax cut worth almost £1.7bn

• Mr Sunak says that, together with small business rates relief, this means more than 90% of all businesses in these sectors will see a discount of at least 50%

Alcohol duty - graphic for rolling budget coverage 27 October

• An overhaul of alcohol duty, cutting the number of main duty rates from 15 to six – the stronger the drink, the higher the rate

• Small producer relief will extend the principle of small brewers’ relief to small cidermakers and others making alcoholic drinks of less than 8.5% ABV

• Sparkling wines will pay the same duty as still wines of equivalent strength, rather than the 28% they currently pay. Duty will also be cut for fruit cider

Fuel duty - graphic for rolling budget coverage 27 October

• Planned rise in fuel duty will be cancelled, meaning that – after 12 consecutive years of frozen rates, the average car driver will save a total of £1,900

Coronavirus - graphic for rolling budget coverage 27 October

• National living wage to increase next year by 6.6% to £9.50 an hour. For a full time worker, that’s a pay rise worth over £1,000

• This move will help more than two million of the lowest-paid workers, Mr Sunak says

Tax - graphic for rolling budget coverage 27 October

• Mr Sunak says his goal is to reduce taxes and the universal credit taper, which reduces financial support as people work more hours, is in his sights

• The rate is currently 63%, so for every extra £1 someone earns, their universal credit is reduced by 63p. Mr Sunak announces plans to cut this by 8 percentage points (from 63% to 55%). This will come into effect “within weeks”

• Work allowances being increased by £500 – combined with the change to the taper, this is a tax cut worth more than £2bn, he says. Nearly two million families will keep, on average, an extra £1,000 a year

Continue Reading

Business

UK economy figures not as bad as they look despite GDP fall, analysts say

Published

on

By

UK economy figures not as bad as they look despite GDP fall, analysts say

The UK economy unexpectedly shrank in May, even after the worst of Donald Trump’s tariffs were paused, official figures showed.

A standard measure of economic growth, gross domestic product (GDP), contracted 0.1% in May, according to the Office for National Statistics (ONS).

Rather than a fall being anticipated, growth of 0.1% was forecast by economists polled by Reuters as big falls in production and construction were seen.

It followed a 0.3% contraction in April, when Mr Trump announced his country-specific tariffs and sparked a global trade war.

A 90-day pause on these import taxes, which has been extended, allowed more normality to resume.

This was borne out by other figures released by the ONS on Friday.

Exports to the United States rose £300m but “remained relatively low” following a “substantial decrease” in April, the data said.

More on Inflation

Overall, there was a “large rise in goods imports and a fall in goods exports”.

A ‘disappointing’ but mixed picture

It’s “disappointing” news, Chancellor Rachel Reeves said. She and the government as a whole have repeatedly said growing the economy was their number one priority.

“I am determined to kickstart economic growth and deliver on that promise”, she added.

But the picture was not all bad.

Growth recorded in March was revised upwards, further indicating that companies invested to prepare for tariffs. Rather than GDP of 0.2%, the ONS said on Friday the figure was actually 0.4%.

It showed businesses moved forward activity to be ready for the extra taxes. Businesses were hit with higher employer national insurance contributions in April.

Read more:
Trump plans to hit Canada with 35% tariff – warning of blanket hike for other countries
Woman and three teenagers arrested over M&S, Co-op and Harrods cyber attacks

The expansion in March means the economy still grew when the three months are looked at together.

While an interest rate cut in August had already been expected, investors upped their bets of a 0.25 percentage point fall in the Bank of England’s base interest rate.

Such a cut would bring down the rate to 4% and make borrowing cheaper.

Please use Chrome browser for a more accessible video player

Is Britain going bankrupt?

Analysts from economic research firm Pantheon Macro said the data was not as bad as it looked.

“The size of the manufacturing drop looks erratic to us and should partly unwind… There are signs that GDP growth can rebound in June”, said Pantheon’s chief UK economist, Rob Wood.

Why did the economy shrink?

The drops in manufacturing came mostly due to slowed car-making, less oil and gas extraction and the pharmaceutical industry.

The fall was not larger because the services industry – the largest part of the economy – expanded, with law firms and computer programmers having a good month.

It made up for a “very weak” month for retailers, the ONS said.

Continue Reading

Business

UK economy remains fragile – and there are risks and traps lurking around the corner

Published

on

By

UK economy remains fragile - and there are risks and traps lurking around the corner

Monthly Gross Domestic Product (GDP) figures are volatile and, on their own, don’t tell us much.

However, the picture emerging a year since the election of the Labour government is not hugely comforting.

This is a government that promised to turbocharge economic growth, the key to improving livelihoods and the public finances. Instead, the economy is mainly flatlining.

Output shrank in May by 0.1%. That followed a 0.3% drop in April.

Ministers were celebrating a few months ago as data showed the economy grew by 0.7% in the first quarter.

Hangover from artificial growth

However, the subsequent data has shown us that much of that growth was artificial, with businesses racing to get orders out of the door to beat the possible introduction of tariffs. Property transactions were also brought forward to beat stamp duty changes.

More from Money

Read more:
Trump to hit Canada with 35% tariff
Woman and three teens arrested over cyber attacks

In April, we experienced the hangover as orders and industrial output dropped. Services also struggled as demand for legal and conveyancing services dropped after the stamp duty changes.

Many of those distortions have now been smoothed out, but the manufacturing sector still struggled in May.

Signs of recovery

Manufacturing output fell by 1% in May, but more up-to-date data suggests the sector is recovering.

“We expect both cars and pharma output to improve as the UK-US trade deal comes into force and the volatility unwinds,” economists at Pantheon Macroeconomics said.

Meanwhile, the services sector eked out growth of 0.1%.

A 2.7% month-to-month fall in retail sales suppressed growth in the sector, but that should improve with hot weather likely to boost demand at restaurants and pubs.

Struggles ahead

It is unlikely, however, to massively shift the dial for the economy, the kind of shift the Labour government has promised and needs in order to give it some breathing room against its fiscal rules.

The economy remains fragile, and there are risks and traps lurking around the corner.

Please use Chrome browser for a more accessible video player

Is Britain going bankrupt?

Concerns that the chancellor, Rachel Reeves, is considering tax hikes could weigh on consumer confidence, at a time when businesses are already scaling back hiring because of national insurance tax hikes.

Inflation is also expected to climb in the second half of the year, further weighing on consumers and businesses.

Continue Reading

Business

Government to announce new scheme as it ramps up AI adoption with backing from Facebook owner Meta

Published

on

By

Government to announce new scheme as it ramps up AI adoption with backing from Facebook owner Meta

The government is speeding up its adoption of AI to try and encourage economic growth – with backing from Facebook parent Meta.

It will today announce a $1m (£740,000) scheme to hire up to 10 AI “experts” to help with the adoption of the technology.

Sir Keir Starmer has spoken repeatedly about wanting to use the developing technology as part of his “plan for change” to improve the UK – with claims it could produce tens of billions in savings and efficiencies.

Politics live: Follow the latest updates

The government is hoping the new hires could help with problems like translating classified documents en masse, speeding up planning applications or help with emergency responses when power or internet outages occur.

The funding for the roles is coming from Meta, through the Alan Turing Institute. Adverts will go live next week, with the new fellowships expected to start at the beginning of 2026.

Technology Secretary Peter Kyle said: “This fellowship is the best of AI in action – open, practical, and built for public good. It’s about delivery, not just ideas – creating real tools that help government work better for people.”

More on Artificial Intelligence

He added: “The fellowship will help scale that kind of impact across government, and develop sovereign capabilities where the UK must lead, like national security and critical infrastructure.”

The projects will all be based on open source models, meaning there will be a minimal cost for the government when it comes to licensing.

Meta describes its own AI model, Llama, as open source, although there are questions around whether it truly qualifies for that title due to parts of its code base not being published.

The owner of Facebook has also sponsored several studies into the benefits of government adopting more open source AI tools.

Please use Chrome browser for a more accessible video player

Minister reveals how AI could improve public services

Read more:
UK to be AI ‘maker not taker’ – PM
Govt AI adviser stands down

Mr Kyle’s Department for Science and Technology has been working on its mission to increase the uptake of AI within government, including through the artificial intelligence “incubator”, under which these fellowships will fall.

The secretary of state has pointed to the success of Caddy – a tool that helps call centre workers search for answers in official documents faster – and its expanding use across government as an example of an AI success story.

He said the tool, developed with Citizens Advice, shows how AI can “boost productivity, improve decision-making, and support frontline staff”. A trial suggested it could cut waiting times for calls in half.

My Kyle also recently announced a deal with Google to provide tech support to government and assist with modernisation of data.

👉Listen to Politics at Sam and Anne’s on your podcast app👈       

Joel Kaplan, the chief global affairs officer from Meta, said: “Open-source AI models are helping researchers and developers make major scientific and medical breakthroughs, and they have the potential to transform the delivery of public services too.

“This partnership with ATI will help the government access some of the brightest minds and the technology they need to solve big challenges – and to do it openly and in the public interest.”

Jean Innes, the head of the Alan Turing Institute, said: “These fellowships will offer an innovative way to match AI experts with the real world challenges our public services are facing.”

Continue Reading

Trending