Jeremy Hunt offers hope on pay settlements but rules out feeding inflation
Chancellor Jeremy Hunt has not ruled out increasing pay offers to public sector workers, but warned that giving more money to teachers and nurses could entrench high inflation.
Speaking as it was revealed the UK economy narrowly avoided recession in 2022, Mr Hunt also indicated he would resist pressure to cancel a planned cut to household energy support that will see typical bills rise by £500 to around £3,000 in April.
Asked if there were any circumstances in which he would consider increasing pay offers to avert more public sector pay strikes the chancellor told Sky News: “It’s not a no, but I’m saying we’ll talk about absolutely anything, except things that will dig in the very high inflation that is causing people to see the cost of their weekly shop go up and the value of their wages erode.
“We’ll talk about absolutely anything to resolve the strikes except measures that will entrench high inflation.
“We don’t think strikes are helpful, they’re very damaging and very disruptive. The best way to resolve these issues is to sit and talk and find a solution that doesn’t entrench the very inflation that is upsetting so many people.”
Many economists dispute the argument that increasing public sector pay can entrench inflation, but Mr Hunt said it was a key factor in holding down pay.
“We should listen to a very clear warning from the Bank of England governor on Thursday who said that if you fund higher wage settlements through borrowing, that is inflationary, and that’s why it’s a very difficult situation. We want to get back into a situation where people’s real wages are growing.”
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Why is the UK economy so weak?
On maintaining energy support, a measure that would reduce inflation for family budgets, he argued that continuing support at current levels would damage the public finances.
The cost to the taxpayer of existing support has proved much lower than initially forecast because wholesale gas prices have fallen, leading campaigners and the energy industry to call for support to be maintained.
“We are doing absolutely everything we can to help families through this difficult period,” Mr Hunt said. “We’re giving about £3,500 of support on average to every family in the country this year and last year, so it’s a massive amount, about £99bn.
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“But we also have to be responsible with public finances. Because if we’re not we just give them a different pressure, which is higher interest rates as a result of the reasons. We look at everything we can do, but we won’t do things that lead to higher interest rates.”
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Thousands of NHS workers strike
The chancellor’s position on pay and energy reflects the dismal state of the public finances.
The official figures released by the Office for National Statistics earlier on Friday paint a grim picture of a stagnating economy with a dysfunctional public sector.
The Bank of England is forecasting a recession this year, albeit slightly less acute than previously, and forecast the UK will not recover to its pre-pandemic scale until 2026.
There is also acute pressure on Mr Hunt from businesses to incentivise investment and growth. Pharmaceutical giant AstraZeneca offered a stark example of the impact of government policy this week, citing rising corporation tax as the reason it has chosen to build a new manufacturing facility in Ireland not the UK.
Mr Hunt rejected the characterisation of the UK’s prospects.
“We believe that this country has some of the most exciting growth prospects anywhere if you look at our strengths in technology,” he said.
“Last year, we became only the third country in the world to have a trillion-dollar tech economy, our strengths are the life sciences and in clean energy where we’re a world leader in offshore wind. We think we have fantastic growth prospects.
“But to take to make the most of those we have to deal with our inflation issue which is over 10%, and for companies that want to invest high interest rates are a real disincentive.
“We need to get interest rates down. That was working with the Bank of England to deal with inflation. And then we think we have tremendous growth prospects.”
They rose to their feet in ecstatic surprise, shouting “heydar, heydar” – a Shia victory chant.
This was the first public appearance of their supreme leader since Israel began attacking their country.
He emerged during evening prayers in his private compound. He said nothing but looked stern and resolute as he waved to the crowd.
He has spent the last weeks sequestered in a bunker, it is assumed, for his safety following numerous death threats from Israel and the US.
His re-emergence suggests a return to normality and a sense of defiance that we have witnessed here on the streets of Tehran too.
Earlier, we had filmed as men in black marched through the streets of the capital to the sound of mournful chants and the slow beat of drums, whipping their backs with metal flails.
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Defiance on streets of Tehran
This weekend they mark the Shia festival of Ashura as they have for 14 centuries. But this year has poignant significance for Iranians far more than most.
The devout remember the betrayal and death of Imam Hussein as if it happened yesterday. We filmed men and women weeping as they worshipped at the Imamzadeh Saleh Shrine in northern Tehran.
The armies of the Caliph Yazid killed the grandson of the Prophet Muhammad in the seventh-century Battle of Karbala.
Shiite Muslims mark the anniversary every year and reflect on the virtue it celebrates, of resistance against oppression and injustice.
But more so than ever in the wake of Israel and America’s attacks on their country.
The story is one of prevailing over adversity and deception. A sense of betrayal is keenly felt here among people and officials.
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Many Iranians believe they were lured into pursuing diplomacy as part of a ruse by the US.
Iran believed it was making diplomatic progress in talks with America it hoped could lead to a deal. Then Israel launched its attacks and, instead of condemning them, the US joined in.
Death to Israel chants resounded outside the mosque in skies which were filled for 12 days with the sounds of Israeli jets. There is a renewed sense of defiance here.
One man told us: “The lesson to be learned from Hussein is not to give in to oppression even if it is the most powerful force in the world.”
A woman was dismissive about the US president. “I don’t think about Trump, nobody likes him. He always wants to attack too many countries.”
Pictures on billboards nearby draw a line between Imam Hussein’s story and current events. The seventh-century imam on horseback alongside images of modern missiles and drones from the present day.
Other huge signs remember the dead. Iran says almost 1,000 people were killed in the strikes, many of them women and children.
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Officially Iran is projecting defiance but not closing the door to diplomacy.
Government spokeswoman Dr Fatemeh Mohajerani told Sky News that Israel should not even think about attacking again.
“We are very strong in defence and as state officials have announced, this time Israel will receive an even stronger response compared to previous times,” she said.
“We hope that Israel will not make such a mistake.”
But there is also a hint of conciliation: Senior Iranian officials have told Sky News that back-channel efforts are under way to explore new talks with the US.
Israel had hoped its attacks could topple the Iranian leadership. That proved unfounded, the government is in control here.
For many Iranians, it seems quite the opposite happened – the 12-day war has brought them closer together.
To the sound of mournful chants and the slow beat of drums, they march, whipping their backs with metal flails.
It is an ancient ceremony going back almost 14 centuries – the Shia commemoration of Ashura.
But this year in particular has poignant significance for Iranians.
The devout remember the betrayal and death of the Imam Hussein as if it happened yesterday.
Iranians gather ahead of Ashura
We filmed men and women weep as they worshipped at the Imamzadeh Saleh Shrine in northern Tehran.
The grandson of the Prophet Muhammad was killed by the armies of the Caliph Yazid in the seventh century Battle of Karbala.
Shia Muslims mark the anniversary every year and reflect on the virtue it celebrates – of resistance against oppression and injustice. But more so than ever this year, in the wake of Israel and America’s attacks on their country.
The story is one of prevailing over adversity and deception. A sense of betrayal is keenly felt here by people and officials.
Men and women weeped as they worshipped at the Imamzadeh Saleh Shrine
Many Iranians believe they were lured into pursuing diplomacy as part of a ruse by the US.
Iran believed it was making diplomatic progress in talks with America, which it hoped could lead to a deal. Then Israel launched its attacks and, instead of condemning them, the US joined in.
“Death to Israel” chants resounded outside the mosque in skies that for 12 days were filled with the sounds of Israeli jets.
There is a renewed sense of defiance here.
One man told us: “The lesson to be learned from Hussein is not to give in to oppression, even if it is the most powerful force in the world.”
‘I don’t think about Trump. Nobody likes him,’ one woman tells Sky News
A woman was dismissive about the US president.
“I don’t think about Trump. Nobody likes him. He always wants to attack too many countries.”
Pictures on billboards nearby link Imam Hussein’s story and current events. They show the seventh century imam on horseback alongside images of modern missiles and drones from the present day.
Other huge signs remember the dead. Iran says almost 1,000 people were killed in the strikes, many of them women and children.
Officially Iran is projecting defiance, but not closing the door to diplomacy.
Government spokeswoman Dr Fatemeh Mohajerani told Sky News that Israel should not even think about attacking again.
“We are very strong in defence, and as state officials have announced, this time Israel will receive an even stronger response compared to previous times. We hope that Israel will not make such a mistake.”
Dr Fatemeh Mohajerani said it would be a mistake for Israel to attack again
But there is also a hint of conciliation. Senior Iranian officials have told Sky News back-channel efforts are under way to explore new talks with the US.
Israel had hoped its attacks could topple the Iranian leadership. Those hopes proved unfounded. The government is in control here.
For many Iranians it seems quite the opposite happened – the 12-day war has brought them closer together.
World
Two security workers injured after grenades thrown at aid site, Gaza Humanitarian Foundation says
Two American security workers in Gaza were injured after grenades were thrown during food distribution in Khan Younis, the Gaza Humanitarian Foundation (GHF) has said.
In a statement, the US and Israeli-backed aid group said a targeted terrorist attack was carried out at one of its sites in southern Gaza on Saturday morning.
The two Americans injured “are receiving medical treatment and are in stable condition,” it said, adding that the delivery of aid was “otherwise successful” and that “no local aid workers or civilians were harmed”.
GHF didn’t say exactly when the incident happened but claimed Hamas was behind the attack, adding: “GHF has repeatedly warned of credible threats from Hamas, including explicit plans to target American personnel, Palestinian aid workers, and the civilians who rely on our sites for food.
“Today’s attack tragically affirms those warnings.”
Later, the aid group posted a picture on social media, which it said showed “fragments of a grenade packed with ball bearings” that was used in the attack.
Asked by Sky’s US partner network, NBC News, whether the two injured individuals were responsible for handing out aid or were responsible for providing security, GHF said they were “American security workers” and “two American veterans.”
The aid group did not provide specific evidence that Hamas was behind the attack.
The US and Israeli-backed group has been primarily responsible for aid distribution since Israel lifted its 11-week blockade of the Gaza Strip in May.
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It comes after Sky News analysis showed GHF aid distributions are associated with a significant increase in deaths in Gaza.
According to Gaza’s health ministry, 600 Palestinians have been killed while seeking aid from GHF sites as of 3 July, which charities and the UN have branded “death traps”.
Meanwhile, the Associated Press has reported that Israeli-backed American contractors guarding GHF aid centres in Gaza are using live ammunition and stun grenades.
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Contractors allege colleagues ‘fired on Palestinians’
GHF has vehemently denied the accusations, adding that it investigated AP’s allegations and found them to be “categorically false”.
Israel’s military added that it fires only warning shots and is investigating reports of civilian harm.
It denies deliberately shooting at any innocent civilians and says it’s examining how to reduce “friction with the population” in the areas surrounding the distribution centres.
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