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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2:42
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.
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“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.
“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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2:32
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.”
Image: Waves splash in Kingston, Jamaica, as Hurricane Melissa hits. Pic: AP
Andrew Tracey had been due to fly home to the UK on Monday, but his flight was cancelled.
Mr Tracey told Sky News that food packages were being delivered to guests at his hotel. Deck chairs have been removed from the beach, and the swimming pools have been drained, at the Negril hotel where he is staying.
“The balcony and walls do feel as though they are vibrating just due to the strength of the wind,” said Mr Tracey.
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“I’m very nervous, it’s hard to comprehend what we are likely to expect.”
The US National Hurricane Centre in Miami said that Melissa was “one of the most powerful hurricane landfalls on record in the Atlantic basin” as it hit southwestern Jamaica near New Hope.
Image: People walk along a road during the passing of Hurricane Melissa in Rocky Point, Jamaica, on Tuesday. Pic: AP
In a social media post, the centre warned that it is an “extremely dangerous and life-threatening situation” – and told those in the area not to leave their shelter as the eye of the storm passes over.
‘It is a bit scary, but we’ve got each other’
A British-Jamaican couple who are sheltering inside as the storm passes over the island spoke to Sky News about their ordeal.
Shantell Nova Rochester and her Jamaican fiance Denva Wray are due to get married on the island next month.
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Floods tear through parts of Jamaica
They spoke of broken windows and water coming in where they are staying, but the couple believe they are “as safe as they can possibly be” in St Elizabeth.
Mr Wray said: “Where we are is quite strong, sturdy, but you can hear a lot of wind. It is a bit scary, but we’ve got each other, so we are strong.”
Asked about the wedding, Ms Rochester said: “We’re just worried about getting through tomorrow, but that’s a worry in the back of our heads.
“Where we’re plan to get married is flooded at this time.”
Government action ‘too late’ – British tourist
One British man who paid £3,500 for last-minute flights so he and his family could return home before the hurricane hit the island said that he felt “completely let down” by the government’s response.
David Rowe and his family, from Hertfordshire, had spent 10 days in Jamaica before deciding to fly back to the UK on Saturday.
Mr Rowe, 47, was critical of the response of the Foreign, Commonwealth and Development Office (FCDO).
Image: David Rowe with his wife Abby, daughter Cora, eight, and son Ethan, 12, during their holiday in Jamaica. Pic: PA/handout
Speaking to the PA news agency, IT manager Mr Rowe said: “It’s all too late, their reaction and their response to the storm has been too late – after the fact.
“The advice should have been last week, like on the Saturday – don’t travel – because a lot of the travel companies use the FCDO guidance on travel (for) all their planning and what decisions they make as an organisation.
“There should have been something done much sooner than this. A lot of the UK nationals, and people on holiday there, they are stranded.
“This could have been prevented with with better action from the UK government.”
Mr Rowe added that he and his wife had felt “very anxious” before they flew home – and “very sad” for those left in the country.
A Foreign Office spokesperson said: “We understand how worrying developments in Jamaica are for British nationals and their families.
“Our travel advice includes information about hurricane season, which runs from June to November. Last Thursday we updated our travel advice for Jamaica to include a warning about Tropical Storm Melissa and that it was expected to intensify over the coming days.
“The safety and security of British nationals is our top priority, and that is why we are urging any British nationals in Jamaica to follow the guidance of the local authorities and register their presence with us to receive updates.”
Blasts have been reported in Gaza after Israel’s prime minister Benjamin Netanyahu ordered his military to carry out “powerful” air strikes.
Witnesses said they saw explosions and heard tank fire in Gaza City and Deir al Balah.
An Associated Press reporter in Deir al Balah heard tanks firing from an area controlled by the Israeli army, and, in Gaza City, two health officials reported strikes, including near the Shifa hospital.
At least two people were killed, and four others wounded, by a strike on a neighbourhood south of Gaza City, according to Gaza’s Civil Defence.
The announcement of strikes came shortly after Israel said that Hamas had opened fire on its forces in southern Gaza on Tuesday.
Hamas has denied involvement in the attack in the city of Rafah. The militant Palestinian group also said in a statement that it remained committed to the US-backed ceasefire deal.
Image: Israeli prime minister Benjamin Netanyahu ordered his military to carry out air strikes on Gaza. Pic: Reuters
A statement from the prime minister’s office said: “Following the security consultations, Prime Minister Netanyahu instructed the military echelon to carry out powerful strikes in the Gaza Strip immediately.”
US Vice President JD Vance said the ceasefire, which began on 10 October, was holding, telling reporters: “That doesn’t mean there aren’t going to be little skirmishes here and there.
“We know that Hamas or somebody else within Gaza attacked an (Israeli military) soldier. We expect the Israelis are going to respond, but I think the president’s peace is going to hold despite that.”
Hamas on Tuesday said that it would postpone the planned handover of a body of a hostage it had recovered, claiming violations of the ceasefire by Israel.
In a sign of the fragility of the ceasefire, Israeli troops were shot at in Rafah, and returned fire, according to an Israeli military official.
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Analysis: Two events combine to threaten a fragile ceasefire
The official told him: “Hamas violated the ceasefire once again, carrying out an attack against IDF forces east to the yellow line, an area under Israeli control.
“This is yet another blatant violation of the ceasefire. This comes after Hamas has also shown their true face and the fact that are pretending to not know where the remaining hostages are.”
Image: Hamas militants carry a white bag believed to contain a body retrieved from a tunnel in southern Gaza on Tuesday. Pic: AP
Hamas said on the Telegram messaging app that any Israeli escalation of attacks in Gaza would hinder search and recovery operations, and delay the return of the bodies of Israeli soldiers.
There are thought to be 13 bodies of hostages still in Gaza.
Speaking to Sky News, Israeli government spokesman David Mencer said: “The first line of this agreement is that all of our hostages should have been returned on the first day of this agreement.
“They were supposed to give back all of our hostages, and there was supposed to be a ceasefire. There are still 13 of our murdered hostages (in Gaza).
“And secondly, Hamas are firing on our troops. That is not a ceasefire.”
After the ceasefire took effect, all 20 living hostages were freed in exchange for almost 2,000 Palestinian prisoners, but the remains of the dead have been slow to be repatriated.
Hamas has said there are problems finding them due to a lack of equipment to sift through the devastation and rubble in Gaza.
The search for hostage bodies had been stepped up over the past few days after the arrival of heavy machinery from Egypt.
Image: Hamas members and Egyptian workers search for the bodies of hostages in the southern Gaza Strip on Tuesday. Pic: AP
Bulldozers were working in Khan Younis, and further north in Nuseirat, with Hamas fighters deployed around them.
Some of the bodies are believed to be in Hamas’ network of tunnels below Gaza.
Eleven people have been killed after a plane carrying tourists to a Kenyan safari reserve crashed.
According to officials, the aircraft burst into flames and was reduced to charred wreckage at the hilly and forested area in which it crashed.
The plane had been travelling from Diani Airport, on the coast, to the Maasai Mara National Reserve.
The dead included eight Hungarian passengers, two Germans and the Kenyan pilot. There were no survivors.
Authorities initially said the crash happened at 5:30am local time. Later, the Kenyan transport minister gave the time of the incident as 8:35am.
Image: Kenyan officials inspect the scene of a plane crash near Diani, Kenya. Pic: AP
Kenya’s ministry of roads and transport said the aircraft was destroyed by the impact of the crash and an ensuing fire.
Investigators from the country’s aircraft accident investigation department have been deployed to the site to begin an inquiry, they said.
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The department added that the Kenyan government’s “highest priority” remains aviation safety.
In a statement, John Cleave, the chairman of Mombasa Air Safari, said “our hearts and prayers” were with all those affected by the crash.
He wrote that the company had activated its emergency response team and was “fully cooperating” with the relevant authorities, who have already begun investigating.
“Our primary focus right now is on providing all possible support to the families affected,” Mr Cleave continued, adding that a family assistance team had been established to offer counselling, logistical coordination and any required assistance to the relatives of the victims.
The Maasai Mara National Reserve is a two-hour direct flight from Diani, a popular coastal town known for its sandy beaches.
Image: Kenyan security officials secure the wreckage of an aircraft which crashed with 11 people onboard. Pic: Reuters
The reserve attracts a large number of tourists as it features the annual wildebeest migration from the Serengeti in Tanzania.
Hungarian Prime Minister Viktor Orbán wrote on social media on Tuesday that his foreign ministry had been in contact with authorities in Kenya concerning the Hungarian victims of the plane crash.
He said: “What a tragedy! Our sincere condolences to families of the Hungarians who died in the plane crash in Kenya.”