Rishi Sunak and Boris Johnson have overseen largest tax rises since Second World War – thinktank

Published

2 years ago

September 29, 2023

admin

Rishi Sunak and Boris Johnson have overseen the largest set of tax rises since the Second World War, according to economic analysis.

The Institute for Fiscal Studies (IFS) estimates that – by the time of the next general election – the tax burden will have risen to around 37% of national income.

This equates to roughly £3,500 extra per household – although the increase is not shared evenly.

Politics latest: Ofcom ‘doesn’t want to give knee-jerk response’

Records began in 1950 for the figures, and no parliament has seen a larger hike.

The size of the tax burden and the lack of cuts to tariffs have been the subject of the ire of many Conservatives.

The headroom for tax cuts has suffered as interest rates rose and the cost to service debt has risen. High inflation has led the government to be cautious of cutting taxes and leaving people with more cash to spend.

Last week, Chancellor Jeremy Hunt said it would be “virtually impossible” to cut taxes at the moment.

“I really, really wish it was true but unfortunately, it just isn’t,” he told LBC.

“If you look at what we are having to pay for our long-term debt, it is higher now than it was at the spring budget.

“I wish it wasn’t, it makes life extremely difficult, it makes tax cuts virtually impossible, and it means that I will have another set of frankly very difficult decisions.

“All I would say is, if we do want those long-term debt costs to come down, then we need to really stick to this plan to get inflation down, get interest rates down.

“I don’t know when that’s going to happen. But I don’t think it’s going to happen before the autumn statement on November 22, alas.”

There will likely be pressure for Mr Hunt and Mr Sunak to cut taxes – with some eyeing up cuts to sizeable projects like HS2 as a way to free up cash, and others calling for a relaxation of inheritance tax.

The economy is an area that Mr Sunak wants to make his strength – with three of his five pledges made at the start of this year relating to them.

Ben Zaranko, senior research economist at the IFS, said the pandemic could not be blamed for rising tax levels and predicted a high-tax approach was here to stay regardless of who wins the next general election.

“It is inconceivable that this parliament will turn out to be anything other than a tax-raising one – and it looks nailed on to be the biggest tax-raising parliament since at least the Second World War,” he said.

“This is not, for the most part, a direct consequence of the pandemic. Rather, it reflects decisions to increase government spending, in part driven by demographic change, pressures on the health service, and some unwinding of austerity.

“It is likely that this parliament will mark a decisive and permanent shift to a higher-tax economy.”

This was echoed by Mark Franks, the director of welfare at the Nuffield Foundation.

He said: “There will be strong pressure in coming parliaments to raise taxes further to meet growing demand for public services such as healthcare.

“Future governments must not only have a credible and robust strategy for the economy and the public finances, but should also be forthright and transparent about the difficult trade-offs they will face.”

Opposition parties seized on the findings, as Labour said that the Tories had “clobbered” the public.

Shadow chief secretary to the Treasury Darren Jones said: “Successive Tory governments have overseen 13 years of low growth and stagnant wages. Their response in the face of this bankrupt legacy is always to load their failure onto working people. And what are we getting back? Crumbling public services.

“Brits are working hard but getting clobbered with 25 Tory tax rises and a continuing Conservative premium on their household budgets.”

Click to subscribe to the Sky News Daily wherever you get your podcasts

A Treasury spokesperson said: “Despite needing to take the difficult decisions to restore public finances in the face of the dual shocks of the pandemic and Putin’s illegal invasion of Ukraine, the latest data shows our tax burden will remain lower than any major European economy.

“Driving down inflation is the most effective tax cut we can deliver right now, which is why we are sticking to our plan to halve it, rather than making it worse by borrowing money to fund tax cuts.

“We have also taken 3 million people out of paying tax altogether since 2010 through raising personal thresholds, and the chancellor has said he wants to lower the tax burden further – but has been clear that sound money must come first.”

Business

Trump fires tariff threats at more nations as EU ‘ready for all scenarios’

Published

7 hours ago

July 9, 2025

admin

Trump fires tariff threats at more nations as EU 'ready for all scenarios'

Donald Trump has revealed a list of more nations set to face delayed ‘liberation day’ tariffs from 1 August.

He has threatened tariffs of 30% on Algeria, 25% on Brunei, 30% on Iraq, 30% on Libya, 25% on Moldova and 20% on the Philippines. Sri Lanka was later told it faced a 30% duty.

Letters setting out the planned rates – and warning against retaliation – are being sent to the leaders of each country.

Money latest: HMRC issues 600,000 fines to people who owe no tax

They were the latest to be informed of the president‘s plans after Japan and South Korea were among the first 14 nations to be told of the rates they must pay on their general exports to the US from 1 August.

The duties are on top of sectoral tariffs, covering areas such as steel and cars, already in place.

Mr Trump further warned, on Tuesday, that a 50% tariff rate on all copper imports to the US was looming.

He has also threatened a 200% rate on pharmaceuticals and is also expected to take aim at all imports of semiconductors too.

The European Union, America’s largest trading partner in combined trade, services and investment, is expected to get a letter within the next 48 hours unless further progress is made in continuing talks.

The bloc, which Mr Trump has previously claimed was created to “screw” the US, has been in negotiations with US officials for weeks and working to agree a UK-style truce by the end of the month.

The EU has retaliatory tariffs ready to deploy from 14 July but it is widely expected to delay them until such time that any heightened US duties are imposed.

It remains hopeful of a deal in the coming days but European Commission president Ursula von der Leyen told the European Parliament: “We stick to our principles, we defend our interests, we continue to work in good faith, and we get ready for all scenarios.”

While the UK’s so-called deal with Mr Trump is now in force, it remains unclear whether steelmakers will have to pay a 50% tariff rate, deployed by the US against the rest of the world, as some final details on an exemption are yet to be worked out.

The rate is currently 25%.

Business

Nvidia wins race to become first $4trn listed company

Published

10 hours ago

July 9, 2025

admin

Nvidia wins race to become first trn listed company

Nvidia has become the first stock market-listed company to achieve a value of $4trn.

Its share price rose by more than 2% at the market open on Wall Street to reach the milestone moment.

It was achieved just over a year since Nvidia overcame the $3trn barrier and overtook Apple, in market cap terms, in the process.

The AI-focused chipmaker has been the darling of Wall Street for many years.

Money latest: HMRC issues 600,000 fines to people who owe no tax

The value of its shares has risen by 409,825% since its market debut in 1999.

Its status has been cemented thanks to the rush for AI technology – suffering several wobbles along the way – but nothing significant when you refer to the percentage rise of the past 26 years.

The most recent pressures have come from the emergence of the low-cost chatbot DeepSeek and concerns for global AI demand as a result of Donald Trump’s trade war hitting growth.

Financial markets have been taking a more risk-on approach to the trade war since the delays to “liberation day” tariffs in April.

It’s explained by a market trend that’s become known as the TACO trade: Trump always chickens out.

It has helped US stock markets post new record highs in recent days.

The wave of optimism is down to the fact that the president is yet to follow through with the worst of his threatened tariffs on trading partners.

Corporations are also yet to report big hits to their earnings – a fact that is also propping up demand for shares.

If Mr Trump does go all-out in his trade war, as he has now threatened from 1 August, then that $4trn market value for Nvidia – and wider stock markets – could be short-lived, at least in the short term.

But market analysts believe Nvidia’s value has further to go.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said of its meteoric rise: “Once known for powering video games, NVIDIA has transformed into a foundational player in AI infrastructure.

“Its high-performance chips now drive everything from natural language processing to robotics, making them essential to training and deploying advanced AI models.

“Beyond hardware, its full-stack ecosystem – including software platforms and developer tools – helps companies scale AI quickly and efficiently. This end-to-end approach has positioned Nvidia as a cornerstone in a market where speed, scalability, and efficiency are critical.”

He added: “The key question is where it goes from here, and while it might seem strange for a company that’s just passed the $4trn mark, Nvidia still looks attractive.

“Growth is expected to slow, and it’s likely to lose some market share as competition and custom solutions ramp up. But trading at a relatively modest 32 times expected earnings, and over 50% top-line growth forecast this year, there’s still an attractive opportunity ahead.

“For investors, it remains a compelling way to gain exposure to the AI boom – not just as a participant, but as one of its architects.”

Business

Greater risk to UK economy following Trump’s tariffs, says Bank of England

Published

10 hours ago

July 9, 2025

admin

Greater risk to UK economy following Trump's tariffs, says Bank of England

The future of the UK economy is weaker and more uncertain due to President Trump’s tariffs and conflict in the Middle East, the Bank of England has said.

“The outlook for UK growth over the coming year is a little weaker and more uncertain,” the central bank said in its biannual health check of the UK’s financial system.

Economic and financial risks have increased since the last report was published in November, as global unpredictability continued after the announcement of country-specific tariffs on 2 April, the Bank’s Financial Stability Report said.

Money blog: €1 home goes on sale – but there are T&Cs

These risks and uncertainty, as well as geopolitical tensions, like the wars in Ukraine and the Middle East, are “particularly relevant” to UK financial stability as an open economy with a large financial sector, it said.

Pressures on government borrowing costs are “still elevated” amid significant doubts over the global economic outlook.

Had a 90-day pause on tariffs not been announced, conditions could have worsened, the report added.

The chance of prices rising overall has also grown as tensions between Iran and Israel and the US threaten to push up energy prices.

Possible higher inflation in turn raises the prospect of more expensive borrowing from higher interest rates to bring down those price rises. This compounds the pressure on state borrowing costs.

Mortgages

Borrowing costs for about 40% of mortgage holders are set to become costlier over the next three years as households refix to more expensive deals, affecting 3.6 million households, the Bank said.

Many homes have not refixed their mortgage since interest rates began to rise in 2021, meaning the full impact of higher rates has yet to filter through.

Those looking to get on the property ladder got a boost as the Bank said lenders could issue more loans deemed to be risky, meaning people could be able to borrow more.

Financial institutions can now have 15% of their new mortgages deemed risky every year, up from the current 9.7%.

Riskier mortgages are those with a loan value above 4.5 times the borrower’s income.

Be ‘prepared for shocks’

Despite the global and domestic economy concerns, the outlook for UK household and business resilience remained “strong”, the Bank said.

Investors, however, were warned that there could be “sharp falls in risky asset prices”, which include shares and currencies.

If there are any vulnerabilities in non-bank lenders, it “could amplify such moves, potentially affecting the availability and cost of credit in the UK”.

“It is important that in their risk management, market participants [people involved in investing] are prepared for such shocks.”

The steep market reaction following the tariff announcements in April “highlights that the interconnectedness of global financial markets can mean stress from one market can move quickly to others,” the report said.

Overall, though, “household and corporate borrowers remain resilient”, the Bank concluded.