UK Treasury chief: Tax cuts must wait for inflation to fall
LONDON — (AP) — Britain's Treasury chief said Friday that taming inflation is more important than cutting taxes, resisting calls from some in the governing Conservative Party for immediate tax breaks for businesses and voters. It has since eased but still reached a painful 10.5% in December and is the highest since the 1980s. Prime Minister Rishi Sunak has promised to halve the inflation rate from those levels by the end of the year. The U.K. economy, like others around the world, has been rattled by pandemic restrictions and the shockwaves from Russia's invasion of Ukraine. Most economists agree that Brexit has weighed down the economy by making it harder for U.K.-based businesses to trade with the 27-nation EU.
wftv.comThe Long Backstory to Britain’s Sudden Bond Blowup
Britain broke all the wrong records in 2022, with its currency tumbling to an all-time low, the biggest-ever spike in government bond yields and the shortest-serving leader in history. The blowup was triggered in September by Prime Minister Liz Truss’s unorthodox plan to cut taxes and increase borrowing in an effort to boost economic growth. But this was a crisis years in the making, and it didn’t end with her downfall after six weeks in office. Government instability and trade disruption due to
washingtonpost.comUK opposition wins special election in blow to Sunak's party
LONDON — (AP) — Britain's opposition Labour Party has handily won a special election for a northwest England seat in Parliament, the first test of voter sentiment since Conservative Prime Minister Rishi Sunak took office in October. Labour held onto the City of Chester constituency with an increased vote share of 61%, according to results announced Friday. Labour won 50% of the votes in Chester at the last national election in 2019. Thursday’s election was called after Labour lawmaker Christian Matheson stepped down over allegations that he made inappropriate sexual advances to a member of his staff. “There are some indications that there are opportunities there for the Tory party,” he told Sky News.
wftv.comThe Long Backstory to Britain’s Sudden Bond Blowup
Britain broke all the wrong records in 2022, with its currency tumbling to an all-time low, the biggest-ever spike in government bond yields and the shortest-serving leader in history. The blowup was triggered in September by Prime Minister Liz Truss’s unorthodox plan to cut taxes and increase borrowing in an effort to boost economic growth. But this was a crisis years in the making, and it didn’t end with her downfall after six weeks in office. Government instability and trade disruption due to
washingtonpost.comUK voters warm to new leader Sunak, but not to his party
LONDON — (AP) — Rishi Sunak has been Britain's prime minister for a month. He is facing a slowing economy, a cost-of-living crisis — and a governing Conservative Party that is fractious and increasingly unpopular after 12 years in power. But he said Sunak’s popularity “is not showing signs of rubbing off onto the Conservative Party brand.”In the same survey the Conservative Party was liked by just 26%, and disliked by 62% — the worst figures for the party in 15 years. Britain’s economy is being weighed down by the pandemic, by Brexit and especially by Russia’s invasion of Ukraine, which has driven global energy prices sky-high. Johnson and Truss both seemed to delight in riling the bloc to placate the powerful euroskeptic wing of the Conservative Party.
wftv.comRelief meets fear as UK budget calms economy but brings pain
“The truth is, we just got a lot poorer,” Paul Johnson, director of the Institute for Fiscal Studies think tank, said. Hunt also renounced the central principle touted by Kwarteng and Truss: that lower taxes are the key to economic growth. “Sound money matters more than low taxes,” he said. But some Conservatives grumbled that Hunt was abandoning the right-of-center party’s longstanding commitment to low taxes. “Next spring, we are going to have this perfect storm of energy bills going up, cost of living continuing to rise and energy bills at their peak,” Lewis told radio station LBC.
wftv.comUK unveils emergency budget amid big demands but little cash
Treasury chief Jeremy Hunt will deliver the government’s plan for tackling a sputtering economy in a speech to the House of Commons on Thursday. Hunt is expected to announce 30 billion pounds in spending cuts and 24 billion in tax increases, the BBC and other British media reported. Welfare recipients and pensioners also are looking for higher payments, and low-income families are calling for an expansion of the free school lunch program. But resources are limited, with Sunak facing a budget shortfall of at least 40 billion pounds ($47 billion) that he says will require both tax increases and spending cuts to close. For 5 pounds, people can buy 20 items of fresh fruit, vegetables and essential items like tinned beans and pasta.
wftv.comUK inflation rises to 41-year high at 11.1%
LONDON — (AP) — Britain’s inflation rate rose to a 41-year high in October, fueling demands for the government to do more to ease the nation’s cost-of-living crisis when it releases new tax and spending plans on Thursday. Consumer prices rose 11.1% in the 12 months through October, compared with 10.1% in September, the Office for National Statistics said Wednesday. Higher prices for food and energy drove October’s inflation rate to the highest since October 1981, the ONS said. The U.S. inflation rate fell to 7.7% in October from 8.2% in September. This material may not be published, broadcast, rewritten or redistributed without permission.
wftv.comUK economy shrinks as economists warn of more pain to come
LONDON — (AP) — Britain’s economy shrank in the three months to September, official statistics said Friday, as forecasters warned of many months of contraction to come. GDP shrank by 0.6% in September, and by 0.1% in August, the statistics office said. It said the U.K. economy is now 0.2% smaller than in February 2020, just before the COVID-19 pandemic shut down big chunks of the economy for months. The U.K.'s finances worsened when then-Prime Minister Liz Truss announced a huge package of unfunded tax cuts on Sept. 23. Hunt is due to make an emergency budget statement next week that is expected to include both tax increases and public spending cuts.
wftv.comRishi Sunak seeks thawed relations at UK-Ireland summit
It’s the first time since 2007 that a U.K. leader has gone to the British Irish Council, which brings together government representatives from the U.K., Ireland and semi-autonomous administrations in Scotland, Wales and Northern Ireland. The checks are designed to keep an open border between Northern Ireland and neighboring Ireland, an EU member. In the absence of a government, civil servants will represent Northern Ireland at the council's meeting. At the summit in northwest England, Sunak will meet with Irish Prime Minister Micheál Martin and the leaders of Scotland and Wales, Nicola Sturgeon and Mark Drakeford. ___Follow the AP's coverage of U.K. politics and Rishi Sunak at https://apnews.com/hub/rishi-sunakCopyright 2022 The Associated Press.
wftv.comBank of England makes biggest interest rate hike in 30 years
LONDON — (AP) — The Bank of England has announced its biggest interest rate increase in three decades as it tries to beat back stubbornly high inflation fueled by Russia’s invasion of Ukraine and the disastrous economic policies of former Prime Minister Liz Truss. The bank boosted its key rate by three-quarters of a percentage point Thursday, to 3%, after consumer price inflation returned to a 40-year high in September. The rate increase is the Bank of England’s eighth in a row and the biggest since 1992. The rate increase will likely be the Bank of England's eighth in a row and biggest since 1992. That pushed consumer price inflation back to 10.1%, the highest since early 1982 and equal to the level last reached in July.
wftv.comUK poised to enact biggest interest rate hike in 3 decades
Plus, wholesale natural gas prices, while down from their August peak, are likely to rise again this winter, driving up energy bills and further fueling a cost-of-living crisis. The rate increase will likely be the Bank of England's eighth in a row and biggest since 1992. The U.K. also has struggled as wholesale gas prices increased fivefold in the 12 months through August. That pushed consumer price inflation back to 10.1%, the highest since early 1982 and equal to the level last reached in July. Andrew Bailey said last month that policymakers “will not hesitate” to raise interest rates to return inflation to the bank’s 2% target.
wftv.comUK politicians demand probe into Liz Truss phone hack claim
LONDON — (AP) — The British government insisted Sunday it has robust cybersecurity for government officials, after a newspaper reported that former Prime Minister Liz Truss’ phone was hacked while she was U.K. foreign minister. The Mail on Sunday said that the hack was discovered when Truss was running to become Conservative Party leader and prime minister in the summer. It said the security breach was kept secret by then-Prime Minister Boris Johnson and the head of the civil service. Opposition parties demanded an independent investigation into the hack, and into the leak of the information to a newspaper. “Was Liz Truss’s phone hacked by Russia, was there a news blackout and if so why?” said Liberal Democrat foreign affairs spokesperson Layla Moran.
wftv.comRussia's Putin says he won't use nuclear weapons in Ukraine
Speaking at a conference of international foreign policy experts, Putin said it's pointless for Russia to strike Ukraine with nuclear weapons. Putin, who sent his troops into Ukraine on Feb. 24, has cast Western support for Ukraine as part of broad efforts by Washington and its allies to enforce its will upon others through a rules-based world order. Putin said he personally ordered Russian Defense Minister Sergei Shoigu to call his foreign counterparts to tell them about the purported plot. “They need to respect the crown prince and Saudi Arabia, and they will respond in kind,” Putin said. Putin also acknowledged the challenges posed by Western sanctions, but argued that Russia has proven resilient to foreign pressure and has become more united.
wftv.comUK says new PM Rishi Sunak won't go to UN climate conference
LONDON — (AP) — British Prime Minister Rishi Sunak will not attend a major United Nations climate conference next month, the government said Thursday. Sunak’s office said the decision was made because of “pressing domestic commitments” including preparations for an emergency budget on Nov. 17 and does not reflect a downgrade in the Conservative government’s commitment to combating climate change. Sunak took office on Tuesday, replacing Liz Truss, who stepped down after a seven-week term in which her tax-cutting plans sparked economic and political mayhem. Britain hosted last year’s COP26 conference in Glasgow, Scotland, which was attended by then-Prime Minister Boris Johnson. “They are forcing mechanisms for action on the biggest issue we face as a world.”___Follow all AP stories on climate change at https://apnews.com/hub/climate-and-environment.
wftv.comSunak makes Parliament debut as PM, axes more Truss policies
LONDON — (AP) — Rishi Sunak faced the opposition in Parliament for the first time as Britain's prime minister Wednesday, promising to restore economic stability after his predecessor's tax plans triggered market tumult. Sunak ripped up more of predecessor Liz Truss' flagship policies, reinstating a moratorium on fracking for shale gas that Truss had lifted. Plans for large-scale deregulation of the economy, part of Truss' vision to unleash economic growth, are also under review, Sunak's spokeswoman said. “We will have to take difficult decisions to restore economic stability and confidence,” Sunak told the House of Commons. Sunak also kept in place Treasury chief Jeremy Hunt, whom Truss appointed two weeks ago to steady the markets.
wftv.comUK Treasury chief delays detailing new economic plans
The economic statement was originally set to be announced on Halloween. “But it’s also extremely important that that statement is based on the most accurate possible economic forecasts and forecasts of public finances." The timing of the statement means that the Bank of England will deliver its ruling on interest rates before the government details its new economic plan. In taking charge on Tuesday, Sunak pledged to tackle economic issues head on. He announced he would retain Hunt, who had been appointed by Truss to steady the markets two weeks ago.
wftv.comUK leader Sunak faces opposition in Parliament for 1st time
LONDON — (AP) — British Prime Minister Rishi Sunak is holding the first meeting of his new Cabinet before facing the opposition in Parliament on Wednesday for the first time as leader. Sunak is seen by Conservatives as a safe pair of hands they hope can stabilize an economy sliding toward recession — and stem the party's plunging popularity. Sunak brought in people from different wings of the Conservative Party for his Cabinet. He faces a backlash for reappointing Home Secretary Suella Braverman, who resigned last week after breaching ethics rules by sending a sensitive government email from a private account. The government has not confirmed whether Hunt’s statement, due on Oct. 31, will be delayed because of the change of prime minister.
wftv.comUK Treasury chief in position of power as PM Truss struggles
As British Prime Minister Liz Truss struggles to retain her authority, one man is seen to be in the real position of power to restore order and credibility to the Conservative government and limit the damage caused by Truss’ economic plans.