British households are set for a record fall in living standards and the highest tax burden since the second world war after Jeremy Hunt laid out plans to cut public spending and raise revenue to fill a £55bn fiscal hole.
The chancellor told the House of Commons that a massive fiscal consolidation, including £30bn of spending cuts and £25bn of tax rises, was needed to restore the UK’s credibility and tame inflation.
“We are asking more from those who have more,” said Hunt, as he outlined plans that would drag millions of Britons into higher tax bands.
The independent Office for Budget Responsibility, whose projections underpin the government’s efforts to restore the public finances to health after Liz Truss’s premiership, said the economy would shrink 1.4 per cent next year and would not regain pre-pandemic levels until late 2024.
Hunt announced that benefits for working-age people will rise from April 2023 by 10.1 per cent, the biggest uprating since 1991, in order to keep pace with inflation. But government cuts and subsidies designed to mitigate soaring gas and electricity costs mean households and businesses will pay much more for their energy next year, he warned.
Here is a round-up of the main takeaways from Hunt’s economic announcement. The squeeze will also extend to government infrastructure projects and departments as they will be forced to “make efficiencies” in coming years.
Five more stories in the news
1. Masayoshi Son owes $4.7bn to SoftBank The billionaire chief executive personally owes SoftBank close to $5bn because of growing losses on the Japanese conglomerate’s technology bets, which have also rendered the value of his stake in the group’s second Vision Fund worthless. The personal liabilities were discovered through a Financial Times analysis of recent filings from the world’s biggest tech investor.
2. New FTX chief details extent of corporate failure John Ray III, an insolvency professional who oversaw the liquidation of Enron, has said the bankruptcy of Sam Bankman-Fried’s crypto group was the worst case of corporate failure he has seen in more than 40 years.
3. Three guilty of murder in downing of flight MH17 A court in the Netherlands has found men with links to the Russian military guilty of murder for their roles in the downing of Malaysia Airlines flight MH17 over eastern Ukraine in 2014, sentencing them to life imprisonment.
4. PR group criticised over COP27 and industry roles A group of scientists has censured US-based Hill+Knowlton Strategies, which handles external communications for COP27, the UN climate conference being held in Egypt, for its work for the fossil fuel industry as concerns swirl about the rise of oil and gas lobbyists at the UN climate summit.
5. Taylor Swift sales cancelled after Ticketmaster overwhelmed The world’s largest ticketing site, which is owned by concert giant Live Nation, cancelled a ticket sale for Taylor Swift’s forthcoming tour after its website was overwhelmed by demand, causing fury among fans and criticism over the company’s stranglehold over the concert business.
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The days ahead
Asia-Pacific Economic Cooperation Economic Leaders’ Meeting Heads of state from 21 nations including China, Japan, Russia and the US gather in Bangkok, Thailand.
COP27 ends The UN climate change conference in the Egyptian resort town of Sharm el-Sheikh draws to a close, but negotiations on efforts to tackle global warming are likely to continue through the weekend. Here’s our guide to the summit’s basics.
Economic indicators In the UK, the GfK consumer confidence survey and October retail sales figures will point to the impact of soaring inflation on businesses, after consumer prices accelerated to a 41-year high of 11.1 per cent. The National Association of Realtors reports sales of previously owned homes in the US for the same month. (FT, WSJ)
Elizabeth Holmes sentencing The Theranos founder, who was found guilty in January of conspiring to defraud investors in her blood-testing start-up, will be sentenced in a California court. She faces decades in jail.
Elections Malaysian voters head to the polls in a general election tomorrow. On Sunday, Kazakhstan’s snap general election — which was called in September — will represent the most significant constitutional change since it declared independence from the former Soviet Union. On the same day, Nepal begins parliamentary and provincial government ballots, while Equatorial Guinea holds presidential, parliamentary and local elections. (FT, Nikkei)
Fifa World Cup The tournament kick offs on Sunday with a game between host country Qatar and Ecuador at 7pm in Doha. To say this is likely to be a contentious tournament would be something of an understatement. The bookmakers’ favourites to win the cup are Brazil followed by Argentina, but they ignore Europe’s long supremacy, writes Simon Kuper. Our weekly Scoreboard newsletter will be devoted to the World Cup over the next four weeks. Premium subscribers can sign up here.
What else we’re reading
How Russia and China buckled in the face of a united G20 It took six rounds of talks over 17 days in Bali before negotiators from the world’s largest economies could agree on a joint draft statement condemning Russia’s war in Ukraine, after Moscow — and Beijing — gave in to the qualified condemnation. Read what it was like from those in the room.
Revolut’s growing pains There’s a streak of immaturity running through the US-based fintech company, according to interviews with more than a dozen former staffers, many of whom left in the past years. Is the internal lack of restraint on the way client communication is handled preventing Revolut from winning more than its existing 25mn customers?
Ukraine’s ‘iron general’ shows his mettle For months from late summer, the country’s forces pursued a meticulous counteroffensive to retake the city of Kherson from occupying Russian troops — without having to fight street by street. The man commanding them: General Valeriy Zaluzhnyi.
Ireland learns of its over-reliance on big tech Global job cuts at Meta, Twitter, Stripe and other technology giants are bitter news for their staff in Dublin, coming just before Christmas. But analysts say they are a “wake-up call” for the side-effects of Ireland’s over-dependence on big tech.
The company behind the World Cup host’s wealth The global energy crisis triggered by Russia’s invasion of Ukraine has led to soaring demand for Qatari liquefied natural gas, cementing QatarEnergy’s position as one of the most important resource companies in the world. Now that windfall is helping to prepare the tiny Gulf state to host the football tournament.
Fashion
Yesterday we launched the first edition of the Fashion Matters newsletter, in which editor Lauren Indvik takes you behind the scenes of the $2.5tn fashion industry. Sign up here.
