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Labour MPs welcome scrapping of two-child benefit cap but worry about hefty future tax increases on constituentsRachel Reeves has been warned that her plans for tax rises and spending restraint in the run-up to the next general election resemble a work of fiscal fiction", as MPs expressed concern about the impact of her budget on their constituents.A day after the chancellor's statement, the Institute for Fiscal Studies (IFS) said Reeves had chosen a high-risk strategy by backloading the squeeze to just before voters go to the polls in 2029. Continue reading...

Businesses grumble about lack of ambition and urgency as Rachel Reeves continues to shy away from meaningful tax reformWhere was the applause for the budget from the business world? Well, there was the banking sector, but it was reportedly under strong encouragement from the Treasury to engage in a round of corporate cheerleading after being spared higher levies. Nor should one get carried away by JP Morgan's coordinated announcement of a new 3bn office in Canary Wharf. Yes, the commitment shows some level of long-term confidence in the UK, but large international banks do not make property decisions on the basis of what they heard one afternoon.In the non-banking business world, the broad day-after reaction to the budget can be summarised as a resigned shrug coupled with amazement that the chancellor, Rachel Reeves, offered so few pro-growth measures even as the Office for Budget Responsibility set out two depressing forecasts. First, that the average growth rate for the economy from 2026 to 2029 will be only 1.5%, rather than the 1.8% expected in March. Second, real-terms annual growth in disposable incomes will be tiny. Continue reading...

PM says: We kept to our manifesto in terms of what we've promised. But I accept the challenge that we've asked everybody to contribute'

Cap on inheritance tax paid by their offshore trusts will only help those worth more than 83m, say expertsA tax break for rich former non-doms that slashes their potential inheritance tax bills was included in the small print of the budget.The benefit relates to how much tax this group faces having to pay on their global wealth held in trust. Continue reading...

Experts question whether back-loaded tax rises outlined in Wednesday's budget will really happen

Experts lay out scale of changes needed in first-of-its-kind national emergency briefing' in WestminsterA host of eminent scientists have warned politicians, business and community leaders that the UK risks severe climate-related risks to its economy, public health, food systems and national security.According to its organisers more than 1,000 corporate bosses, senior civil servants and civic leaders were set to assemble in the Methodist central hall in Westminster for the first-of-its-kind national emergency briefing" on Thursday morning. Continue reading...

Research group More in Common spoke to former blue wall' constituents unimpressed by chaotic' U-turnsIt's all sort of stacked against you ... The people that are working hard and earning a decent wage, trying to get childcare costs under control ... you sort of question why you're doing what you're doing," was how Hayley, an assistant headteacher in our focus group in Aldershot, described the economy, shortly after the budget was announced.Hayley's not alone: a record 57% of Britons now say they are unsure that the cost of living crisis will ever end. But what was so revealing about Wednesday's focus group was that they were all in what we would normally see as relatively high-paid jobs, they owned their own homes - not the type of voter you'd normally think of as struggling. As Martin, a product manager in the automotive industry, put it: On paper, we should be feeling really well off." Continue reading...

Move will have greater impact on living standards of taxpayers in bottom half of income scale, thinktanks say

As they struggle with the cost of living, people weigh up whether Rachel Reeves's measures will help them

Chancellor axes two-child benefit cap and cuts energy bills paid for by mansion tax and freezing tax thresholds

Damaging events could knock finances off course, says Treasury's independent forecaster as it downgrades growth outlook

By the time the chancellor reached the dispatch box, the OBR had accidentally published its verdict in full online

After a tumultuous run-up to a make-or-break moment for the government, has the chancellor struck the right balance? Continue reading...

Chancellor unveils action on energy bills, rail fares and two-child benefit cap as she reveals 26bn tax rises

Planning permission granted for Buckinghamshire project seen as test of Labour's drive for economic growth

OBR forecasts appear to show that chancellor has more than doubled her fiscal headroom to almost 22bn

Rachel Reeves is announcing her financial update - here are the main points, with political analysis

Chancellor to set out tax and spending plans shaped by weak productivity, high borrowing costs and cost of living crisis

Downing Street does not deny that justice secretary, David Lammy, is considering scrapping juries for most trialsJohn McFall is standing down early as Lord Speaker in the House of Lords so that he can care for his wife, Joan, who has was Parkinson's. According to Sam Blewett and Bethany Dawson in their London Playbook briefing for Politico, the main candidates to replace him are Michael Forsyth, a rightwing Scottish secretary in the final two years of the John Major government, and Deborah Bull, a crossbencher and former Royal Opera House creative director. They reports:Labour isn't expected to put forward a candidate as McFall's previous political affiliation means it's seen as another party's turn to rule the roost, Noah [Keate] writes in to say. Forsyth has garnered support from some Labour grandees who like his traditional approach and aversion to modernization while Bull has being promoted by some female peers keen for a woman to take charge. One Tory peer described Forsyth as a political animal" who may struggle to encourage a consensus across the chamber. A list of candidates' register of interests and election addresses (up to 300 words) will be emailed to all peers on Dec. 1. Watch your inboxes!Transport secretary Heidi Alexander rejected a rival proposal from Arora Group, saying Heathrow's own plans were the most credible and deliverable option".The Heathrow proposals involve building a 3,500-metre runway and require a new M25 tunnel and bridges to be built 130 metres west of the existing motorway.Following a comparative assessment of the remaining proposals for Heathrow expansion, the government's view is that the Northwest runway scheme brought forward by Heathrow Airport Limited offers the most credible and deliverable option, principally due to the relative maturity of its proposal, the comparative level of confidence in the feasibility and resilience of its surface access plans, and the stronger comfort it provides in relation to the efficient, resilient and sustainable operations of the airport over the long-term.The HAL scheme is considered comparatively more mature in its approach to road infrastructure. While the HAL scheme requires major works to the M25, assessment indicates that the HWL scheme would also have a considerable impact on the M25. Continue reading...

Chancellor says people must be properly rewarded for their hard work' with 16- to 21-year-olds also in line for raiseMillions of low-paid workers in the UK are to get a pay rise of 4.1% next year, as Rachel Reeves confirmed that minimum wage rates will go up as part of the government's ambition to improve living standards.The national living wage will rise from 12.21 to 12.71 an hour from April for over-21s, which the government said would increase the annual earnings of about 2.4 million workers by 900.A year in Westminster: John Crace, Marina Hyde and Pippa Crerar. On Tuesday 2 December, join Crace, Hyde and Crerar as they look back with special guests at another extraordinary year, live at the Barbican in London and livestreamed globally. Book tickets here Continue reading...

Kingfisher may be thriving, but its numbers mask a retail landscape that looks increasingly fragile as budget loomsJust what an embattled chancellor needs on the eve of a tax-raising budget: a leading retailer upping its profits forecast and singing about the joys of the UK economy.Unfortunately, only the first bit is true. Kingfisher, owner of B&Q and Screwfix (and similar businesses in France and Poland), raised its profit expectations for its current financial year from 480m-540m to 540m-570m. Continue reading...

Government sets out plans to lower the threshold within the Soft Drinks Industry Levy to 4.5g per 100ml, down from 5g

Here's what Rachel Reeves is tipped to announce after months of speculation

West Midlands police's assistant chief constable says threat of violence by Maccabi fans was more important considerationBadenoch says the government should be cutting regulation.And she claims she can do this because, when she was business secretary, she was able to cut regulation. As an example, she says she ruled about mandatory ethnicity pay reporting.Fewer and fewer people are working to support more and more people out of work and living on welfare. The rider is getting heavier than the horse. Continue reading...

Rolling coverage of the latest economic and financial news, as Novo Nordisk finds its semaglutide drug fails to help in Alzheimer's treatmentGerman business morale has unexpectedly fallen this month, as companies lose hope on a recovery of the German economy following two years of contraction.The Ifo institute has reported that its business climate index fell to 88.1 in November from 88.4 in October, weaker than expected. It's a blow to German chancellor Friedrich Merz's efforts to revive growth through a major spending package.Companies have little faith that a recovery is coming anytime soon."Like U2 sang almost 40 years ago: the German economy still hasn't found what it's looking for.The year 2025 has been another year of hope and disappointed optimism. A year which saw excitement and enthusiasm sparked by Germany's unprecedented fiscal policy U-turn and its decision to invest significantly in infrastructure and defence this spring. But also a year that brought a rude awakening and a cringing feeling as we watched the new government undermine the positive impact of fiscal stimulus with clumsy budgetary decisions, new political tensions, and a lack of structural reforms. Continue reading...

Budgets need to be reassuringly dull with no repeat of this year's long, drawn-out and chaotic buildupRachel Reeves should put us all out of our misery this Wednesday with a tax-and-spend statement bold enough to make future budgets boring again.Ask any economist or policy wonk and they'll tell you the buildup to this year's budget has been among the most drawn-out and chaotic they can remember. Continue reading...

Despite the US's economic success, income inequality remains breathtaking. But this is no glitch - it's the systemThe Chinese did rather well in the age of globalization. In 1990, 943 million people there lived on less than $3 a day measured in 2021 dollars - 83% of the population, according to the World Bank. By 2019, the number was brought down to zero. Unfortunately, the United States was not as successful. More than 4 million Americans - 1.25% of the population - must make ends meet with less than $3 a day, more than three times as many as 35 years ago.The data is not super consistent with the narrative of the US's inexorable success. Sure, American productivity has zoomed ahead of that of its European peers. Only a handful of countries manage to produce more stuff per hour of work. And artificial intelligence now promises to put the United States that much further ahead. Continue reading...

US officials to hold high-level talks in Brussels amid unhappiness in Washington at slow action on July dealThe EU and US are set to restart trade negotiations next week after a two-month pause to try to settle unresolved sticking points in their controversial tariff deal struck in July.The US commerce secretary, Howard Lutnick, and trade representative Jamieson Greer will hold high-level meetings in Brussels on Monday with ministers, EU commissioners and industry bosses. Continue reading...

From the outside, the run-up to Rachel Reeves's announcement has looked chaotic, and many see the future of the chancellor and PM in the balanceEvery budget could be described, to a greater or lesser extent, as a high-stakes moment. Things can easily go badly wrong, as Gordon Brown discovered when he abolished the 10p tax rate in 2007, or George Osborne when his 2012 omnishambles' budget fell apart over pasties, and especially Kwasi Kwarteng, whose disastrous mini-budget of 2022 sent the Conservatives spiralling towards electoral defeat.Rachel Reeves appears to have come perilously close to the turmoil of previous budgets, and that's before she has even delivered it. Continue reading...

Rolling coverage of the latest economic and financial newsShares are falling faster than wickets in Perth at the start of trading in London, as fears of an AI bubble rip through markets again.Following losses on Wall Street last night, the FTSE 100 share index has dropped by 104 points, or just over 1%, at the start of trading to 9423 points. That's a one-month low.it's been a truly remarkable 24 hours, with a sequence of moves that were almost impossible to predict....After the world's largest company reported spectacular results, the stock was up around +5% by 3pm London time. It closed down -3.15%. The broader market followed a similar pattern: the S&P 500 initially climbed +1.93%, only to fade and close down -1.56% as doubts about AI valuations crept back in. That marked the biggest intra-day swing for the S&P since the six days of extreme market turmoil that followed the Liberation Day tariffs in early April. Adding to the negative backdrop for crypto were lingering questions over the crypto market structure bill that's being worked on in Congress. Continue reading...

Bureau of Labor Statistics canceled release of October's consumer price index, citing the government shutdownThe US federal government will not publish official data on inflation for October, depriving policymakers at the Federal Reserve of key information as they consider whether to cut interest rates.The Bureau of Labor Statistics canceled the release of the closely watched consumer price index (CPI) for October, citing the government shutdown - the longest in history, before it ended earlier this month - and stating it could not retroactively collect" the data required for the report. Continue reading...

Central bank chief warns that the bloc's dependence on third countries for trade and security has left it vulnerableEurope's economy is geared towards a world that is gradually disappearing", according to a warning from Christine Lagarde that the EU needs reforms to spur growth.The president of the European Central Bank (ECB) said the EU's dependence on international trade had left it vulnerable, as major partners had turned away from the trade that made the bloc's exporters wealthy. Continue reading...

October figures represent final snapshot of public finances before Rachel Reeves's tax and spending statement

Supermarkets, clothing stores and online mail order firms suffer sales declines as consumers delay purchases

Leading US stock markets tumble less than 24 hours after strong results from chipmaker Nvidia sparked gainsFears of a growing bubble around the artificial intelligence frenzy resurfaced on Thursday as leading US stock markets fell, less than 24 hours after strong results from the chipmaker Nvidia sparked a rally.Wall Street initially rose after Nvidia, the world's largest public company, reassured investors of strong demand for its advanced datacenter chips. But the relief dissipated, and technology stocks at the heart of the AI boom came under pressure. Continue reading...

Chancellor Rachel Reeves will be keeping a close eye on inflation data ahead of her autumn budget, due next Wednesday.Elsewhere this morning, there's upheaval at WH Smith, as my colleague Joanna Partridge reports:WH Smith's chief executive has stepped down with immediate effect, after a review found accounting failures in its North American division, prompting the retailer to slash its profit outlook.Our priority now is to rebuild trust and credibility and to improve the performance and profitability of our North America division.We are confident that the actions we have taken and will continue to implement over the months ahead will ensure a strong foundation for the business going forward. Continue reading...

Drop in October's annual rate raises hopes of interest rate cut after Rachel Reeves's tax and spending statement

Rachel Reeves hints there will be budget measures to push down prices and Bank of England is likely to act

Rolling coverage of the latest economic and financial news, as shares fall across Asia and bitcoin hits a seven-month lowEurope's major share indices are down by more than 1%, as the sell-off spreads across global markets.The UK's FTSE 100 index fell by 0.9%. Germany's Dax is down 1.3%, France's CAC and Italy's FTSE Mib both lost 1.5%, and Spain's Ibex dropped 1.6%.It's been a challenging start to the week as markets brace for two key events: Nvidia's earnings tomorrow night and the US payrolls report on Thursday.For now, equities remain under pressure, with the S&P 500 (-0.92%) posting a third consecutive loss [on Monday] for the first time since September and marking its worst three-day run since April (-2.61%) with futures down another half a percent as I type this morning. Concerns swirling around the AI trade pushed Nvidia (-1.88%) to another decline.I think [OpenAI] can be very successful as a company but at the same time I'm very nervous about the size of these investments in these data centres. That's the particular thing that I am concerned about." Continue reading...

David Zahn of Franklin Templeton said bond yields could rise in response to chancellor's fiscal plans and government would have to reactThe bond markets could force Rachel Reeves to deliver a second budget if investors are disappointed by the chancellor's fiscal plans next week, a City investor has warned.David Zahn, the head of European fixed income at Franklin Templeton, said the biggest risk from the budget on 26 November was that Reeves disappoints", leading to a sharp rise in bond yields - the interest rate on UK government debt. Continue reading...

The Maga base rallied on inflation and racial grievances, but stressing race over the economy is costing the US presidentDonald Trump's 2024 campaign strategy leaned heavily on two sources of grievance among the Maga base. The first was the rising cost of living, propelled by the sharp burst of inflation that peaked at 9% a year in July 2022. Though inflation had receded to 2.7% by election day, frustration over prices convinced many voters that Trump would be a superior steward of the economy. The other theme was race.The strategy won the presidency. Then Trump made a mistake: focusing relentlessly on hostility towards immigrants and the diverse citizens of urban America, the president pretty much ignored - nay, worsened - his supporters' economic woes. In elections earlier this month, US economic grievances came back to bite him. Pummeled by voters, Trump is now trying to recover his economic narrative. But it may be too late. Continue reading...

Rolling coverage of the latest economic and financial news

From mobiles to insurance and subscriptions, firms are able to exploit the fact they know more than customersEver felt swizzed by the small print in your mobile contract, bamboozled by a plethora of insurance products or locked into a subscription you signed up for by mistake?Then you are far from alone: a paper on the UK's productivity predicament suggests the way the markets for some key services work is not only a monumental pain for consumers but bad for the economy, too. Continue reading...

In the local authority where people have the least spare cash there are hopes the chancellor will instil changeAnika* has a full-time job, but says she never eats in local cafes or restaurants and takes her lunch to work. The cost of living is too high for her to buy more than the basics of life.Everything is so expensive. I cry, and ask myself what more can I do to make things better," she says. Continue reading...

Paul Nowak says OBR should be modernised to ditch hardwired' support for austerity economicsBritain's budget watchdog is in danger of strangling growth and should be modernised to ditch its hardwired" support for austerity economics, the Trades Union Congress has warned.Less than two weeks before Rachel Reeves's autumn budget, the trade union umbrella group said the Office for Budget Responsibility (OBR) was at risk of being a straitjacket" on growth in living standards. Continue reading...

Last year's employer NICs increase and a weak economy are adding to tricky conditions for young people

Retreat from plans to increase income tax means Labour is unlikely to make system fairer and more coherentFor decades now, whenever the British public has faced the prospect of tax rises, large sections of the electorate - so large they sway most politicians - have made it quite clear, let those increases be by stealth.It is a message every chancellor since Nigel Lawson has heeded, with just a few honourable exceptions in the intervening decades. Continue reading...

Survey finds 60% of key cities councils are planning to sell assets to meet costs of adult and children's social careEnglish councils are planning to sell social clubs, sports centres and shopping arcades as they bet on a fire sale of assets to balance the books, according to a survey of local authorities.The key cities group of councils, which represents second-tier cities in England, said 60% of councils were planning to sell assets to meet the escalating costs of adult and children's social care. Continue reading...

Chancellor expected to freeze level at which people start paying income tax for two years rather than putting rates upRachel Reeves will raise 7.5bn from millions of workers by freezing tax thresholds at the budget, after her decision to scrap controversial plans to raise income tax led to a sell-off in the bond market.Government sources said the chancellor had decided to maintain the level at which people start paying income tax for two years while abandoning plans to raise the headline rate, which would have broken a manifesto promise. Continue reading...