Tax Justice UK calls on Rishi Sunak’s government to introduce five reforms targeting the richest peopleRishi Sunak’s new government could raise up to £37bn to help pay for public services and the energy bills support scheme if it introduced a string of “wealth taxes”, according to tax equality campaigners.Tax Justice UK called on the government to introduce five tax reforms targeting the very wealthy, who the campaign group said had done “really well financially” during the coronavirus crisis and national lockdowns, rather than seek to save money with further cuts to public services.Equalising capital gains tax with income tax could raise up to £14bn a year. At present many well-paid people who earn an income from their investments such as stocks and shares can pay capital gains tax at a rate of 20% rather than income tax, which is as high as 45% for earnings over £150,000. CGT also applies to income from selling a second home or stocks and shares.Applying national insurance to investment income could raise £8.6bn.Closing loopholes on inheritance tax could raise £1.4bn.Scrapping the non-dom regime and taxing their offshore income could generate £3.2bn.And introducing a 1% tax on super-rich people’s assets over £10m could raise an additional £10bn. Continue reading...

Bank records quarterly profits above $3.2bn estimated as interest rates rise on back of higher borrowing costsHSBC’s quarterly profits have increased by more than forecasts of $3.2bn (£2.8bn) had predicted as the bank enjoys a windfall from rising interest rates, fuelling calls for an excess profits tax on UK banks.The lender reported pre-tax profits of $700m more than average analyst estimates, boosted by an increase in net interest income, which is the difference between what the bank charges for loans and what it pays in interest on deposits. Continue reading...

Director general Tony Danker says it is vital new UK PM does not pursue path of austerityThe head of the Confederation of British Industry has warned Rishi Sunak against pursuing an austerity “doom loop” of cuts to public spending and tax rises amid fears over a mixed outlook for the economy.Tony Danker, the director general of the CBI, said it was vital for the new UK prime minister not to repeat the mistakes made by David Cameron’s Conservative-Liberal Democrat coalition when billions of pounds were slashed from public spending. Continue reading...

New PM has himself made case for longer period of reflection, citing ‘difficult decisions’ aheadOne of the first things on Rishi Sunak’s to-do list is the matter of whether next week’s fiscal plan should go ahead. This is one of the easier decisions the new prime minister has to take. The fiscal event should certainly be delayed.To be sure, there are arguments in favour of going ahead with the package of tax and spending announcements as planned on 31 October. The problem is that none of them are especially good ones. Continue reading...

Price of budget food items in supermarket soar by 17% in year to September, ONS figures showThe prices of staples such as pasta, tea and chips have surged in the UK in the past year, with cooking oil shooting up 65%, according to figures that highlight how poorer households are being hit disproportionately by the cost of living crisis.The overall price of budget food items in supermarkets soared by 17% in the year to the end of September, according to data from the Office for National Statistics (ONS). This was nearly double the 9% annual increase measured in the 12 months to April. Continue reading...

UK industry leaders hope for urgent steps from new PM to repair battered business confidenceAnxious business leaders have cautiously welcomed Rishi Sunak as prime minister amid signs the UK economy is heading for recession after a sharp fall in confidence among company bosses during Liz Truss’s brief premiership.The latest snapshot from the economy showed optimism among business leaders collapsed in October to the lowest level since April 2020, during the early stages of the Covid pandemic, as intense inflationary pressures, escalating political uncertainty and rising borrowing costs weighed on growth. Continue reading...

Data indicates there are only 137 such products now available compared with 353 in December last yearThe number of low-deposit 95% mortgages on sale has fallen by more than half since last month’s scrapped mini-budget, stoking fears that financial uncertainty could lead some banks to scrap the deals that are often the only way first-time buyers with small deposits can own a home.Data from Moneyfacts shows that the number of new 95% mortgages stood at 137 on Monday. Continue reading...

The Conservative party is now so fractious and divided that the business of government may become impossibleSo there we have it. In the end, Penny Mordaunt couldn’t quite scrape together enough nominees to make it over the threshold and trigger a full leadership election. Perhaps if Boris Johnson had pulled out a day or two earlier, she might have been able to build the requisite momentum. But it wasn’t to be.Now Rishi Sunak will be the UK’s latest prime minister. His mission, which I suppose he now has no option but to accept, is somehow to keep the Conservatives united enough to govern and thus avoid what would be a catastrophic general election.Henry Hill is the deputy editor of ConservativeHome Continue reading...

Voters may not mind that the new PM is richer than the King, but can they forgive the gutting of services already at breaking point?Rishi Sunak steps up to the lectern of doom outside Downing Street, illegitimate, unelected, with no manifesto. The ungovernable party avoided the instant cataclysm of a run on the pound that might have come had Boris Johnson been refenestrated. But that’s the end of the good news, the forecast is bleak.How Sunak will shape up is anyone’s guess, but he has the advantage of the lowest ever bar if he wants to improve on his two disgraced predecessors. One scar he bears is from that boast to Tunbridge Wells Tories that he had deliberately diverted funds from deprived urban areas to affluent places like theirs. Now we shall see if any concept of levelling up has gone for ever. A budget planned in days will reveal his intent. We know our leaders not by their words but by their budget priorities, and there may end whatever blip of a honeymoon he hopes for.Polly Toynbee is a Guardian columnistCrisis at No 10: How long can the Tory government hold on? Join Hugh Muir, Polly Toynbee, John Crace and Jessica Elgot discussing another failed Tory prime minister and what the future holds for the government, in this livestreamed event. On Wednesday 26 October, 8pm–9pm BST. Book tickets at theguardian.com/guardianlive Continue reading...

Incoming PM can take a cautious approach with the Tories’ reputation at rock bottom, but he cannot afford mistakes

Business surveys raised concerns over a looming UK recession, as the former Chancellor Rishi Sunak was set to become prime ministerShares in online fashion retailer Asos have risen by as much as 4% in early trade after confirmation over the weekend that billionaire retail tycoon Mike Ashley has built up a 5% stake in the company.Ashley’s sportswear and fashion business - Frasers Group - informed Asos on Friday that it had increased its holding in the company, making it Asos’s fourth-largest investor.Frasers Group has a long history (over twenty years) of making strategic investments to develop relationships and partnerships with other retailers, suppliers and brands, including by way of acquisitions of shares, options, contracts for difference and other financial instruments. Continue reading...

Cross-party committee to examine problems faced by funds that led to £65bn Bank of England intervention

Thinktank says any reduction would ‘sit uncomfortably’ with pledge to focus on skills and economic growthBritain’s leading economic thinktank has warned the government of the dangers of cutting education spending on students in sixth forms and further education colleges, after new analysis showed recent additional investment being all but eroded by inflation and growing student numbers.As the Treasury attempts to balance the budget, government departments are on standby to identify spending cuts, but the Institute for Fiscal Studies (IFS) said any attempt to reduce spending in the 16-18 sector would “sit uncomfortably” with the government’s stated commitment to focus on skills and economic growth. Continue reading...

Guy Hands says Conservatives are putting country ‘on a path to be sick man of Europe’

After a decade in the doldrums, savings rates are finally on the up. But where best to put your cash and can it really come close to inflation?

GDP rose 3.9% in the July to September quarter, but China remains on track to deliver among weakest growth in almost four decadesChina’s economy expanded faster than economists expected in the September quarter but the poor performance of the nation’s property market and weak retail and import data underscored the nation’s ongoing growth challenges.China, the world’s second-largest economy, posted a 3.9% increase in gross domestic product in the July-September period from a year earlier, the national bureau of statistics said. Continue reading...

Former Bank of England governor says politicians must be clear that taxes and mortgage rates will riseAverage earners, rather than the wealthy, will be required to pay significantly higher taxes to finance higher public spending in the UK, the former governor of the Bank of England said on Sunday.Mervyn King said there “isn’t enough money there amongst the rich to get it back” to fund the “strong case” for some additional public spending, designed to help the economy recover from the pandemic. Continue reading...

New prime minister will have to make tough decisions on long list of issues in months ahead

The Truss-Kwarteng blunders have seen off any hope that people-friendly policies will be pursuedTangled up in Blue. A Hard Rain’s Gonna Fall. Desolation Row. In a way, it was a shame none of these songs featured in Bob Dylan’s set at the London Palladium on the day Liz Truss announced her resignation because all three would have been captured the mood.The opening song from Blood on the Tracks aptly sums up the state of modern Britain after 12 years of Conservative rule. This is a country that is increasingly dysfunctional and, from the outside, appears to be having a nervous breakdown. Continue reading...

Replacing things that aren’t broken helps push up GDP, but is absurd. Much like Tory economic policyHow often, would you say, do chairs break? I’m going to open the bidding with “not very often”. Not never. God, no. I’m not saying that! I won’t be cornered into such an absurd pronouncement. That would be “Liz Truss will never be prime minister” all over again! But my general expectation, when in a room, is that most of the chairs are going to remain functional until I leave it. The same thing used to be said of prime ministers.More often than seeing a chair break, you come across one that’s basically already broken, betraying saucy glimpses of dowel, for the imps of fate to guide the ample posterior of a sensitive soul towards on some relatively public occasion, preferably while the soul is holding a large slice of gateau. Continue reading...

Economists soon saw through Truss and Kwasi Kwarteng’s plans for billions of unfunded tax cuts to benefit the richThe unconditional surrender of Liz Truss and her “hit the pound running” tax plans have raised hopes among many people that this phase of neoliberal economics is now over.Her version of Thatcherite “trickle down” economics has been rejected even before it began – not just by a kind of popular uprising, but also by operators in the financial markets who might be supposed to benefit handsomely from reductions in the top rate of taxation. Continue reading...

He, more than anyone else, more even than herself, is culpable for the catastrophe of the Truss premiershipContemplating a regime of churning chaos presiding over extreme financial volatility, some market analysts no longer treat Britain as a G7 country and bracket us with emerging markets. This is unfair. There are many developing countries with much more stable governments and predictable policy programmes than ours. Three prime ministers in three months. Four chancellors in four months. Three home secretaries in less than two months. It is anarchy in the UK with the punk Tories.Liz Truss will not just go down as the briefest prime minister in our history. She will also be recorded as one of the most calamitous. Many previous occupants of the office have had four or more years at Number 10 without doing the damage she inflicted in 44 days. Tories will now try to turn this unique entry in the book of atrocious political records into a kind of alibi for the rest of them. Continue reading...

The Conservatives want to foist another prime minister upon the country but they must not be allowed to do more harmThree and a half months ago, he was forced by his party to resign his premiership in disgrace. Yesterday, Boris Johnson landed back in the UK, fresh from a holiday in the Caribbean amid the squall of drama that surrounds his every move, to attempt the launch of his bid to lead the country again in the wake of Liz Truss’s resignation. There is perhaps no greater symbol of the contempt the Conservative party has for voters than the scores of MPs apparently willing to disregard the fact he is being investigated for misleading parliament – and may well face a Commons suspension and perhaps even a byelection before the year is out – in order to re-elevate to high office a charlatan who has repeatedly demonstrated that he is devoid of the integrity citizens should expect from their prime minister. Even some of his close former backers are warning him that to proceed would do his party great damage.This absurd state of affairs is just the latest chapter of the decade-long Tory psychodrama that has imposed untold hardship on British people, eroded their trust in politicians and made Britain an international laughing stock. It is the sorry tale of a governing party that abandoned any attempt to fashion real solutions to the problems the country faces in favour of populist rhetoric about Brexit, without considering the consequences – for its own fortunes, for our political institutions and for the country as a whole. As a result, the UK is mired in an economic crisis made immeasurably worse by the actions of four successive Conservative prime ministers. It should not be left to Conservative MPs, or Conservative party members, to decide who the right person is to steer us out of this mess. The country needs and deserves a general election to choose its next prime minister.Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 250 words to be considered for publication, email it to us at observer.letters@observer.co.uk Continue reading...

Third-quarter profits will be subdued, but many lenders will accept a raid on them to boost the public finances (and their own image)UK banking bosses would be well advised to take a page out of the Shell boss’s book when they report third-quarter earnings this week.Ben van Beurden made waves earlier this month when the oil chief declared that the profitable energy sector should be taxed to help protect the poorest people from surging living costs. That was despite Liz Truss’s government having refused to claim a larger chunk of energy firms’ profits, even as she rolled out costly caps on gas and electricity bills. Continue reading...

Boris Johnson and Rishi Sunak hold talks as deadline for nominations approaches on MondaySenior Tories are engaged in a frantic campaign to stop Boris Johnson staging a dramatic return to Downing Street, with claims he would cause further economic damage and risk “the end of the Conservative party”.Johnson’s team was claiming on Saturday night that he had privately secured the support of the 100 MPs necessary for entering the race, despite only 55 backing him in public. The assertion was immediately disputed by MPs and rival leadership campaign sources. Johnson released a photo of himself lobbying an MP on the phone, but his allies on Saturday night could not confirm he would officially enter the contest to win back the leadership he was deposed from just months ago. Continue reading...

Goods trade is down, as is productivity, and the financial sector is also set to suffer. But will the opposition dare talk about it?Those who would blame Brexit for most of Britain’s ills have struggled to come up with unequivocal figures to support their cause. The pandemic muddied the economic waters and gave supporters of leaving the European Union space to argue that remainers had overplayed their hand.But as Christmas approaches, and with it the second anniversary of the UK’s exit from the single market and customs union, it is clearer than ever that the Brexit project is accelerating a long decline in the UK’s ability to pay its way in the world. Continue reading...

In the wake of Covid, many of the economically inactive people in the UK would love to take up a new job. In the first of a series of articles about our changing workforce, we ask what it would take to make them productive again“I can’t see me ever being well enough to go back to teaching, or actually to do any kind of meaningful employment, because I can’t concentrate. I have about an hour, and then it’s gone.”Naomi Vann, a PE teacher at a special needs school, has been suffering from long Covid since November 2020, when she caught the virus for the second time. Continue reading...

Giorgia Meloni’s radical economic agenda had resembled Kwasi Kwarteng’s. It won’t any longerItaly’s rightwing politicians kept a close eye on Liz Truss during her rise and fall. Not for the first time, Westminster has provided a guide for leaders in every European capital, and no more so than in Rome, about how not to make policy.It wasn’t long after the 2016 Brexit vote that the Italy’s dominant populist forces – the League, the Five Star Movement and the Brothers of Italy – quietly ditched longstanding demands for their own referendum on EU membership. Continue reading...

Moody’s say downgrade from ‘stable’ was driven by political instability and high inflation

With a weekend home sporting a £400,000 pool and spa, the ‘insanely rich’ ex-chancellor is dividing opinion in his Yorkshire seat

Credibility of economic event could be in doubt if it is launched on Halloween, just a few days into new leader’s tenure

Chancellor says he will do ‘whatever is necessary’ to bring down national debt

Pair sympathetic to her growth agenda told Truss before she became PM that plans needed to be handled with care

Expect also a harder downturn if market credibility is to be restored, with a 2% contraction in GDPIt was all a bad dream. That, at least, is one interpretation of markets’ view of Liz Truss’s short and chaotic premiership. The pound stood at $1.15 against the dollar when she took office 44 days ago and was $1.13 soon after her resignation – down a bit, but most things are against the US currency.Over in the gilt market, the yield on 10-year government IOUs, the usual yardstick of the country’s medium-term cost of borrowing, is a shade under 4%, which doesn’t sound so bad when inflation is 10%, the rest of the world is laughing at your governing party and a clear-the-air general election could still be two years away. Continue reading...

From soaring mortgage costs to a sterling slump, the fiscal event set off a chain of chaos that led to PM’s downfall

Sterling has gained a cent against the US dollar after PM quits, on hopes that UK economic and political turmoil could ease

Trussonomics, and Brexitism, have proven the dangers of trying to turn rightwing ideology into reality

The Tory leader’s attempt to tear up the status quo only brought about economic, political and social chaos

Bosses say next prime minister must restore confidence with a credible fiscal plan

Ben Broadbent says increase already priced into markets would deliver ‘pretty material’ hit to economy

The Conservatives know the people’s verdict would be devastating. But they can’t be allowed to carry on in a state of perpetual chaosSummer 2022 must mark a low moment in the history of British politics.Whatever emerges in the next week, the mother of parliaments has been reduced to a bad joke, its constitution a laughing stock. Four prime ministers have been ejected from office in six years, none by the vote of a democratic electorate. A fifth is about to be chosen, again without an election.Simon Jenkins is a Guardian columnist Continue reading...

Exclusive: Statement expected shortly after departures of top ministers and evaporation of political authority

Firms such as Jupiter and Schroders suffer net outflows as inflation, economic uncertainty and Ukraine war weigh on investorsAsset managers have said they are navigating tough investment conditions in the UK, as economic turmoil reduced the value of their portfolios and persuaded customers to pull and divert their cash.London-based firms including Jupiter, Schroders, and St James’s Place issued trading updates on Thursday, which laid bare the challenges facing fund managers amid soaring inflation and global uncertainty, including the effects of the war in Ukraine. Continue reading...

Pubs, hotels and restaurants experienced fastest fall in output of any UK sector on Lloyds trackerTourism and recreation experienced the fastest fall in output of any UK business sector last month, the latest data shows.Output in the sector, which includes pubs, hotels and restaurants, declined at the fastest pace since February 2021, when the UK was last in lockdown, with a tracker score of 36.3 in September, according to the Lloyds Bank UK Recovery Tracker. Any reading below 50 indicates contraction. Continue reading...

Sourdough out, white sliced in – Waitrose says shoppers are ‘making little downgrades’ and choosing cheaper cutsThe cost of living crisis has put home cooks on a war footing with a new “thrifty” mindset boosting supermarket sales of nostalgic canned foods, including Spam and pilchards, as well as cheap cuts such as fish heads.With official figures showing food price inflation running at nearly 15%, Waitrose said its customers are seeking prudent alternatives for mealtimes and making small downgrades such as swapping sourdough for sliced white bread and olive oil for cheaper vegetable oil. Continue reading...

Liz Truss has apologised for the ‘mistakes’ she made in her mini-budget. But as her new chancellor, Jeremy Hunt, shreds her economic plan and warns of ‘eye-watering’ decisions ahead, will her party accept the tough choices they face? The Guardian’s Gaby Hinsliff speaks to the former Conservative adviser Salma Shah and columnist Rafael Behr about the prime minister’s options Continue reading...

As UK inflation tops 10%, a discount for over-60s at Manchester’s Urmston branch is proving a lifeline for many“Everything, really,” says Joyce Irlam matter of factly when asked what she has noticed going up in price. “All the shops I go in, I can see the difference in the prices.”Irlam speaks for many as the latest official data shows inflation hitting 10.1%, stoked by a near 15% jump in the cost of food and drink, with staples such as bread, meat, milk, cheese and eggs among the biggest risers. Continue reading...

CPI inflation has jumped to 10.1%, highest in 40 years, as Bank of England reveals funds were ‘shouting on the phone to us’ after mini-budget

Standard formula means payments would increase by 10.1% but Jeremy Hunt could choose cheaper option

Voters are told that cuts will deliver stability. But we are returning to the very playbook that gave us Brexit and the chaos that followedAs you may have heard, this country has a new ruler. Jeremy Hunt now sets the government’s course and even, critics carp, decides who sits around the cabinet table (so long, Suella Braverman, and thanks for all the tofu jokes); Liz Truss is merely his barely-human shield. But very few of this week’s tributes to the “real prime minister” mention that precisely 18 people voted for him to take that job. That is the grand total of MPs who backed Hunt in this summer’s Tory leadership contest, from which he was ejected in the very first round. Out of eight contenders, he came eighth. “Who voted for this?” Truss was asked when she unveiled her mini-budget. As Hunt dismantles her entire programme we know who voted for him, down to their very names. They make up 0.00003% of the population.Yet rather than dismay, what pours forth from the politico-media classes is undiluted relief. “It is just so good to have a grownup in the room, someone who commands respect,” gushes one senior Tory MP. Others praise the new boss as a “calming influence” on all-important financial markets, because they must be appeased and Hunt fancies himself as the gilt-whisperer.Aditya Chakrabortty is a Guardian columnist Continue reading...