The new chancellor launches his economic plan for growth. But is it just so much hot air?• You can order your own copy of this cartoon Continue reading...

Boris Johnson was far more eco-conscious than recent Conservative predecessors. But this mini-budget is a reversion to typeThe dash for growth by Kwasi Kwarteng means unshackling City bankers and property developers from the taxes and regulations that prevent them from paving over what’s left of Britain’s green and pleasant land.The humble concrete mixer will be elevated to exalted status. There will be more executive homes built on greenfield sites. More distribution sheds dotted along busy A-roads. And more urban renewal of the kind that involves tearing down buildings in a plume of dust and carbon emissions to replace them with something not much better, at least not in environmental terms. Continue reading...

Analysis by Resolution Foundation shows 95% of UK population will be worse off after chancellor’s actionsThe chancellor’s mini-budget will disproportionately benefit London and the south-east, a new analysis has found, marking a sharp U-turn from the levelling up strategy of the previous government.According to the Resolution Foundation, an independent thinktank, households in London and the south-east could gain an average of £1,600 next year from Friday’s fiscal statement. This is three times as much as those in Wales, the north-east and Yorkshire, which it predicts will gain an average of £500. Continue reading...

Labour leader attacks ‘casino economics’ in wake of £45bn package of tax cuts announced by chancellorSir Keir Starmer has accused the government of “gambling the mortgages and finances” of the British people with its “casino economics”.Speaking before his party’s conference in Liverpool, the Labour leader tweeted: “Tory casino economics is gambling the mortgages and finances of every family in the country. Labour will secure growth for working people, that benefits all communities. My government will deliver a fairer, greener future.” Continue reading...

High earners are the big winners in the chancellor’s tax giveaway, while people on universal credit risk losing income Continue reading...

Tax cuts to cost Treasury around £37bn in 2023-24, official figures reveal

Strategy of sweeping tax cuts gets hostile reception from markets and economic thinktanks, leaving some Tory MPs aghastKwasi Kwarteng has been accused of delivering a reckless mini-budget for the rich after his £45bn tax-cutting package sent the pound crashing to its lowest level against the dollar in 37 years.In a high-risk strategy designed to revive Britain’s stagnant economy, the new chancellor announced more than £400bn of extra borrowing over the coming years to fund the biggest giveaway since Tony Barber’s ill-fated 1972 budget. Continue reading...

Sterling has tumbled by over three cents to 37-year low, and UK gilt yields are surging, after Kwasi Kwarteng announced huge unfunded tax cutsKwasi Kwarteng’s (expected) pledge to “turn the vicious cycle of stagnation into a virtuous cycle of growth” hasn’t sparked much excitement in the City.The blue-chip FTSE 100 index has lost 0.6% this morning, dropping to its lowest since mid-July.The FTSE 250 index has lost 22% so far this year, with the latest 0.5% rate hike from the Bank of England adding to tightening concerns at a time when growth is flat to non-existent.It is expected that the government will unveil a new “fiscal event” later in a mini-budget which should involve tax cuts and increased spending in an attempt to stimulate growth. It remains to be seen how effective such moves might be, given the wider pressures affecting economies globally.” Continue reading...

Thinktank says someone earning £1m will gain £40,000 as top rate, basic rate and national insurance reducedAlmost half of the personal tax cuts in the mini-budget will go to the richest 5% of the population, according to analysis by leading economic thinktanks.Highest earners will gain the most from Kwasi Kwarteng’s giveaways after the chancellor cut the top rate of tax for people paid more than £150,000 from 45p to 40p – although big earners in Scotland will not benefit from this. Continue reading...

Kwasi Kwarteng’s measures benefit the rich at expense of struggling families, say critics

Chancellor maxes out with morally bankrupt budget that is anything but mini

By cutting taxes instead of investing to grow the economy, Kwarteng’s borrowing spree will have ugly economic consequencesWhen is a budget not a budget? When the government does not want there to be any informed analysis of its economic impacts. The only reason the Treasury has insisted Kwasi Kwarteng’s statement was a “fiscal event” and not a budget – despite a range of measures far exceeding the contents of most budgets – is that, since George Osborne’s tenure, chancellors of the exchequer have been required by law to ask the Office for Budget Responsibility (OBR) to conduct an independent analysis of the measures taken.And why has the government been so keen to avoid such scrutiny? Because the economic impacts are likely to look very ugly. It is more or less impossible to find an economist who supports the government’s approach, or an economic model able to justify it. Indeed, the financial markets have already given their negative verdict. Continue reading...

Sell-off as investors take fright at prospect of surge in government borrowing to cover huge tax cutsThe pound fell below $1.09 on Friday for the first time since 1985 as investors took fright at the prospect of a surge in government borrowing to pay for the sweeping tax cuts in Kwasi Kwarteng’s mini-budget.Issuing a punishing verdict on the chancellor’s “dash for growth”, traders sent sterling tumbling on Friday in a broad-based sell-off in response to the huge rise in public borrowing required to finance his plans. Continue reading...

From income tax to stamp duty and national insurance, how Kwasi Kwarteng’s announcements could affect you

Kwasi Kwarteng has delivered his first budget since being appointed to Liz Truss's cabinet. On Friday, in a statement before parliament, the UK chancellor laid out plans to cut stamp duty, scrap bankers' bonuses and get rid of the highest band of income tax. The Treasury has released a document showing the newly introduced tax cuts will cost about £37bn in 2023-24

Chancellor abolishes cap on banker bonuses, cuts basic income tax and national insurance in mini-budget that favours top earners

The chancellor has delivered his mini-budget – here are the main points, with political analysis

Levelling up secretary Simon Clarke hits out at critics before chancellor’s budget announcementThe levelling up secretary has described the suggestion that the chancellor’s mini-budget will be “trickle-down economics” as leftwing “nonsense”.Simon Clarke made the comments before a tax-cutting budget to be announced on Friday. Continue reading...

In today’s newsletter: The newly appointed chancellor will deliver his first ‘fiscal event’ in Parliament today – but will it make a difference?Good morning. For a “mini” budget, today’s announcements by new chancellor Kwasi Kwarteng will have some pretty maxi consequences. At 9.30 this morning, Kwarteng will set out significant tax cuts, explain how he will pay for the energy price freeze and announce new “investment zones”. He will tell MPs that his plans will help break the “vicious cycle of stagnation”.Coming the day after the Bank of England said the economy was in recession and put interest rates to their highest level since 2008, even as the pound fell to its lowest level against the dollar since 1985, all this is likely to have a more significant economic impact than many full-scale budgets of previous years – but the Treasury has refused to publish the Office for Budget Responsibility’s (OBR) analysis of exactly what their plans will mean.Ukraine | The first full day of Russia’s mobilisation produced emotional showdowns at draft centres and even signs of protest, as reports emerged claiming Russia could conscript far more than its stated 300,000 soldiers. Meanwhile, five Britons released from Russian captivity were reunited with their families.Religion | Northern Ireland’s 2021 census has shown Catholics outnumber Protestants for the first time. While neither group have a majority, this is a landmark moment for a state that was a century ago supposed to have a permanent Protestant majority.Fracking | Ministers face a furious backlash from Conservative MPs after overturning a manifesto pledge to pause fracking until it is proved safe, and then indicating drilling could be imposed without local support. The new energy secretary Jacob Rees-Mogg has dismissed worries about earthquakes as “hysteria”.Diplomacy | Liz Truss has said she is considering relocating the British embassy in Israel from Tel Aviv to Jerusalem, in a controversial move that would break with decades of UK foreign policy and follow in the footsteps of Donald Trump.Iran | The death in custody of an Iranian woman that has sparked widespread protests must be “steadfastly” investigated, Iran’s president Ebrahim Raisi has said. At least 31 people are feared to have died during protests sparked by Mahsa Amini’s death while being held by the morality police. Continue reading...

From soaring inflation and gas prices to tax take and national debt, these are the trend lines that frame Kwasi Kwarteng’s calculationsKwasi Kwarteng will announce the details of his mini-budget on Friday with Britain already in a recession. In only his third week in the job, the chancellor is expected to announce sweeping tax cuts and further details on the government’s energy price freeze, in an emergency support package worth more than £150bn.It comes after the Bank of England reported that Britain’s economy fell into recession earlier this year amid the cost of living crisis. Here are the five key charts that will underpin the chancellor’s statement. Continue reading...

It’s true that the UK Treasury thrives under the pressure of a crisis, from the 2007 financial crash to the Covid pandemic – but is its self-hyped reputation as the bedrock of government stability really deserved?Archive: BBC, Telegraph, The Guardian, ITV, UK Parliament Continue reading...

Threadneedle Street makes clear on eve of tax-cutting mini-budget that plans risk triggering more rate risesThe Bank of England has warned Kwasi Kwarteng the economy is in recession and it will most probably need to push interest rates higher after Friday’s tax-cutting mini-budget.On the eve of a major package of support from the chancellor designed to break what he called the economy’s “cycle of stagnation”, Threadneedle Street said the UK economy was heading for a second consecutive quarter of falling output, with gross domestic product set to shrink 0.1% in the three months to September. Continue reading...

For postal workers, firm’s proposal to hold talks at conciliation service Acas is one to consider seriouslyStrictly speaking, Royal Mail’s management is not saying it is ripping up the nine-year-old deal with the Communication Workers Union that, until strikes in recent weeks, had helped to keep a lid on industrial disputes. Instead, as the bosses see things, they are exercising the company’s right to give notice of an end to protections within the agreement in the event of nationwide strikes.The distinction could be significant should the CWU go to court. For now, though, it’s the signal that matters. The message from management is that it is prepared to raise the stakes in a dispute over pay and working practices. Challenging the “agenda for growth” agreement – or just elements of it – was always a possible next escalation. Now it has happened. Continue reading...

Tax cuts and more borrowing are likely to feature on Friday as the chancellor gambles on growthThe chancellor, Kwasi Kwarteng, stands up in the Commons on Friday morning to reveal his “emergency budget”. Here’s what we know so far: Continue reading...

As the rich get richer, former trade minister John Battle has a sense of deja vu about Liz Truss’s economic policiesIn 2011, the economist Branko Milanovic pointed out that the employee bonuses paid out by the investment bank Goldman Sachs in 2009 (the “credit crunch” days) were equal to the combined earnings of the world’s 224 million poorest people. The response of the coalition was the austerity years. As the number of “ultra high net worth” people rises to a new record (Number of global ultra high net worth individuals hits record high, 20 September), it is with an appalling sense of deja vu that I envisage a Liz Truss government squeezing already damaged public services in a vain attempt to run away from “redistribution”. What about trying fairer shares and even a statutory maximum wage (including bonuses)?

DJ Donald Trump’s musical choice | Trickle-down theory | Churchill’s 99% tax rate | Cheating at chess | Woman-free WordsearchYou report that, as host DJ at Mar-a-Lago, Donald Trump routinely finishes an evening with the hymn How Great Thou Art (80s hits and nuclear secrets: security concerns plague Trump’s Mar-a-Lago, 20 September). As a deputy organist, called on to play it on several occasions, I eventually realised why doing so had made me uneasy: the Horst Wessel song, the Nazi party’s anthem, is rhythmically identical.

Central banks are putting rates up as currencies slide against dollar but Japan and Turkey buck trendJapan has intervened to prop up the yen for the first time since 1998, after it hit a 24-year low as its central bank resisted the trend for higher interest rates.Tokyo was forced to take action in the foreign exchange market to shore up its weakening currency, after the Bank of Japan (BoJ) maintained its ultra-loose monetary policy on Thursday. Continue reading...

UK central bank predicts economy shrank for second quarter in a row, after shops closed and many stayed at home for Queen Elizabeth II’s state funeralNorway’s central bank has joined the rate-hikers.The Norges Bank has lifted its benchmark interest rate by 50 basis points, to 2.25%, and signalled that the policy rate will probably be raised further in November.Many will be facing a squeeze on finances given the rapid rise in prices at the same time as the policy rate is being raised.But a faster rate rise now reduces the risk of inflation becoming entrenched at a high level and thereby the need for a sharper tightening of monetary policy further out. Continue reading...

From mortgages and the housing market to credit cards and loans, half-point increase will have an impactThe Bank of England has voted to hike interest rates by 0.5 percentage points to 2.25% - the seventh rise since last December. So what does this mean for your finances? Continue reading...

In a three-way split decision, MPC signals inflation risks outweigh short-term threat of recessionBritain’s economy is now in recession, the Bank of England has said, as it raised interest rates to tackle the worst bout of inflation for 40 years.A majority of the Bank’s nine-member monetary policy committee (MPC) voted to increase the key base rate by 0.5 percentage points to 2.25% – its highest level since 2008 – judging that the risks of inflationary pressures becoming entrenched outweighed the short-term dangers to the economy. Continue reading...

The half-point rise wasn’t the limit of the measures announced by a central bank accused – until now – of acting too slowly on inflationDespite believing that Britain is already in the early stages of a recession, the Bank of England voted to raise interest rates by 0.5 percentage points at the latest meeting of its monetary policy committee.That’s the first unusual aspect of the latest pronouncement from Threadneedle Street. In the past, a slowing economy – let alone one already going backwards – would be the signal for lower borrowing costs. Continue reading...

The PM’s assault on economic orthodoxy is a leap in the dark with every prospect of backfiring spectacularlySince launching her bid to be prime minister in July, Liz Truss has talked non-stop about the need to challenge Treasury orthodoxy and run the economy differently. Friday marks the day when the talking ends and Britain gets a taste of what Trussonomics actually means.Let’s be clear: Kwasi Kwarteng’s statement to MPs on Friday is much more than a run-of-the-mill fiscal event. Mini budget doesn’t really do it justice either. Most full-blown budgets matter little and are quickly forgotten. This one is a very big deal indeed.Larry Elliott is the Guardian’s economics editor Continue reading...

Despite 8% rise in sales over past six weeks, retailer worries that energy costs will dampen consumer spendingJD Sports has warned it remains “cautious” about trading over the coming months as surging inflation and worker strikes threaten to curb consumers’ spending power and disrupt its supply chain.The sports retailer said that although sales over the past six weeks were 8% higher than a year earlier, it was aware that rising prices linked to a jump in energy costs could impact its earnings as shoppers cut spending. Continue reading...

Ray Fair’s latest analysis suggests Democrats will get 46.7% of the national vote – and he usually comes within 3% of the final tallySince 1978 Ray Fair, ​​professor of Economics at Yale University, has been using economic data to predict US election outcomes. His bare-boned, strictly by the numbers approach has a fairly impressive record, usually coming within 3% of the final tally.Sadly for Democrats – if Fair’s on track again this time – the Biden administration will struggle to keep control of Congress in November’s crucial midterm elections. Continue reading...

Brexit, inflation and pandemic have taken toll on sector that is almost a third smaller than in 2019The multibillion-pound UK music industry remains almost a third smaller than before the pandemic as rampant inflation, soaring costs and Brexit red tape threaten to derail its fragile recovery, a report warns.UK Music, the umbrella body representing the industry from artists and record labels to live performance, is calling for a package of support including tax relief, a VAT cut for struggling venues and a streamlining of restrictions affecting workers and touring between Europe and the UK. Continue reading...

Scrapping the bankers’ bonus cap, slashing taxes and lifting the moratorium on fracking. Liz Truss says she is prepared to be ‘unpopular’ to boost the UK economy, but who really benefits? The Guardian’s John Harris is joined by David Gauke, a former Conservative chief secretary to the Treasury, and Miatta Fahnbulleh, CEO of the New Economics Foundation, to discuss Truss’s vision for the country Continue reading...

Government needs independent verification of policies if it is to win vital finance sector confidenceThe government’s tax-cutting pledges continue to pile up. We already knew Friday’s big reveal would bring a cut in national insurance contributions and a scrapping of the planned hike in corporation tax. Now, it is reported, a giveaway on stamp duty on house purchases is on the cards.The coy phrase “fiscal event” doesn’t cover it. This is a full-blown budget in all but name. And, critically, it is being launched against the backdrop of a blank-cheque pledge to freeze household energy bills for two years, plus a parallel promise to support companies, charities and public sector organisations for six months – measures that, together, could conceivably add £150bn to public borrowing over the next two years. Continue reading...

Concerns mount before mini-budget that precarious financial position will spark run on sterlingBritain’s mounting debts will be unsustainable if the government presses ahead with sweeping tax cuts in a mini-budget on Friday, according to the Institute for Fiscal Studies thinktank.Fuelling concerns that the UK’s precarious financial position will spark a run on the pound, the chancellor, Kwasi Kwarteng, is expected to reverse an increase in national insurance payments and cut corporation tax at a cost to the Treasury of £30bn. Continue reading...

The social and environmental costs of wealth creation are becoming impossible to ignore, writes Jeremy Brettingham, while Barbara Williams says the key to our survival is not money but healthy ecosystems. Plus letters from Alan Knight and Damian GrantGeorge Monbiot calls for inspiring alternatives to the current disastrous ideology (Trussonomics is a fanatical, fantastical creed, and the last thing Britain needs, 17 September). A good place to start might be to finally dispel the convenient myth that amassing a lot of money is the same as creating wealth. To “make” lots of money basically involves taking bits of money from lots of other people, by fair means or foul.Wealth, on the other hand, is at its root “created” by using the resources of the Earth – whether that be the soil, plants, trees, water, rare minerals or hydrocarbons – and combining that with leveraging the differences in socioeconomic expectations between different social groups/countries. Continue reading...

Yvon Chouinard’s donation of his $3bn company is a step to kickstart change, but global actions are needed, writes Prof Phoebe Barnard of Stable Planet AllianceYvon Chouinard’s bold donation of his $3bn company for the public good (Yvon Chouinard – the ‘existential dirtbag’ who founded and gifted Patagonia, 15 September) felt like oxygen to all of us working to ensure a livable planet for the future – and raised questions about which moneyed leaders might follow. But how should such investments be made in humanity’s and the planet’s future?As I and my colleagues argued in the World Scientists’ Warnings series of papers and action framework, our planetary and societal crises are just symptoms of overshoot, with relatively simple root-cause solutions: stabilising and reducing human numbers and appetites. Climate change, road rage, water insecurity and plastics pollution aren’t independent crises – we shouldn’t be fighting them as if they are. Continue reading...

Capping electricity and gas for six months won’t provide long-term security, schools and hospitality firms fear, as business secretary hints at more support

Government warned measure would create housing bubble that does little to benefit first-time buyersCuts to stamp duty will hurt first-time buyers and stoke an inflationary bubble in the property market as house prices rise at the fastest rate for almost 20 years, the government has been warned.In the latest report detailing the tax cuts favoured by Liz Truss, the Times said Kwasi Kwarteng, the chancellor, was preparing to launch radical cuts to stamp duty as the “rabbit out of the hat” measure in his mini-budget to the House of Commons on Friday. Continue reading...

Hike in interest rates would be the biggest in 33 years and would heap renewed pressure on borrowersThe Bank of England is considering the biggest interest rate rise in 33 years to tackle soaring inflation, a move expected to cost millions of households more than £3bn in extra mortgage costs.City investors expect Threadneedle Street to raise interest rates by at least 0.5 percentage points, or even 0.75 percentage points, on Thursday at the next meeting of its monetary policy committee (MPC). Continue reading...

MPs had no chance to question Jacob Rees-Mogg’s announcement and no one is marking Kwasi Kwarteng’s homeworkThere can be no starker contrast between how the two political parties are judged on economic policy than the way the past fortnight has played out for Liz Truss.The astonishing scale of state spending to relieve the energy crisis and enable tax cuts has been announced with total omertà thus far on how much the proposals will cost the British taxpayer. Continue reading...

Over the past 14 years, older homeowners have continued to benefit – creating an unpleasant form of economic progressOn Thursday at midday the Bank of England’s monetary policy committee will announce an interest rate rise. Some City analysts have predicted the announcement will jack up the rate by 0.75 of a percentage point (mimicking that of the European Central Bank in early September) to a total of 2.5%. An upward jump of this size has not occurred since the Bank was made independent in 1997. And the last time interest rates have moved by more than half a percentage point in either direction was in the depths of the 2008 banking crisis, when they were cut rapidly in an effort to shore up the circulation of credit.Even if, as other observers expect, the announcement is merely of a rise of a 0.5 percentage point, it will be one more step on a staircase that is likely to reach at least 4% by early next year. Regardless of pace, these rises mark the conclusion of one of the most extraordinary economic policy experiments in modern history. The architects of this era – characterised by uniquely low interest rates – were unelected technocrats rather than politicians, and yet they leave a profound political and economic legacy of spiralling inequality, channelled above all through the ownership of housing.William Davies is a sociologist and political economist. His most recent book is Unprecedented? How Covid-19 Revealed the Politics of Our Economy Continue reading...

Foreign Office minister Gillian Keegan replies to Joe Biden pouring scorn on tax cuts for the rich and businessesOne of Liz Truss’s ministers has said her government’s approach can in “no way” be described as “trickle-down economics”, despite the prime minister urging world leaders to join the UK in introducing far-reaching tax cuts.Gillian Keegan, a Foreign Office minister, said the £100bn-plus package of support for households and businesses on energy bills showed that this was not the government’s philosophy. Continue reading...

Figure of £11.8bn comes as high inflation drives interest payments to a record for the month

You simply love to see it

The US central bank is expected to announce a sharp rise in interest rates on Wednesday in an attempt to tackle the cost of living crisisFederal Reserve chair Jerome Powell warned last month that there would be “pain” ahead as the US central bank struggles to contain a surge in inflation unseen in 40 years. Powell will offer some indication of how much pain he expects on Wednesday.The Fed is expected to announce another sharp rise in interest rates on Wednesday afternoon after the conclusion of its latest meeting. It will also update its economic forecasts for the US economy. Continue reading...

The land of the free is heading for ‘developing country’ status, based on a UN index that ranks quality of life. The UK’s not doing much betterWhat do you call a country where nearly one in 10 adults have medical debts and a broken bone can boot you into bankruptcy? A country where a city of more than 160,000 residents recently had no safe drinking water for weeks? A country where life expectancy has dropped for the second year in a row and poor people sell their blood plasma in order to make ends meet? A country where the maternal mortality rate of black women in the capital is nearly twice as high as for women in Syria?You call it one of the richest countries in the world. Continue reading...