Press Round-Up Short (Premium)
Millions of households are facing a “stealth” tax raid under Liz Truss’s government despite her promise to support workers through the cost-of-living crisis by lowering their tax bills, Britain’s leading economic thinktank said on Wednesday. The Institute for Fiscal Studies (IFS) has calculated that for every £1 given to workers by cutting headline tax rates, £2 was being taken away through a freeze on the level at which people begin paying tax on their earnings.
Liz Truss’s intervention to freeze energy prices for households for two years is expected to cost the government £89bn, according to the first major costing of the policy by the sector’s leading consultancy. The analysis from Cornwall Insight, seen exclusively by the Guardian, shows the prime minister’s plan to tackle the cost of living crisis could cost as much as £140bn in a worst-case scenario. – Guardian.
British shoppers are expected to spend £4. 4bn less on non-essentials – a fall of 22% – in the run-up to Christmas as a surge in the cost of living puts a squeeze on their spare cash. Almost 60% of shoppers expect to cut back on non-food spending in the so-called “golden quarter”, or last three months of the year when most retailers book the majority of profits, according to research by Retail Economics with retail technology firm Metapack. – Guardian.
The Pensions Regulator has for the first time been drafted into high-level emergency talks led by the Treasury and Bank of England as they examine measures to calm financial markets in the wake of the meltdown which followed Kwasi Kwarteng’s mini-budget. The watchdog, which oversees the £1. 5tn pension sector, is understood to have been summoned into closed-door meetings of the Authorities’ Response Framework (ARF), which are triggered when an “incident or threat” could cause major disruption to financial services in the UK.
Jingye Group, the Chinese outfit that brought British Steel out of insolvency in 2020, has told ministers that its two blast furnaces would not be viable unless financial support from taxpayers was forthcoming. In remarks to Sky News, insiders said the company may need "hundreds of millions of pounds" in order to keep the company's blast furnaces in Scunthorpe, north Lincolnshire, operational. It remained nevertheless unclear whether the rescue package would take the form of a grant or loan.
Partners at Deloitte in the UK and Switzerland will receive an average income of more than £1m each for the second year in a row, after the accountancy firm enjoyed another successful year. Each partner will receive an average distributable profit of £1,058,000 in the year to the end of May, about 33 times the UK’s average annual pay. This is the first time the sum has exceeded £1m and is an increase of about 24% compared with the same period the year before.
The bookmaker Betfred has been fined nearly £2. 9m for failings in its social responsibility and money-laundering controls, after accepting tens of thousands of pounds from gamblers without performing adequate safety checks. One customer was allowed to lose £70,000 over a 10-hour period just a day after opening their account, the Gambling Commission said. – Guardian.
The International Monetary Fund has launched a stinging attack on the UK’s tax-cutting plans and called on Liz Truss’s government to reconsider them to prevent stoking inequality. In rare public criticism of a leading global economy, the Washington-based fund said Kwasi Kwarteng’s mini-budget risked undermining the efforts of the Bank of England to tackle rampant inflation amid the cost of living emergency. – Guardian.
Bankers could rake in bumper bonuses from a “wave of bids” by overseas buyers for UK businesses made temptingly cheaper as a result of the plunge in the pound against the dollar. A fresh frenzy of merger and acquisition activity would mean a ramp-up in payouts for City dealmakers. Sterling fell by nearly 5% at one point on Monday to $1. 0327, its lowest since Britain went decimal in 1971. The currency has fallen by more than a fifth against the dollar this year.
The number of people visiting UK shops this Christmas could remain almost a fifth below pre-pandemic levels as shoppers struggle with the cost of living crisis, according to forecasts. Retail footfall in December is expected to be 18% lower than the same month in 2019, said Springboard, a retail data company. – Guardian.
Boeing and its former chief executive have settled an investigation by the US’s top financial regulator into allegedly misleading statements the planemaker and its then boss made about its 737 Max jets, involved in two deadly crashes in Indonesia and Ethiopia. Boeing will pay $200m to settle charges that it misled investors and the former Boeing chief Dennis Muilenburg has agreed to pay $1m. – Guardian.
Britain’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. – Guardian.
Jacob Rees-Mogg is expected to announce a cap on energy prices for businesses that would cut the rates they pay by up to half this winter. The business secretary will outline support on Wednesday for companies, charities and public sector organisations for six months from 1 October, after Liz Truss said they would receive equivalent help to households whose costs are being capped. – Guardian.
Business investment in the UK fell to the lowest rate in the G7 group of wealthy nations despite corporation tax cuts, the government has been warned, as ministers prepare £30bn of giveaways targeted at companies and higher-income workers. The Institute for Public Policy Research (IPPR) said a “race to the bottom” on the headline tax rate on company profits had failed to boost investment and economic growth in Britain over the past 15 years. – Guardian.
Australian investment outfit Macquarie is studying a possible £1bn bid for PD Ports, the logistics empire that includes the strike-plagued Felixstowe port in the south or Teesport in the northeast. An auction by PD 's owner, Canadian private equity firm Brookfield, was cancelled in November following a legal spat with the South Tees Development Corporation, which owns the land around Teesport. Bids at the auction had reached around £1. 3bn but the economic backdrop and performance of PD Ports had worsened since then.
Fresh fears have been raised about the health of the global economy after the World Bank warned that efforts to tackle inflation could cause a global recession. Central banks from the US Federal Reserve to the Bank of England are racing to raise interest rates to try to bring surging prices in the economy under control. The annual rate of inflation in the UK is hovering at close to a 40-year high and rate-setters at the Bank of England are widely expected to raise borrowing costs further when they meet next week.
California is suing Amazon, accusing the company of violating the state’s antitrust laws by stifling competition and engaging in practices that push sellers to maintain higher prices on products on other sites. The 84-page lawsuit filed on Wednesday in San Francisco superior court mirrors another complaint filed last year by the District of Columbia, which was dismissed by a district judge earlier this year and is now going through an appeals process. – Guardian.
US freight railroad workers are close to striking over claims that grueling schedules and poor working conditions have been driving employees out of the industry over the past several years. Heated negotiations over a new union contract between railroad corporations and 150,000-member-strong labor unions have been ongoing for nearly three years. A “cooling off” period imposed by the Biden administration after it issued recommendations to settle the dispute ends on Friday.
The UK’s largest banks will be tested on their ability to withstand a rise in defaults linked to sky-high energy prices, as part of the Bank of England’s delayed health check of the financial industry. The Guardian understands that Threadneedle Street has crafted a new crisis scenario that will feature a deep economic recession, punctuated by soaring energy bills that could make it harder for some borrowers – particularly businesses – to afford loan repayments.
Britain’s biggest housebuilders privately lobbied for the government to ditch rules requiring electric car chargers to be installed in every new home in England, documents have revealed. The FTSE 100 construction firms Barratt Developments, Berkeley Group and Taylor Wimpey were among the companies who argued against the policy in responses to an official consultation seen by the Guardian. The “blatant lobbying efforts” were criticised by Transport & Environment, a campaign group.