Tag: sunak

Categories
-Top News UK News

Budget maps out return to higher foreign aid spending

That more upbeat assessment also allowed the government to predict it would be able to restore aid spending in 2024/2025 because the fiscal tests it had set for doing so would be met by then – earlier than previously forecast…reports Asian Lite News.

Britain’s spending on foreign aid should return to 0.7% of economic output by 2024/25, finance minister Rishi Sunak said on Wednesday, having temporarily ditched that target last year to help pay for the government’s pandemic response.

Prime Minister Boris Johnson has faced heavy criticism of the decision to cut aid spending to 0.5% of GDP, including from some within his own Conservative Party who said it undermined Britain’s global image at a time when it was trying to build new post-Brexit alliances.

Official budget forecasts on Wednesday showed the British economy bouncing back from Covid-19 more strongly than expected, allowing Sunak to announce billions of pounds of tax cuts and new public spending.

That more upbeat assessment also allowed the government to predict it would be able to restore aid spending in 2024/2025 because the fiscal tests it had set for doing so would be met by then – earlier than previously forecast.

The test for returning to 0.7% is that “on a sustainable basis the government is not borrowing for day-to-day spending and underlying debt is falling.” The government’s spending plans set aside 5.2 billion pounds in 2024/25 to pay for the increase, but that remains conditional on the tests continuing to be met until that time.

Campaigners raised concerns about a lack of detail around how the money would be spent – fearing Britain would try to broaden the classification of what counts as aid, resulting in less money going to where they say it is needed.

“Having already shrunk the UKs support for development, implementing further cuts by stealth would exacerbate the challenges of climate and COVID already faced by developing countries,” said Amy Dodd, Director of Development Finance Policy at campaign group ONE.

The budget documents set out in broad terms a shift in British aid spending towards bilateral aid programmes – part of recently-appointed foreign minister Liz Truss’s stated aim to tie her foreign policy more closely with Britain’s commercial, defence and security interests.

It did not set out details of any reduction in funding to multilateral agencies.

ALSO READ-Sunak delivers Budget for stronger economy

READ MORE-All eyes on Sunak ahead of Budget 2021

Categories
-Top News UK News

All eyes on Sunak ahead of Budget 2021

Finance minister likely to announce a three-year spending plan with investments in public transport, skills training and other projects to advance Johnson’s plan to “level up” poorer regions of the country, reports Asian Lite News

Finance minister Rishi Sunak will try to show that he is moving on from the Covid-19 pandemic on Wednesday when he announces multi-billion-pound investments to help Prime Minister Boris Johnson meet his spending promises to voters.

But Sunak, who has racked up the biggest ever peacetime budget deficit to combat the coronavirus, will also keep a tight grip on day-to-day spending by many government departments, something that could slow Britain’s still incomplete recovery.

As well as a budget update — which for once is not expected to include emergency stimulus measures — Sunak will announce a three-year spending plan with investments in public transport, skills training and other projects to advance Johnson’s plan to “level up” poorer regions of the country.

At the same time, he will try to burnish the government’s low-carbon credentials before Britain hosts the COP26 climate summit starting next week.

“Today’s budget begins the work of preparing for a new economy post-Covid, an economy fit for a new age of optimism,” Sunak is due to say, according to excerpts of his speech released by the finance ministry.

That Sunak can focus on extra spending in his speech to parliament – expected to start around 1130 GMT – is due in part to a big tax increase for workers and employers announced in September. Companies face an additional tax hike in 2023.

Britain’s economy suffered a near 10% collapse last year after the country was slower than others to shutter its economy to ward off coronavirus contagion, and ended up spending more time in lockdown.

Nonetheless, an upgrade of Britain’s growth forecasts on Wednesday will give the government extra room for manoeuvre.

Bond dealers polled by Reuters expect borrowing this financial year will come in at 190 billion pounds, 44 billion pounds less than the government forecast in March and equivalent to around 8% of gross domestic product.

Sunak, a former Goldman Sachs analyst, has pre-announced higher spending on health, public transport in cities away from London, and skills training as well as the lifting of a freeze on public sector pay.

However, many ministries will face a further squeeze as Sunak sets a new fiscal rule for the government. It is expected to focus on bringing day-to-day spending into balance with tax revenues over a three-year horizon.

Many economists say that target looks achievable and could allow Sunak to cut taxes before for the next election, which is due in 2024 but could come earlier.

As well as a renewed rise in Covid-19 infections in Britain, a big risk for Sunak is that the recent jump in inflation proves to be stubborn than expected, which could push up the government’s debt costs sharply.

Around a quarter of British gilts are indexed to inflation, a higher share than most other rich economies.

A 1-percentage-point rise in interest rates and inflation would cost taxpayers about 25 billion pounds a year, according to government estimates.

That would be equivalent to double the money that Sunak plans to raise with his increase in social security contributions to fund the health service and social care.

Borrowing costs could start to go up as soon as next week when the Bank of England is due to announce its November policy decision against the backdrop of an inflation rate on course to hit 5%, more than double its target.

Retailers warn of pre-Christmas price rises

Meanwhile, British retailers warned on Wednesday of pre-Christmas price rises after they reported the smallest year-on-year decline in the average selling price of goods in their stores since before the start of the coronavirus pandemic.

The British Retail Consortium trade body said shop prices rose by 0.4% on the month in October and were 0.4% lower than a year before, the smallest year-on-year fall since January 2020.

Price rises were led by higher costs for food, which was 0.5% more expensive than a year earlier.

People wearing face masks stand next to Christmas trees in London, Britain, on Dec. 4, 2020. (XinhuaHan Yan)

“It is now clear that the increased costs from labour shortages, supply chain issues and rising commodity prices have started filtering through to the consumer,” BRC chief executive Helen Dickinson said.

Three in five retailers planned to raise prices before Christmas, she added.

The BRC’s shop price index covers a narrower range of spending than the consumer price index targeted by the Bank of England, which touched its highest since 2012 in August at 3.2%.

ALSO READ-Sunak calls on G7 to work together on supply-chain difficulties

READ MORE-Sunak on spending spree ahead of Budget

Categories
-Top News UK News

Sunak on spending spree ahead of Budget

The finance minister, who has been in charge of the country’s financial response to the pandemic, reiterated his promise to do ‘whatever it takes’ to help businesses and working families, reports Asian Lite News

Chancellor of the Exchequer Rishi Sunak on Sunday unveiled a series of spending pledges ahead of his Autumn Budget statement next week, including GBP 5 billion towards health research and innovation and GBP 3 billion for education and skills.

The finance minister, who has been in charge of the country’s financial response to the pandemic, reiterated his promise to do ‘whatever it takes’ to help businesses and working families.

Among the pledges unveiled by his Treasury department ahead of Wednesday’s Budget speech, GBP 1.4 billion has been earmarked to encourage foreign investment into UK businesses and attract overseas talent; GBP 700 million to be spent mainly on the new post-Brexit borders and immigration system, as well as a new maritime patrol fleet; GBP 560 million for adult maths coaching to help increase numeracy; and a six-month extension to the COVID recovery loan scheme to June 2022.

“I know that families here at home are feeling the pinch of higher prices and are worried about the months ahead,” Sunak wrote in the ‘Sun on Sunday’.

“But I want you to know, we will continue to do whatever it takes, we will continue to have your backs. just like we did during the pandemic. And while we cannot solve these problems overnight, I’m determined to meet these challenges head on, with the same grit and determination this great nation has shown throughout the pandemic,” he wrote.

At the heart of his plans is a so-called ‘skills revolution’ covering T-Level skills qualifications for 16 to 19-year-olds.

“This GBP 3 billion skills revolution builds on our Plan for Jobs and will spread opportunity across the UK by transforming post-16 education ‘ giving people the skills they need to earn more and get on in life,” said Sunak.

And, around 500,000 people are expected to benefit from a new Multiply programme of free personal tutoring, digital training, and flexible courses.

“Better maths can mean a better job and a bigger pay packet. Multiply will help people develop new skills and create opportunities,” added Sunak.

Besides, a UK-wide trial of Covid-19 antiviral treatments will receive GBP 33 million, while GBP 40 million will be spent on research in social care reform, GBP 30 million on investing in research skills and training, and GBP 20 million on research in climate change and health.

The Autumn Budget, presented to the House of Commons, is crucial in the UK’s financial calendar and will be accompanied by a Spending Review to allocate funds to different government departments. Sunak has described next week’s Budget as his plan to ‘invest in public services, invest in growth, and invest in jobs’.

The minister will also announce a £5 billion fund for innovative health-related projects, according to his office.

Health Minister Sajid Javid said the investment would add to coronavirus treatments and vaccines developed in the UK to battle the pandemic.

“The new investment will build on this success by accelerating the discovery of ground-breaking medicines and technologies,” he said.

But the big-spending plans have raised questions about where the debt-wracked government is going to find the money, with free-marketers within Sunak’s Conservative Party concerned that it will come from tax rises.

The country is also suffering from high inflation and supply shortages, blamed on the pandemic and Brexit.

But he conceded supply shortages and high energy prices were squeezing household budgets.

Labour’s Rachel Reeves, the shadow finance minister, took aim at her counterpart for not doing enough to ease the burden.

“Our priority would be easing the cost-of-living price crisis, helping businesses who have had a torrid 18 months,” she told Sky News.

ALSO READ-Saudi Arabia eases precautionary measures against Covid-19

READ MORE-Universal vaccination key to taming Covid-19: India

Categories
-Top News UK News

Sunak calls on G7 to work together on supply-chain difficulties

“Global cooperation is key to addressing our shared challenges as we emerge from the pandemic,” he said in a statement ahead of the meetings…reports Asian Lite News.

Finance minister Rishi Sunak said on Wednesday the Group of Seven rich nations should work together more closely to tackle supply-chain disruption which has hampered the economic recovery from the COVID-19 pandemic.

Sunak is meeting other finance ministers in Washington this week on the sidelines of the annual meetings of the International Monetary Fund and the World Bank.

“Global cooperation is key to addressing our shared challenges as we emerge from the pandemic,” he said in a statement ahead of the meetings.

“From global tax reform to global supply chains, we must work together to seek international solutions for the benefit of our citizens at home.” The IMF warned on Tuesday that supply-chain bottlenecks, including delays at ports and shortages of key components such as microchips used in car production, were delaying recovery and fuelling inflation pressures worldwide.

Britain has been hit especially hard due to the added impact of post-Brexit trade barriers and tougher immigration rules.

Many British petrol stations temporarily ran out of fuel last month, and a pan-European surge in natural gas prices has led to a shortage of carbon dioxide used to stun farm animals before slaughter.

Sunak also intends to encourage other rich countries to redirect part of their share of the IMF’s new $650 billion allocation of its internal currency to poorer nations to improve healthcare and respond to climate change.

ALSO READ-‘Sunak’s in-laws face £5.5m demand in Amazon India tax dispute’

READ MORE-Johnson ‘threatened to demote Sunak’ over leaked letter

Categories
Economy UK News

Sunak mulls cap to annual pension rise

The Sunday Times said the finance ministry wanted to break the link between pensions and wages for a year…reports Asian Lite News.

UK Chancellor Rishi Sunak is planning to block a near 6% rise in old-age pension payments as part of a wider effort to rein in the cost of Prime Minister Boris Johnson’s spending, the Sunday Times newspaper said.

The pension promise was made during the Conservative Party’s 2019 election campaign, in which state pensions are meant to rise each year by the highest of the annual inflation rate, wage growth or 2.5%.

Due partly to distortions from the coronavirus pandemic, annual wages in the three months to April grew by an annual 5.6% – creating an extra 4 billion pound ($5.5 billion) annual cost for future pensions, it was reported.

The Sunday Times said the finance ministry wanted to break the link between pensions and wages for a year.

“Pensioners are going to be doing extremely well. It’s not politically that difficult a thing to smooth it out for a year,” the newspaper quoted an unnamed minister as saying.

Earlier, a Guardian investigation has found that a joint venture between Sunak’s billionaire in-laws and the internet retailing giant Amazon is in a multimillion-pound dispute with the Indian tax authorities,.

https://www.youtube.com/watch?v=hghSAjoCEPM

The disclosure adds to the list of legal battles currently involving the joint venture, following news on Friday that India’s competition commission has been given permission to relaunch an investigation into Amazon.

The Guardian reported that small traders claim they are being squeezed out of business by the multinational’s selling practices and that the US retailer’s 1 billion-pound-a-year venture with the chancellor’s father-in-law, the technology entrepreneur NR Narayana Murthy, could be bypassing Indian foreign ownership rules.

Amazon says it is operating in full compliance with local laws.

ALSO READ-Sunak warns of taxing times ahead

READ MORE-‘Sunak’s in-laws face £5.5m demand in Amazon India tax dispute’