Closing post
Time to wrap up:
Chancellor Rachel Reeves has pledged to stick to her fiscal rules, despite UK borrowing rising faster than expected last month.
Reeves told the House of Lords economics affairs committee that the government showed the “political courage and strength” to stick to those fiscal rules, adding:
“We will continue to do so.”
Reeves also resisted an invitation to rule out a wealth tax in the autumn budget, and warned that the UK was still reliant on “the goodwill of strangers” willing to buy its debt, saying:
“We are still very reliant on the goodwill of strangers in buying our government bonds.
“I’m a Labour politician. I don’t think there’s anything progressive about spending 100 billion pounds a year, often to U.S. hedge funds, when I would rather spend that money on the health service or on defence or on better schools.”
Reeves was speaking just hours after the latest UK public finances data showed a jump in borrowing last month. Public sector net borrowing rose to £20.7bn, up by £6.6bn from the same month a year earlier to reach the second-highest June borrowing figure since monthly records began in 1993.
The UK’s fiscal watchdog, the Office for Budget Responsibility, pointed out that borrowing so far this financial year was in line with its forecasts.
But, several economists still predicted that Reeves would raise taxes in the autumn, given the opposition from Labour MPs to spending cuts.
Reeves also urged businesses to hire unemployed and economically inactive members of the UK labour market, rather than relying on migration.
Bank of England governor Andrew Bailey warned the chancellor against watering down City banking rules, warning it risks repeating the mistakes that led to the 2008 financial crisis.
Members of the Bank’s FPC told MPs that financial stability was crucial to achieving growth.
Bailey also hinted that he might not support the introduction of a digital pound, if the Bank’s efforts to embed digital payments technologies into commercial bank payment systems succeeded.
And in other news:
It’s also been another historic day in the London stock market, where the FTSE 100 share index has hit a new intraday high of 9035 points.
Lord Razzell probes chancellor Reeves over her controversial increase in employers’ national insurance contributions.
Q: If you had the time to go into your local pub, they’d complain to you about the impact. Did the Treasury model the impact of the NICs changes?
Rachel Reeves says the Labour government discovered a number of unfunded spending commitments when it entered office, so she decided to increase taxes on businesses and the wealthiest by £40bn in the budget.
She says the government took steps to protect smaller firms from the NICS increase, such as increasing the Employment Allowance, which cut the cost of employing people on the minimum wage.
She concede that the NICS increase has been painful for businesses. But the counterfactual, she insists, would either have been higher taxes on working people, cuts to public services, or higher borrowing.
