Closing summary
Time to wrap up….
Here’s our latest stories on yesterday’s autumn statement:
The boost to Sunderland’s car plant, expected tomorrow morning:
Plus, in other news:
In the money markets, traders have been trimming their expectations for UK interest rate cuts next year.
Today’s PMI report, showing a pick-up in price pressures, and the tax cuts announced yesterday by Jeremy Hunt are causing investors to ponder how persistent inflation may be in 2024.
Currently, the swaps market suggests the first rate cut may not come until August, rather than in May as recently expected.
Bloomberg has more details:
Traders are betting the central bank will reduce rates by around 60 basis points in 2024, according to swaps tied to monetary-policy meeting dates. That means two quarter-point reductions are fully priced in — with the first cut in September. The chance of a third is about 40%.
Oil and gas industry deny relying on “illusion” of “implausibly large” carbon capture plans
The UK’s oil and gas industry has rebuffed claims by the International Energy Agency (IEA) that fossil fuel companies are relying on the “illusion” of “implausibly large” carbon capture solutions to avoid cutting their fossil fuel production and investing more in clean energy.
The IEA report warned that oil companies are investing twice as much in oil and gas as they should if the world hopes to limit rising global temperatures to avert a climate catastrophe.
A spokesperson for Offshore Energies UK (OEUK), which represents the UK’s offshore oil and gas sector as well those in carbon capture, said the industry is committed to net zero and wants to reduce its operational emissions by 50% by 2030.
Enrique Cornejo, the OEUK’s head of energy policy, said:
“The UK’s offshore energy sector is fully committed to net zero. Our greenhouse gas emissions in 2022 were down by more than 24% compared with 2018 and the sector is committed to meeting the 50% emissions reduction target for 2030.”
“Our supply chains and skills will also be essential to underpin the scale up of [carbon capture and storage]. CCS technologies are crucial for the UK to meet net zero. Alongside emissions reductions, CCS has an important role to play in the UK’s energy security, both as an enabler of low-carbon hydrogen production and through the development of power-to-CCS.”
Kaisa Kosonen, a policy coordinator at Greenpeace International, said in industry’s “smoke and mirrors game with carbon capture and forest offsets is no longer fooling anyone”.
Kosenen added:
“Aligning with the Paris Agreement means scaling up renewable energy solutions while scaling back oil and gas operations, a message that needs to come clearly from governments at Cop28,”
Hunt’s tax cuts mean austerity ‘more painful’ than under Osborne, warns IFS
Rishi Sunak’s government has laid the groundwork for a “more painful” austerity drive after the next general election than during the decade of belt-tightening under George Osborne, leading economists have warned.
A day after the chancellor’s autumn statement, the Institute for Fiscal Studies said Jeremy Hunt’s £20bn package of tax cuts was almost entirely funded by swingeing real-terms reductions to public spending planned from 2025.
Having sought to blunt the highest tax levels since the second world war, details contained in the chancellor’s plans showed persistently high inflation is on track to slash almost the same amount from public service spending power by 2027.
While the government is committed to funding for key areas – including the NHS, schools, defence and overseas aid – economists said unprotected departments would face deep reductions in their budgets without a rapid change in course.
Paul Johnson, the director of the IFS, said the scale of the cuts would be harder to achieve because they would come after the era of austerity kickstarted by the former chancellor Osborne after the Conservatives came to power in following the financial crisis.
Johnson said:
“That was painful. Doing it again will be more painful still. Mr Osborne made his cuts after a decade of big spending increases. Mr Hunt, or his successor, will have no such luxury.
Turkey raises interest rates to 40%
Turkey’s central bank has surprised analysts by hiking its key interest rate to 40%, as it tries to battle inflation.
That’s a rise of five percentage points, from 35%, while economists had expected a smaller rise to 35.7%.
The Central Bank of the Republic of Turkey acted after inflation was clocked at 61% in October, little changed on September.
Timothy Ash, emerging markets strategist at BlueBay Asset Management, hailed the move, telling clients:
“Really impressive move by the CBRT [Central Bank of the Republic of Turkey] - probing their orthodoxy and getting well ahead of expectations.
“These guys and girls are serious about fighting inflation.
We need to give them credit for that.”
Today’s hike extends a policy tightening that began after President Recep Tayyip Erdoğan was re-elected in May.
Erdoğan had pushed for lower borrowing costs in recent years, which prompted the central bank to lower rates through 2022, and down to 8.5% by early this year. Those loose policies weakened the lira, lifting the cost of imports and adding to inflation.
Boom! Turkey hikes by 500bps vs expected 250bps, bringing the real policy rate very close to positive territory and a policy anchor closer to reality. The new poster kid of frontloading! pic.twitter.com/ZntcelYIlh
— Natalia Gurushina (@NGurushina) November 23, 2023
One of China’s biggest financial conglomerates with links to the country’s ailing property market has admitted a shortfall of nearly £30bn as it warned investors that it is “severely insolvent”.
Zhongzhi, an asset and wealth management company in China’s shadow banking sector, said its total assets amounted to 200bn yuan (£22.5bn) against obligations of up to 460bn yuan, in a letter to shareholders issued on Wednesday.
In the letter, the company blamed its brewing insolvency crisis on the departure of several senior executives, which left a situation in which “internal management ran wild”, the Financial Times reported.
The group’s troubles first came to light when one of its trust companies, Zhongrong International Trust Co, missed payments on several investment products over the summer. Zhongrong’s assets are thought to be largely property-related.
MPs to quiz Wilko bosses about chain's collapse
The former bosses of collapsed retail chain Wilko, and the firm’s auditors, are to appear before MPs next week to explain how and why the firm collapsed.
The Business and Trade Committee says it will ask Lisa Wilkinson, former Chair of Wilko, and former CEO Mark Jackson, why the Wilkinson family took millions of pounds in dividends out of the firm, even when it was heavily indebted.
MPs will also examine what attempts were made to save the business and whether crucial advice was ignore, and why there was a £50m shortfall in the company’s pension fund.
Wilko collapsed last summer, with the loss of more than 400 stores and 12,000 jobs.
Representatives from auditors EY will also attend the hearing, which takes place on Tuesday, as will experts including Nadine Houghton, national officer at GMB.
Houghton says:
“It’s only right Wilko bosses should be forced to explain themselves to MPs.
“They ignored all warnings about their company’s financial future - lining their own pockets and dishing out millions to shareholders before leaving 10,000 people jobless.
“Wilko workers deserve answers from the company that crushed their livelihoods, while UK taxpayers will want to know why they’ve had today millions in redundancy payments.
“Hopefully the select committee will get those answers.”
Updated
Back in the eurozone, the head of Germany’s central bank has warned the European Central Bank to resist any temptation to cut interest rates early, despite signs that Europe’s economy is struggling.
Bundesbank President Joachim Nagel argued that the most difficult part of fighting off the recent inflation surge could still be ahead
In a speech in Milan, Nagel said:
“We are faced with the most difficult part of our journey forward.
We need the patience to wait for the full effect of policy tightening on inflation to materialise.”
Yesterday, though, the ECB warned that there are “early signs of stress” on the balance sheets of eurozone banks, due to rising loan defaults and late payments by customers.
Paul Swinney, director of Policy and Research at the think tank Centre for Cities, has welcomed the news that Nissan is expected to commit to manufacturing future electric versions of its two best-selling cars in Sunderland.
Swinney said:
“Nissan’s re-commitment to building in Sunderland is a great boost for the city.
“It employs many thousands of people, and it supports the cafes, bars and restaurants through the money that it puts in people’s pockets.
“That said, the city is currently very much more reliant on the automotive sector than most other cities are on their key industries.
“Sunderland needs more than one engine of growth if, should Nissan ever decide to leave, its departure doesn’t have the same impact that the closure of the mines and shipyards had.
“This is why the ongoing changes in the city centre, and the proposed Crown Works film studios by the River Wear are so important to bring not just more jobs, but more higher-paid jobs to the city.”
Over in France, minister are fretting that their credit rating could be downgraded next week.
French finance minister Bruno Le Maire has warned that the country’s borrowing costs would rise if it is downgraded by S&P Global Ratings, which is due to release an update next Friday (1 December).
Le Maire told France Info radio:
“Of course the risk exists, I’m perfectly aware of that, which is why I am intransigent on reducing debt and deficits.
If our rating was downgraded tomorrow, that would mean interest rates would be higher again, we’d borrow at higher cost, and throw billions of euros out the window to pay interest.”
Le Maire Says French Debt Costs Would Rise On S&P Downgrade - BBGhttps://t.co/4yXNcmnGfe
— LiveSquawk (@LiveSquawk) November 23, 2023
Full story: Nissan to secure UK’s largest car plant with two new EV models
Nissan is expected to announce it will build two new electric models in Sunderland, securing the future of the UK’s largest car factory.
The Japanese carmaker will build replacements for its Qashqai and Juke crossover cars, according to Sky which first reported the news.
Investment in the factory could reach as much as £1bn, with significant government subsidy expected.
It comes after the chancellor, Jeremy Hunt, announced £2bn of government support on Wednesday for investments in zero-emission technology in the UK’s automotive sector. Hunt said in his autumn statement that the measure had been “warmly welcomed by Nissan and Toyota”, both of which have large factories in Britain.
Paul Johnson, head of the Institute for Fiscal Studies, has put his finger on the problem with Jeremy Hunt’s tax cuts – they are effectively paid for by planned real cuts in departmental government spending.
Johnson told a briefing this morning that higher inflation is expected to lift tax receipts in the next few years.
Departmental spending, though, is only forecast to rise a little in the guidance the Treasury gave to the OBR (which is implausible given the demands on government).
Johnson says:
There were two substantial tax cuts – cuts to NICs and making full expensing in corporation tax permanent. Yet the projected tax burden is still set to reach 37.7 per cent of GDP by the end of the forecast period: its highest ever level in the UK.
Effectively those cuts offset the additional revenue generated by that additional inflation.
Put another way, the tax cuts are paid for by planned real cuts in public service spending.
Our Politics Liveblog has all the latest reaction to the autumn statement:
Following this morning’s PMI survey, the EY ITEM Club has predicted UK GDP should avoid a contraction in Q4 as the drag from strike action on public sector output fades.
But the prospect of another flatlining quarter remains, they warn, following stagnation in July-September.
Martin Beck, chief economic advisor to the EY ITEM Club, says:
“November’s flash S&P Global/CIPS survey offered some encouragement, suggesting that private sector activity flatlined rather than declined that month, in contrast to the surveys of late summer and autumn. The composite PMI rose to 50.1 from October’s 48.7. This rise was partly driven by the services sector, with the flash services PMI rising to 50.5 from 49.5. The output balance of the flash manufacturing survey also strengthened to 47.9 from 44.3 in October, albeit remaining in contractionary, sub-50 territory.
“The relationship between the S&P/CIPS surveys and official output data has been weak of late. This is partly because the surveys only cover the private sector, so have been unable to capture the impact of public sector strikes on GDP. Given the number of working days lost to strike action has fallen in Q4 2023 so far, this should mean that GDP growth comes in stronger than signalled by recent PMIs. Still, even with this boost, the EY ITEM Club thinks the economy will struggle to grow in Q4.
Package holiday operator Jet2 has flagged an easing of demand for winter holidays.
Jet2 told shareholders this morning that bookings for this winter have been “a little slower in recent weeks”.
Jet2 also posted a 19% rise in operating profits for the six months to the end of September, despite several challenges.
Jet2 says it remains on track to hit expectations for this financial year. And looking further ahead, bookings and pricing for next summer are “encouraging”, at this early stage.
Jet2’s operations were disrupted by the failure of the UK’s National Air Traffic Services in August, Rhodes wildfires and flooding in Skiathos which resulted in approximately £14.0m of lost profitability.
There is some relief that that UK PMIs show a marginal return to company growth this month.
Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, says the rise in the UK PMI to 50.1 (just above stagnation) is “some rare positive news” on the state of Britain’s economy.
The rebound in services activity, in particular, should somewhat allay concerns over the possibility of a UK recession, and we remain quietly hopeful that a contraction in GDP will be avoided in the final quarter of the year.”
Wall Street bank Citigroup has said it expects the Bank of England to deliver its first rate cut in August next year, later than its earlier expectation of May, as national insurance rate cuts, as well as personal tax cuts, add to inflationary risks, Reuters report.
Economists at Citi said in a note dated November 22 they expect a 100 basis points of cuts through 2024 and that monetary policy must “not only wait for clear evidence that wage inflation has eased, but also that fiscal policy will not use any subsequent space to meaningfully increase the risk.”
“The implication is almost certainly waiting far too long to begin to loosen,” they added.
Updated
The pound has inched up 0.2% against the euro this morning to €1.1491, following the PMI surveys from across Europe.
Simon Harvey, head of FX analysis at Monex Europe, says:
November’s flash PMIs once again support our view that the UK economy is merely in a state of stagnation as opposed to outright contraction, like that seen in the eurozone.
In conjunction with structural supply issues which should keep short-term UK rates higher for longer relative to the eurozone, we expect the UK’s better relative growth prospects to support renewed upside in GBPEUR.
This has broadly been on display this morning, with the cross rallying two tenths of a percent as the PMI reports show diverging economic momentum and more credible inflation pressures in the UK, leading UK-eurozone rate spreads to widen.
Updated
There are also new recession fears in the eurozone this morning.
The latest eurozone composite PMI output Index remained in contraction territory this month, rising to 47.1 from October’s 46.5.
The survey found that business activity in the euro area continued to fall during November, amid a further solid decline in new orders.
That’s a worse PMI reading than in the UK, of course:
Some unexpected good news on the #UK economy: flash #PMI Composite Output Index recovered to 50.1 in November (from 48.7 in October).
— Julian Jessop (@julianHjessop) November 23, 2023
Still only consistent with flat activity, but at least the UK appears to be avoiding the #recession now engulfing the eurozone (PMI just 47.1) 👇 pic.twitter.com/q9Jn7c76sK
Despite rising more than expected to 50.1 in November, the UK PMI is at a level that “historically, has been consistent with a contraction in real GDP”, says Ashley Webb, UK economist at Capital Economics.
Today’s PMI survey (see previous post) shows that the UK is still not completely out of the “inflationary storm”, warns Dr John Glen, chief economist at CIPS.
Glen adds:
“The overall uptick in activity was driven by the services sector, which benefited from the pause in the hiking of interest rates and improving business conditions. However, challenges persist for UK manufacturing, with subdued demand leading to decreasing production volumes.
Manufacturers will be hoping the permanent extension of the full expensing tax break and the further investment into strategic manufacturing announced in yesterday’s Autumn Statement will give the sector the timely boost it needs.
UK still faces “elevated” recession risks, as new orders fall again
Newsflash: The UK economy still faces “elevated” recession risks as the new year approaches, new economic data shows, despite a small pick-up in business growth this month.
The latest poll of purchasing managers at UK firms shows a marginal return to growth in November, after three months of contraction.
The Flash UK PMI composite output index, which tracks activity across the economy, has risen to 50.1 from October’s 48.7. That’s the first time in four months it has been above the 50-point mark showing stagnation.
The services industry returned to growth, while manufacturing shrank at a slower rate, according to data provider S&P Global Insight.
They say:
Relief at the pause in interest rate hikes and a clear slowdown in headline measures of inflation are helping to support business activity, although the latest survey data merely suggests broadly flat UK GDP in the final quarter of 2023.
United Kingdom Composite Purchasing Managers' Index: 50.1 - https://t.co/v2YGlc1JOL
— Investing.com UK 🇬🇧 (@uk_investing) November 23, 2023
Manufacturing PMI: 46.7
Services PMI: 50.5#PMI #UK #economy #BREAKING_NEWS pic.twitter.com/zZpFtk9Omk
However, some companies reported that reduced discretionary consumer spending and cost-of-living pressures were hitting sales.
Total new work decreased for the fifth month running.
And in a blow to consumers, firms hiked their prices in November as they passed on strong wage inflation and higher fuel costs.
Those input cost pressures picked up for the first time in four months, leaving to a rise in output costs.
That could alarm the Bank of England, which is already worried that domestic inflation pressures will remain persistent.
Tim Moore, Economics Director at S&P Global Market Intelligence says the UK economy “found its feet again in November”, but warns:
“The survey’s forward-looking indicators suggested that recession risks will likely remain elevated into the New Year, as new orders decreased for the fifth month running amid ongoing reports of subdued sales opportunities.
At the same time, business activity expectations held close to October’s recent low and remained notably soft in comparison to the first half of 2023.
Updated
Resolution Foundation are presenting their autumn statement analysis now – you can watch it here.
In their analysis, they show that the UK’s economic past looks better than expected, but the economic future looks “grim”.
The improved past is because of recent upgrades to historic GDP, which show a stronger recovery from the pandemic than first thought.
But the future looks less rosy, with an economic slowdown delayed rather than cancelled: growth in 2024 is now forecast to be 0.7%, more than halved from the 1.8% forecast in March.
James Smith, research director at the Resolution Foundation, says this is the “weakest growth backdrop to a general election in over three decades”.
Smith adds that you have to go back to 1992 to find an election year “where we were in quite such weak growth”.
Updated
Here’s our news story about how Jeremy Hunt’s tax cuts benefit the wealthiest:
Some of the policies announced this week by Jeremy Hunt are potentially inflationary, says Emma Wall, head of investment analysis and research at Hargreaves Lansdown.
She told CNBC that the 8.5% increase in the state pension from April, and the near-10% rise in the national living wage, will lead to increased demand and higher spending.
Wall points out that the UK now isn’t expected to hit its target of 2% inflation until the second half of 2025.
She also says markets noted the cuts to GDP forecasts, with growth in 2024 halved.
"Some of the policies are inflationary," @EmmaSmWall tells CNBC's @dan_murphy after UK Chancellor @Jeremy_Hunt rolled out tax cuts in an election-orientated Autumn Statement. pic.twitter.com/beLFYFjZzo
— CNBC Middle East (@CNBCMiddleEast) November 23, 2023
Updated
On the tax cuts announced yesterday, “It seems like the chancellor has taken away with both hands and now he’s giving back with one”.
That’s the verdict of Nina Skero, the CEO of economics consultancy Cebr, speaking to Bloomberg TV this morning.
Skero explains that the cut to national insurance means Hunt is only giving back around a quarter of what’s being taken away by keeping tax thesholds frozen, rather than uprating with “very, very high inflation”
And on business taxes, making full expensing permanent does not make up for the very high business tax increases in recent years, Skero adds.
"It seems like the chancellor has taken away with both hands and now he's giving back with one"
— Bloomberg UK (@BloombergUK) November 23, 2023
Jeremy Hunt cut taxes in his Autumn Statement — but dig into the detail and it's not as simple as that, economist Nina Skero tells @lizzzburden https://t.co/jVGQjFA52O pic.twitter.com/NFxBbJ22LM
The fiscal measures announced by Jeremy Hunt will do very little to stimulate investment and economic growth, warns Professor Costas Milas, of the Management School at University of Liverpool.
Professor Milas tells us:
The tax break for companies that invest in new equipment will be made permanent which is a good move. All other fiscal give-aways (such as state-pension increases and “minimum” wage increases above current inflation) will most likely be seen by the BoE as inflationary and therefore delay any interest rate cuts, which, of course, will undermine investment planning.
What worries me most is, however, policy uncertainty. In a brand new co-authored paper, I find that what has hammered Foreign Direct Investments (FDIs) in the UK is persistently high policy uncertainty since the Brexit vote which makes investors (whether domestic or international ones) unwilling to invest in the UK.
One implication here is that uncertainty about the timing of the forthcoming general election will take priority over permanent tax breaks in investment decisions and therefore undermine our economic growth prospects…
Earlier this week, deputy Bank of England governor Sir Dave Ramsden warned that the outcome of the Brexit vote and years of political uncertainty it triggered has had “a chilling impact” on business investment in Britain.
Companies such as telecoms giant BT should benefit from Jeremy Hunt’s decision to make full expensing permanent.
That policy allows businesses to offset investment in items such as new IT equipment and factory machinery against tax.
Shares in BT Group jumped 3.7% yesterday, as traders calculated that permanent full expensing would help BT, as it spends billions of pounds rolling out high-speed internet infrastructure.
$BT gains on confirmation that the #UK’s ‘full expensing’ tax cut is to be made permanent, the reduction in #tax payments could bring a very material benefit to BTs reported free tax flow.
— Saxo (@saxobank) November 23, 2023
Find out more here: https://t.co/sjQLic2m3y#stocks #trading #BTGroup pic.twitter.com/7GCwtUH2KB
And this morning, BT are the top riser on the FTSE 100 index of blue chip shares, up another 1.7%.
The broader market reaction to the autumn statement was rather muted – certainly less dramatic than after the mini-budget of September 2022.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:
The 100% tax relief – the so-called ‘full expensing’ - is good for businesses that invest in big machinery but in a service-focused economy like the UK’s, the benefits will likely remain limited.
As the Guardian reported last night, the cut in workers’ national insurance contributions announced yesterday has fuelled speculation about a snap spring general election.
But, City consultancy Capital Economics warned last night that yesterday’s pre-election splurge from Jeremy Hunt will be followed by a post election squeeze.
Capital Economics also suggested that Hunt’s tax cuts will make it harder to cut UK interest rates soon, saying:
The net giveaway the Chancellor announced in the autumn statement is designed to curry favour ahead of an election late in 2024. However, fiscal policy is still being tightened in 2024/25 and it looks as though whoever wins the election will have to implement a big squeeze on real spending.
What’s more, the near-term boost to the economy from the new tax cuts may just mean inflation is a bit higher than otherwise. This supports our view that the Bank of England won’t cut interest rates from 5.25% until late in 2024.
Updated
Simon French, chief economist at UK investment bank Panmure Gordon, says the autumn statement was a “decent fiscal event”.
He welcomes the focus on stimulating business investment through permanent full expensing of new plant and machinery (allowing companies to offset this spending against their tax bill).
But there were also “big picture areas” where the Chancellor was silent, French warns, adding:
The most salient was on public sector productivity – an arena that has been a weeping sore at the heart of the public finances for a quarter of a century.
Here’s a thread with more analysis:
Some thoughts from me on the #AutumnStatement in todays’s @TimesBusiness This was a decent fiscal event - in my view - with some more detailed observations in a 🧵 below (1/n)https://t.co/w3iaE9c1bG
— Simon French (@shjfrench) November 23, 2023
First thing - the @OBR_UK economic outlook was simultaneously a larger U.K. economy & lower growth rates than in March. How can these two things be true? Well the big ONS upgrade in August - that was largely absent from comment yesterday - framed all the fiscal choices (2/n)
— Simon French (@shjfrench) November 23, 2023
Turning to choices - whilst it was written up by many as an “election budget” actually the big interventions tally with addressing long-dated themes (underinvestment, preferential treatment for non-labour income, reversal in self employment). V little Labour disagrees with (3/n)
— Simon French (@shjfrench) November 23, 2023
Throughout the Statement there were signs of HMT engagement with OBR on supply measures. Some may accuse govt of leaning on its independent fiscal watchdog, but is there greater contrast with mini budget & market reaction? (albeit inflation/energy backdrop also v different) (4/n)
— Simon French (@shjfrench) November 23, 2023
Is this package inflationary? Well the decision to uprate UC, pensions (+6.7%;+8.5% respectively) & cut NICs does introduce > aggregate demand than baseline, so it hinges on whether supply side responds. Immigration data today will show that one part of supply picture is! (5/n)
— Simon French (@shjfrench) November 23, 2023
But while this was a “decent report card” for the Chancellor there were a couple of areas that were underwhelming. Public sector productivity & capital market reforms. On productivity - the dire data (productivity up by less than 5% since 1997!) there was no sign of a plan (6/n)
— Simon French (@shjfrench) November 23, 2023
Every fiscal event as far as the eye can see will be hard without a concerted effort on public sector productivity. Funding for depts after the next GE looks very tight (as many have noted) and excitable words on AI, Maude review & back to office edicts are no substitute (7/n)
— Simon French (@shjfrench) November 23, 2023
Any incoming government will face this problem and the idea that the tax burden can move off a post WW2 high of 38% without progress in this area is laughable. Big job for new CST Laura Trott ahead of March Budget, and for successor CSTs. (8/n)
— Simon French (@shjfrench) November 23, 2023
Finally on Capital Markets. One investor said to me “an autumn statement is no place for such reforms”. They may be right, but ministers lined this up themselves. The policy response was underwhelming. It might need a very high profile plc to delist for the penny to drop (9/n)
— Simon French (@shjfrench) November 23, 2023
The increase in energy bills announced this morning is the last thing families need as we approach Christmas, says TUC general secretary Paul Nowak:
“Energy bills are already 50% higher than two years ago. And this year minsters have removed any government support with energy costs— so today’s rise will just hammer households even harder.
“It didn’t have to be this way.
“The Conservatives could have helped bring down bills by imposing a proper windfall tax on the likes of Shell and BP. But they left billions on the table.
“And instead of investing in improvements for draughty homes, they have left people out in the cold.”
Energy bills in Great Britain to rise by 5% from January as cap hits £1,928
Newsflash: Households across Great Britain will begin the new year with a 5% increase in energy bills after the regulator raised the price cap to an average of £1,928 a year for the typical gas and electricity bill.
Ofgem has just announced it is raising the maximum price that energy suppliers can charge their customers from £1,834 a year for the typical household between October to December.
The rise follows a rise in global gas market prices after the start of the Israel-Hamas war last month.
From January to March the price cap will rise to £1,928 a year, which will determine the energy bills for most households.
Jonathan Brearley, CEO of Ofgem, said:
“This is a difficult time for many people, and any increase in bills will be worrying. But this rise – around the levels we saw in August – is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price that we all pay.
“It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.
Here’s the full story:
Reminder: the cap restricts the price of a unit of energy – there’s no limit on the maximum bill a customer can run up.
Nissan set to build two new electric models at its Sunderland plant
In a boost to the UK car industry, Nissan is expected to commit to manufacturing future electric versions of two of its best-selling models at its Sunderland plant.
Nissan will announce it will build new electric Qashqai and Juke models at the Sunderland site - a decision that will help safeguard thousands of jobs there.
The decision, after months of talks involving Rishi Sunak and Jeremy Hunt, is expected to be announced tomorrow.
According to Sky News, Nissan has been promised a significant government funding guarantee, although it was unclear whether any taxpayer cash would be provided up front.
Exclusive: Nissan will announce on Friday that it will build electric versions of the Qashqai and Juke models at its plant in Sunderland in a major boost for Britain's biggest car manufacturing site. The project will involve a major investment from the Japanese carmaker...
— Mark Kleinman (@MarkKleinmanSky) November 22, 2023
2/2...and government support in the form of a guarantee from taxpayers. Both PM Rishi Sunak and chancellor Jeremy Hunt, who used today's autumn statement to write a £4.5bn cheque to advanced UK manufacturing, are likely to be involved in the announcement. https://t.co/QrPs1HGiQK
— Mark Kleinman (@MarkKleinmanSky) November 22, 2023
Petrol-powered Qashqai and Juke cars are currently made at the Sunderland site, where about 6,000 workers are employed, so this decision should remove any lingering uncertainty over the future of the plant.
Nissan warned in 2019 that uncertainty over Brexit was affecting businesses. But in 2021 it committed to its Sunderland plant after the Brexit trade deal was agreed.
Updated
Introduction: Richest benefit most from autumn statement
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Richer Britons benefit most from yesterday’s autumn statement, new analysis of Jeremy Hunt’s announcement shows.
The Resolution Foundation have calculated that about 40% of the gains from the tax and benefit measures announced yesterday will go to the richest fifth of the population.
Those measures include cutting the main 12% rate of employee national insurance contributions by two percentage points to 10% from January, the start of an election year.
The top 20% will gain £1,000 on average from Hunt’s changes, five times the £200 gains seen by the bottom fifth, Resolution says.
The IPPR came to a similar conclusion – they worked out yesterday that for every £100 Jeremy Hunt spent on personal tax cuts, £46 will benefit the richest fifth of households. Only £3 of every £100 of tax cuts will go to the worst-off families, they say.
Yesterday, the New Economics Foundation calculated that poorest households will be over £200 per week short of an acceptable standard of living following the autumn statement.
🚨NEW: Following the Autumn Statement, our analysis shows the poorest quarter of households will be over £200 a week short of what they need for an acceptable standard of living by April 2024.
— NEF (@NEF) November 22, 2023
The reality is this budget will make people poorer. pic.twitter.com/GBNXINRVCc
But despite yesterday’s giveaways, the tax burden is still heading towards a post-war high. Yesterday brought £20bn of tax cuts, but that must be set against around £90 billion of tax rises (including higher Corporation Tax) already announced this parliament.
Resolution says:
So despite the tax-cutting rhetoric, taxes are rising by 4.5 per cent of GDP between 2019-20 and 2028-29, equivalent to £4,300 per household.
Taken together, Resolution says, all the tax and benefit measures announced in this parliament remain progressive, with the richest fifth of households set to lose £1,100 on average, while the poorest 20% gain an average of £700.
The autumn statement, though, was also based on a squeeze on government departments over future years – which would erode £19bn from the real value of departmental budgets. Such a plan is simply implausible, given inflationary pressures on departments.
Torsten Bell, chief executive of the Resolution Foundation, explains:
“Jeremy Hunt yesterday got his pre-election giveaways in early, with an autumn statement offering tax cuts today, at the price of implausible spending cuts tomorrow. Well-targeted specifics, addressing problems such as our tax system’s bias against working-age earnings or benefit system’s failure to keep pace with fast rising rents, were juxtaposed with far less well-designed big picture fiscal choices. Tax cutting rhetoric clashed with tax rising reality, and positive steps to encourage business investment combined with a growth sapping hit to public investment.
“Ultimately this reflects the pressures, not only of an upcoming election, but of governing a sicker, older, slower growing Britain, amidst an era of far higher interest rates.
“That might be difficult for policy makers, but it’s a disaster for households whose wages are stuck in a totally unprecedented 20 year stagnation. This parliament is set to achieve a truly grim new record: the first in which household incomes will be lower at its end than its beginning.”
Resolution have also calculated that renters in Inner South London, Inner Greater Manchester and Bristol benefit most by the decision to re-peg Local Housing Allowance at the 30th percentile of rents in 2024-25.
But overall, the UK us also facing a “grim new record on living standards”, Resolution adds:
With just a year to go until the next general election, this parliament is on track to be the first in which real household disposable incomes have fallen (by 3.1 per cent from December 2019 to January 2025). Households will on average be £1,900 poorer at the end of this parliament than at its start.
We’ll hear more from Resolution, and the Institute for Fiscal Studies, and other economists through the day.
The agenda
9am GMT: Resolution Foundation holds briefing on the autumn statement
9am GMT: Eurozone ‘flash’ PMI survey of manufacturing and services sectors
9.30am GMT: UK ‘flash’ PMI survey of manufacturing and services sectors
10.30am GMT: Institute for Fiscal Studies holds briefing on the autumn statement
Updated
