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Here is a summary of the latest developments:
The budget’s “clean bill of health” with fiscal watchdogs should give investors confidence in Labour’s plans, Rachel Reeves has said amid market fluctuations. Asked about post-budget market movements on a visit to Newcastle, the chancellor told broadcasters: “I won’t comment on market moves, because markets move all the time. What I am confirming is that the International Monetary Fund has given our budget a clean bill of health and the Office for Budget Responsibility have confirmed that we meet our fiscal rules two years early. That should give confidence to investors that we have a plan to secure our public finances after the instability and chaos of the last few years.”
Reeves has been warned an extra £9bn of tax rises may be required to avoid a fresh austerity drive in key public services as her record tax-raising budget sent tremors through the financial markets. Threatening to undermine the chancellor’s claim that her budget would restore economic stability to Britain, government borrowing costs rose sharply in the City on Thursday as traders turned on Reeves’s tax and spending measures.
City traders warned the higher short-term borrowing levels set out in the budget threatened to derail the Bank of England from pushing ahead with a deep round of interest rate cuts. The pound also fell against the US dollar to its lowest for two months.
However, the Bank of England is expected to cut interest rates next week, despite forecasts that Labour’s autumn budget could lead to higher inflation over the coming year. Policymakers will announce the result of their November meeting on Thursday, where most analysts think they will trim the base rate by a quarter-point to 4.75%.
The UK is in a “very different world” compared with the turmoil which followed Liz Truss’s economic plans, a minister said on Friday as the government seeked to quell post-budget market jitters. Darren Jones, Reeves’s deputy at the Treasury, told Sky News that “markets always respond to budgets in the normal way”. “I think we’ve all got PTSD from Liz Truss,” he added.
Jones also defended the government paying £950 a day to a new value for money chair David Goldstone. Asked by LBC about Goldstone’s salary as the head of the Office for Value for Money (OVFM), Jones said: “It is right that we pay people for their time. We can’t expect people to work for free. That is an important way in which we do things in this country. Actually, the day rate for David is, on a benchmark basis, competitive.”
Liberal Democrat leader, Ed Davey, has raised concerns over the budget creating a “lost generation” of farmers. His comments came as he visited an agricultural college in Maidenhead on Friday. Davey said: “The government is at risk of creating a lost generation of farmers. Young people will lose the opportunity to keep the farms their families have run for generations, while at the same time they are seeing government support for farming slashed.”
The president of the National Farmers’ Union (NFU) has said he is “absolutely baffled” at the government’s decision to “double down” on inheritance tax on farms. Tom Bradshaw, who is meeting environment secretary, Steve Reed, on Monday, said the current plans to change agricultural property relief (APR) and business property relief (BPR) “need to be overturned and fast”. In an interview with the PA news agency, Bradshaw spoke of “tension”, “anger” and “frustration” among farming communities.
In a piece for The Daily Telegraph on Friday, Reed said he “understood farmers’ anxiety at any changes” but that changes to inheritance tax on farms would “make the system fairer”. He added: “Only the richest estates will be asked to pay, not small, family farms as some misleading headlines have claimed. Look at the detail and you’ll see that the vast majority of farmers will not be affected at all. They will be able to pass the family farm down to their children just as previous generations have always done.”
Reeves has been warned that her number one mission to boost Britain’s economy is at risk amid fresh evidence that the budget has damaged business confidence. In a snap poll of more than 700 members of the Institute of Directors, the lobby group said two-thirds felt negatively about the budget and thought that it would not support the government’s growth mission.
The rating agency Moody’s said the budget would do little to improve Britain’s economic growth, and said Reeves’s plans to add to government borrowing in the near-term would pose an “additional challenge” to repairing the public finances.
GP surgeries are not eligible for compensation, the government has confirmed in reference to a PA news agency report that suggested No 10 had hinted that GP surgeries could get help with NICs. The quotes from a No 10 spokesperson were not intended as a hint that extra NICs compensation was coming, government sources have indicated.
The Independent Schools Council (ISC) has said it will launch legal action against the government’s decision to impose VAT on independent school fees. The council, which represents more than 1,400 private schools in the UK and abroad, reached its decision after a board meeting held on Thursday.
Downing Street is confident changes to inheritance tax on farms will not impact food security and said there was adequate financial support available to farmers. A No 10 spokesperson said the government’s message was “clear that we are committed to supporting farmers”, adding: “It is expected that almost three-quarters of estates are expected to be unaffected by this.”
An EU citizen caught up in a Home Office backlog of applications for post-Brexit residency status has been forcibly removed from the UK. Costa Koushiappis, 39, a Greek Cypriot, was put onboard a plane to Amsterdam with only three days’ notice.
Planned strikes by London Underground workers in the RMT have been suspended, the union announced. Workers were due to take action on Friday evening and on several days in the coming weeks in a dispute over pay. The RMT said it had received an improved pay offer. Strikes by members of the drivers’ union Aslef next week and later in the month are still scheduled to go ahead.
GP surgeries will have to consider making staff redundant if the rise in employer national insurance contributions announced in the budget is not covered, the government has been told. Helen Morgan, health and social care spokesperson for the Liberal Democrats, added: “We are urging the chancellor to change course and exempt GPs from a tax hike.”
A care group has called on the government to exempt social care providers from the tax rise or ringfence funding to cover it. Independent Care Group (ICG) chair Mike Padgham said: “The government has to do something and it has to do it quickly, as I am already hearing from providers that this might be the last straw for some of them.”
Scottish councils say they must receive their fair share of new funds from the UK budget, as they called for “sustainable investment” in local authorities. Council umbrella body Cosla has written to the Scottish and UK governments seeking clarity on the funding arrangements, after Reeves said the Scottish government is now in line to receive £47.7bn in the next financial year.
The growth in UK house prices slowed unexpectedly last month, Nationwide said, as it warned buyers to expect a rush in transactions early next year sparked by changes to stamp duty rules in the budget. Robert Gardner, Nationwide’s chief economist, warned that the chancellor’s decision to remove the temporary increase to the nil rate for stamp duty next April could spark a rush to complete purchases before the changes.
Ryanair could cut flights to and from UK airports by 10% next year after Labour’s decision to increase the tax on airline tickets in the autumn budget. The airline’s chief executive, Michael O’Leary, criticised the spending statement on Friday, saying it has “damaged” UK growth prospects and “made air travel much more expensive”. Reeves said air passenger duty (APD) will rise from the 2026/27 financial year, adding up to £2 to the cost of an economy ticket for a short-haul flight.
Updated
Responding to the news that government sources have indicated that GP surgeries will not be eligible for compensation from the government’s employers NICs rise (see 1.36pm GMT), Liberal Democrat Treasury spokesperson, Daisy Cooper said:
The government must scrap this GP penalty immediately.
After years of the Conservatives disgraceful neglect, our primary care services are in crisis and this could push many to reduce the number of staff they employ or just decide to shut up shop.
Instead of investing in our GPs and their staff, the government has put more pressure on them in a move that will make it even harder for patients to see a GP when they need to.”
