Rachel Reeves needs wider headroom against fiscal rules, ex-Bank of England deputy says
The former Bank of England deputy governor Charlie Bean has urged Rachel Reeves to create much wider headroom against her fiscal rules – a decision likely to require significant tax rises or spending cuts,Bean suggested that the current slim margin of less than £10bn, had led the chancellor to “fine-tune” the government’s tax and spending plans to meet the Office for Budget Responsibility’s (OBR) forecasts five years ahead,“Government spending is about one and a quarter trillion, so £10bn is a small number … and it is a small number in the context of typical forecasting errors,” he told BBC Radio 4’s Today programme,He added: “She should aim to operate with a larger margin of headroom, so previous chancellors have typically operated with headroom of the order of £30bn,“Because she has chosen about a third of that … it is very easy for numbers to go in the wrong direction and she finds she has to neurotically fine-tune taxes to control the OBR forecast that is several years ahead.
”Bean, who is also a former member of the OBR’s budget responsibility committee, added: “The original sin is that she should not have chosen to operate with such a tight margin of error.”Reeves increased taxes by a historic £40bn in her budget last October.However, with most of the proceeds earmarked for public services, she left herself on track to meet her strict fiscal rules with a relatively slim margin.That “headroom” was set to be wiped out before the spring statement in March, prompting the scramble for savings that led to the £5bn cuts to disability benefits, which Labour dropped this week after a backbench revolt.Reeves’s team privately acknowledge that the small headroom of less than £10bn she left herself against the forecasts has contributed to the challenges of the past 12 months – but argue that she had little choice given the poor fiscal inheritance left by the Tories.
Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe chancellor is widely expected to have to increase taxes in her autumn budget to close the gap created by U-turns on disability benefits and the winter fuel allowance, and because of the prospect of weaker economic forecasts.She insisted she was “cracking on with the job” on Thursday, after a tumultuous day on Wednesday in which bond markets dumped UK government debt amid speculation about the chancellor’s future.Creating an additional £20bn of fiscal headroom, as Bean suggested, would require tax rises equivalent to 2p on the basic and higher rates of income tax.
Trump threatens 17% tariffs on food and farm produce exports from Europe
Donald Trump threatened to impose 17% tariffs on food and farm produce exports from Europe during talks in Washington this week, it has emerged.Such tariffs would hit everything from Belgian chocolate to Kerrygold butter from Ireland and olive oil from Italy, Spain and France, all big sellers in the US.First reported in the Financial Times, sources confirmed that the EU trade commissioner, Maroš Šefčovič, was given the warning on Thursday when he met the US treasure secretary, Scott Bessent, trade representative Jamieson Greer and commerce secretary Howard Lutnick.EU ambassadors were briefed on the threat on Friday.The EU remains optimistic for a high-level political agreement, but the threat gives a flavour of the US’s continued aggressive negotiating position to extract a high price out of the EU, which Trump once described as “nastier” than China when it came to trade
How to balance the UK books: six options open to Rachel Reeves
Rachel Reeves is under pressure to tackle a multibillion-pound shortfall in the government finances.Labour’s high-stakes welfare U-turn and a spike in bond markets prompted by speculation over the chancellor’s position has dragged the government’s tax and spending plans into the spotlight.Ministers have warned of “financial consequences” after the backtracking on disability benefits and winter fuel payments for pensioners, which have a price tag north of £6bn.Alongside a sluggish economic outlook and possible downgrade in productivity forecasts from the Office for Budget Responsibility at the autumn budget, economists at Deutsche Bank predict that Reeves could face a £30bn shortfall against her self-imposed fiscal rules.This has raised questions over how the chancellor responds
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Lauren Sánchez packed 27 designer dresses for her wedding to the billionaire Amazon founder, Jeff Bezos, in Venice last week, but left with only 26 after one went missing.The couple, who are now honeymooning in Taormina, Sicily, were wed during a star-studded three-day celebration in the lagoon city.They left Venice on Sunday, but mystery over the missing dress has generated chatter in Venice, with Corriere della Sera claiming that it was stolen, possibly by someone who evaded security and gatecrashed a party on the tiny island of San Giorgio, where the couple exchanged rings, on Friday. The newspaper said the number of gatecrashers to the event was such that officers from the local unit of Italy’s anti-terrorism squad, Digos, were called to the island.The newspaper also alleged a vintage Dolce & Gabbana-designed dress, either worn by the bride or wedding guest Ivanka Trump, was torn and caught fire during another party
Scrutiny of Sam Konstas ramps up as West Indies keep second Test alive | Geoff Lemon
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Raducanu justifies primetime billing even as Sabalenka’s superpower wins out | Jonathan Liew
Britain’s No 1 was outpointed when her opponent raised her game but showed why she merits the hype and spotlight that surrounds herIt’s a little after 8pm by the time the first ball is tossed. Karen Khachanov has just beaten Nuno Borges on No 3 Court and so even before it has started Emma Raducanu v Aryna Sabalenka is the last game on anywhere at Wimbledon: a standalone attraction, the roof not so much closed as hermetically sealed. We are locked in, under these hot lights, until nightfall.And of course this is not simply a third-round game. At the behest of the broadcasters this is also a primetime television product, an item of light entertainment
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