Some Budget tax reforms really are better than others
In the absence of leaks ahead of next week, we’ve been deluged with wrong-headed calls for cuts
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In the absence of leaks ahead of next week, we’ve been deluged with wrong-headed calls for cuts
The Week Ahead (26 – 30 Oct): Interest Rates, UK Budget, US Hyperscalers, UK Oil Majors StockopediaAI trade meets…
Next week, John Healey is expected to reveal plans for a number of cost-of-living measures while increasing taxes for banks and gambling firms.
The chancellor is preparing to deliver his first Budget on October 28
Guardian Europe columnists Rokhaya Diallo and Alexander Hurst will be live taking questions from readers about the riots and protests in France at 3pm BST / 4pm CEST today. Send your questions by email now to conversations@theguardian.com or join the discussion in the comments nowAfter weeks of protests and a weekend of riots in which a town hall was set ablaze, 2,000-plus shops were looted, 2,300 people were arrested and 1,000 police injured, the repercussions for France – for its society and its economy – continue.
Allegations of police brutality surfaced, and the violent protests unnerved investors, resulting in a debt sell-off, with borrowing costs rising higher than for Greece. All of this ahead of a hotly contested presidential election that’s now just six months away.The French government’s escalating financial problems were covered by the Guardian’s Europe correspondent Jon Henley who wrote: “France’s national debt, at 119% of GDP, is at its highest level since 1946. Its budget deficit, at 5.1%, is also among the highest in the EU.
There is just no money in the bank to ease the cost of living squeeze that brought 550,000 people on to the streets on Saturday.” Continue reading...
According to the credit rating agency, Hungary’s 2027 draft budget supports its aim of meeting the conditions for adopting the euro by the end of the decade.
Rolling coverage of the latest economic and financial newsWhile less red tape will be welcome news for small businesses, the chancellor is still facing pressure from bigger companies in the UK for more support.Earlier this month some of the UK’s biggest retailers and hospitality businesses, including Tesco, Costa Coffee and the Co-op, met John Healey to urge him to cut the cost of employing young people in his first budget.It’s not right that pointless bureaucracy gets in the way of people working hard to build something that matters to their high street.So we’re getting government off their backs and giving businesses the breathing space to grow.
Because when businesses succeed, they create good jobs, strengthen their communities and bring growth to every part of the country.”British firms are fed up with form-filling and pointless paperwork that eats into valuable time and money when they simply want to get on with running their businesses.That is why we are cutting unnecessary bureaucracy and giving businesses the breathing space they need to invest, innovate and create good jobs.”The test now is delivery.
Cutting unnecessary admin can free firms to invest, compete and grow – and business will want to see that ambition translated quickly into meaningful reductions in the burden they face.” Continue reading...
High inflation, low growth and rising unemployment can be added to the federal treasurer’s wall of worriesGet our new political email, free app or daily news podcastJim Chalmers in a speech last week offered the scant encouragement that the economy would be “a bit better” in a year’s time.Fast forward to Friday morning, and the treasurer revealed that his officials were busy downgrading their forecasts ahead of December’s mid-year budget update to show slower growth and higher unemployment.
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That wince you just made while researching travel options? Get used to it.Why it matters: Soaring jet fuel prices are accelerating changes across the airline industry, seen in higher fares, premium-heavy cabins and fewer flight options for travelers. Airfares rose 22% year over year in September, marking a 10th straight monthly increase in the government's airfare price index, which hit an all-time high.State of play: All the major airlines are feeling the pain:American Airlines reported today that its fuel bill jumped nearly 70% in the third quarter from a year ago, adding $1.9 billion in costs and undercutting its revenue growth.Southwest and United Airlines both slashed their profit forecasts this week on higher fuel costs.And Delta Air Lines expects its fuel bill this year to come in $6 billion above last year's.The impact: To protect their bottom lines, airlines are raising fares and turning to more premium seats to squeeze more revenue out of their flights.At Southwest, the average passenger fare rose 26.9% to $231.69 in the third quarter, compared with a year earlier — and that doesn't include fees.Delta's premium seating revenue jumped 18% in the third quarter, even though the number of premium seats rose only 6%.What they're saying: The airlines have few options to make up for extra fuel costs other than fare increases, said Scott Keyes, founder of flight-deal service Going.com."None of them are hedging fuel the way they used to, in large part because they had a pretty terrible experience with it," Keyes said in an interview.The big picture: Airline executives, however, see these changes — many of which were already underway — as a necessary new normal.This year's fuel spike has only "accelerated" change, Delta CEO Ed Bastian said on the company's earnings call on Oct.
9."Regardless of the next move in fuel prices, the forces reshaping the U.S. airline industry will continue with many carriers struggling to earn their cost of capital well before the run-up in fuel," he said.United CEO Scott Kirby told investors Wednesday that the industry's underlying costs — including airport fees, maintenance and engines — have increased so much in recent years that airlines must fundamentally change their economics.Zoom in: Executives echoed Bastian's comments on pricing from earlier in the month, suggesting this week that the higher fares and other changes to protect profitability are likely to remain in place even after jet fuel prices ease."I'm pretty confident that we're not going to take steps backwards in pricing," Kirby said.
"I think we're demonstrating this year that it's different this time."American CEO Robert Isom said the fuel price spike "has just been a catalyst to allow us to realize that there is value," referring to the strong demand from customers willing to pay higher fares.And airlines are becoming increasingly reluctant to operate flights that don't make money — potentially leaving travelers with fewer options.United's Kirby predicted that trend will continue across the industry.
"One golden rule — don't fly places that lose money," he said on the company's earnings call. "There's going to be less loss-making flying," he predicted.Zoom out: The fallout from higher fuel prices — triggered largely by the war in Iran, which has throttled supplies — started with the shutdown of Spirit Airlines earlier this year.While Spirit's troubles were many, the fuel price spike was widely seen as the last straw for the budget carrier.And its exit means it's now easier for airlines to get away with charging more to cover their extra fuel costs, Keyes said."Spirit's demise is another factor in why you're seeing airfare go up so precipitously because they and other budget airlines act as something of an anchor for airfare in general," Keyes said.The bottom line: Fuel prices may eventually come back down.
Don't count on airfares following.
I fell short of my goal and blew my budget. But here’s how joggers like me are keeping the economy running.
Treasury is revising all the numbers for the mid-year update as economists warn of a difficult six months aheadGet our new political email, free app or daily news podcastJim Chalmers has revealed December’s mid-year budget update will project weaker growth and higher unemployment, as economists warn of a difficult six months ahead for the Australian economy.Two days after a senior Reserve Bank official foreshadowed the potential for another interest rate hike in under two weeks’ time, the treasurer in a speech on Friday morning will say “higher inflation is putting people under pressure, tighter monetary policy is weighing on domestic activity, and we can see that in the softening of the labour market”.
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See if you can do a better job than John Healey at creating a budget that keeps MPs and the bond markets onsideOn 28 October, John Healey will announce the autumn budget to parliament. As in all years, the chancellor has to strike a balance between the following:Raising the money needed to fund the services that voters demand.Keeping taxes at levels that are acceptable to voters.Persuading the government’s creditors in the bond markets that it will continue to be able to pay its debts.
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Sainsbury’s said it saw shoppers buying greater volumes of products, as price inflation slowed over the period
UK bank says 1,000 job cuts already done with a further 4,000 to go before year end, driven by advances in AI, described as ‘icing on the cake’ by Barclays bossYou be the chancellor: play our budget game to see if you can balance the booksThe French 10-year government bond yield has risen above the equivalent US Treasury yield for the first time since 2013.The French yield, or interest rate, jumped 10 basis points to 5.09% this morning, while the 10-year US Treasury yield fell 4bps to 5.07%.I am disappointed and you can be sure this will get my attention.
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Expectations for the state of the economy over the next three months fell from minus 34 to minus 40 this month, according to new figures.
French bond yields have topped 5%, their highest level since 2002, after widespread protests and violence over the weekend. It's a sign that investors are losing confidence in France's finances, as the government grapples with budget and debt problems. Also in the show - chipmaker Nvidia says it's invested $10 billion in European tech firms to boost the 'AI economy,' and the UK approves a controversial natural gas field as PM Andy Burnham faces pressure over energy costs.