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“Horrible for families, terrible for businesses, terrible for society as a whole, and electorally terrible for government.”
That was the verdict of Financial Times columnist Stephen Bosch on the biggest drop in household income in the UK since the 1950s, as detailed by the Office for Budget Responsibility yesterday along with Chancellor Jeremy Hunt’s autumn statement.
Other think tanks today faced further criticism of Hunt’s package of £30bn in spending cuts and £25bn in tax increases, which he hopes will stabilize the economy after the stunning collapse suffered by his Tory predecessors just last month.
The Institute for Fiscal Studies said Britain was entering a “new era” of higher taxes and public sector austerity because of its failure to create economic growth.
IFS director Paul Johnson said it was “a bleak place to be”, with “high borrowing, high debt, high taxes and yet so many public services feeling the pressure”. Or, as the Financial Times chief economic commentator Martin Wolf puts it, Hunt made no jam today and no jam tomorrow.
The Resolution Foundation has focused on Balance Sheet Office projections that show average wages will not regain 2008 levels until 2027. The UK has not experienced such a prolonged recession since the 1820s, according to figures calculated by the Financial Times.
Although Hunt hit back at accusations that he was targeting middle-income earners, there was more sign today of a strain on household finances, with Nationwide, the UK’s largest building association, warning of a rise in bad loans.
The political reaction on all sides was less than courteous. The right criticized the tax increases, while others lamented the failure to mention Brexit – a “special economic goal” as IFS’ Johnson called it – as a major source of the UK’s problems. Mark Littlewood, director of the Institute of Economic Affairs, said the statement was “a recipe for orderly decline,” not a plan for prosperity.
While business groups welcomed the decision to ease business rates, the Small Business Federation said investment would be hurt by Hunt’s tax raids, arguing that his plans were “high on stealth creation and low on wealth creation.” Experts have warned that new stealth taxes on capital gains and profits threaten to discourage UK entrepreneurs and could lead them to sell. There were also harsh words from the technology and science communities over the decision to cut tax credits for research and development.
However, the chancellor can take some comfort that there has been no negative reaction from financial markets this time and he can take credit for restoring the country’s financial credibility, the Financial Times editorial board said.
Now that the UK government has anchored the economic ship, the Financial Times’ editorial board added, “it must devise a serious and credible plan to grow the British economy again. If it fails to do so, it will give up whatever little hope it might hold of winning the next election and leaves Britain facing years of painful austerity and stagnation.”
The final word today goes to Johnson IFS: “We are . . . reaping the costs of the long-term failure to develop the economy, the effects of an aging population, and previously high levels of borrowing. The truth is that we are getting poorer. We are in for a long, hard and unpleasant journey.”
Need to know: UK and European economy
UK retail sales It grew by 0.6% better than expected in October but remained below pre-pandemic levels, continuing the long-term downward trend.
Read the how-to story G20 leaders They managed to rally support together for a (qualified) condemnation of Russia’s war in Ukraine. French president Emmanuel Macron She told the Financial Times that China’s ability to pressure Russia has proven “extremely beneficial”.
Russian economy It shrank by 4 percent in the third quarter due to the impact of Western sanctions, which pushed the country into recession. The country’s central bank expects a decline of 3 to 3.5 percent for the year.
Irelandalso known as Europe’s “Silicon Valley,” has enjoyed many economic benefits from its decades-old focus on global information technology, but the potential bursting of the tech bubble leaves government needing to rebalance.
Need to know: The global economy
The Republicans are back in control we Parliamentalbeit by a narrow margin, after the results of the final midterm elections.
newly sworn Iraqi government Mohamed Shiaa Al-Sudani is reeling from the “stealing of the century” after $2.5 billion was kept from tax authorities.
Peru The new finance minister – who has had the country about as good as the UK this year – admitted that the country’s rolling dysfunction was putting off investors. Chile, Colombia and now Brazil have followed Peru in electing new left-wing presidents. Hear Latin America Editor Michael Stott explain the changing nature of the region’s political landscape.
The world Cup Finally it launches this weekend in Qatar. Is there an ethical case for witnessing what many believe is a highly immoral event? And how would fans cope without beer? Whatever you decide, our experts have all the bases covered on and off the field.
Here’s our take on the heroism’s potential legacy.
Need to know: business
UK ministers prevented the sale Newport Weaver Fab, Britain’s largest chip maker, to the Chinese-owned Nexperia. The acquisition has been halted under new government powers to limit transactions involving strategic national assets.
Britain also has a difficult decision to make space industry After uncertainty about continued participation in the European Union’s Copernicus Earth Observation Programme, as well as the €95 billion Horizon Research Fund.
Our Big Read takes into account whether cultural and operational issues in the digital bank Revolution It could hinder its acceptance by UK and European regulators.
The Chemicals and agricultural industries The sector is considered one of the sectors most affected by the unrest caused by the war in Ukraine. Read more in our special report: Chemicals and Manufacturing.
Yuji NakaA famous Japanese video game programmer and co-creator of Sonic the Hedgehog, has been arrested over an alleged insider scam.
Chinese doctors have warned that they are not prepared for the possibility of it happening Covid “exit the wave” As restrictions eased, with more effort spent on containment than on building strong defences. Confusion reigns in Guangzhou as local officials try to explain Beijing’s relaxation of rules while dealing with a record Covid outbreak.
United kingdom Covid infections have fallen to their lowest level in seven weeks.
The space race between America and China has intensified with the successful launch of NASA Artemis, the first mission to the Moon in half a century. Artemis aims to be the launch pad for sending humans to Mars.
Global decline in Sperm count It is accelerating after levels fell by more than half between 1973 and 2018, according to new research.
simple invention He has the power to change the world, says columnist Tim Harford. So why haven’t we heard more about Dr. Dilip Mahlanaps’ treatment for cholera?
Covid cases and vaccinations
Total global cases: 630 minutes
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Some good news
University of Edinburgh Scientists have discovered that parasites from ancient leprosy have the ability to regenerate the liver.
Something for the weekend
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