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The Independent
27 minutes ago
- The Independent
Rachel Reeves encouraged to consider wealth tax
A government minister has indicated openness to a wealth tax, despite the business secretary recently dismissing the idea as "daft". Policing minister Dame Diana Johnson stated it is "important" to discuss and examine evidence for a wealth tax, while Business Secretary Jonathan Reynolds previously called it a "magic" concept that does not exist. The debate arises amid increasing pressure on the government to find ways to raise funds and address a deficit in public finances, following significant spending commitments and departmental cuts. Former Labour minister Anneliese Dodds and rebel Labour MP Rachael Maskell have also urged the government to consider a wealth tax, with Ms Maskell suggesting it could raise up to £24bn annually. The Chancellor, Rachel Reeves, is ultimately responsible for making decisions on tax measures to be announced in the budget later this year.
Times
28 minutes ago
- Times
Has Trump pulled off an amazing deal, or is the worst yet to come?
The Trump administration's flurry of eleventh-hour tariff agreements will raise US protectionism to the highest level in a century. The effective tariff applied on goods entering America will jump from an average of just above 2 per cent at the start of the year to around 18 per cent, according to the Yale Budget Lab. Before its August 1 deadline, the White House signed off tariff agreements that will apply a basic 15 per cent tariffs on goods from the European Union, Japan and South Korea, a higher 35 per cent rate on some Canadian goods, and 39 per cent rate on Switzerland. The UK will be subject to a 10 per cent minimum, while scores of other countries — around 70 — that failed to agree new terms will fall back on the 'reciprocal' levies announced in April. • FTSE 100 slides as markets retreat on new Trump tariffs The expiry of President Trump's deadline marks an unprecedented four months of upheaval in the global economy, where the world's economic superpower has picked apart the rules of globalisation through daily threats of punishing import taxes, de facto capital controls, and financial sanctions on its trading partners. Yet for all the noise about what Trump will announce or un-announce on the rest of the world, the US and global economy enter August in a position not too dissimilar from where they started before Trump's 'liberation day' taxes were unleashed in April. The US economy and labour market have not been plunged into recession, interest rates continue to fall in most advanced economies, and equity markets have reversed their April wobbles to touch record highs in the US, UK, and Europe. This relatively benign outcome has led some to conclude that Trump has won the first battle in his trade war: the US is dismantling the global trading system and dictating humiliating terms to its erstwhile allies with minimum damage to its economy or financial stability so far. • Investors fleeing US equities boost unloved London market To add to the euphoria, the effective 18 per cent tariff rate on the rest of the world will generate around $450-500 billion in federal tax revenues for Trump — worth more than 1.25 per cent of the US economy and significant source of fiscal relief in a country where the budget deficit was on course to stick at 7 per cent of GDP. 'The US has emerged as a clear winner in the trade war at this juncture,' Mark Dowding, chief investment officer at RBC BlueBay Asset Management, said. 'There is a feeling that Trump has extracted pretty much every concession he would have hoped for in the trade negotiations conducted to date. In the absence of material retaliatory tariffs, this has been viewed as a great result for the US.' Dowding added that then 'worries that Trump was undermining US policy credibility have been replaced by a grudging sense of respect for the negotiator-in-chief'. This reassessment is best reflected in the value of the dollar which is heading for its strongest week in three years. The US currency, which has been the chosen market proxy for worries about US policy credibility, has recovered 1.5 per cent from the trough hit at the end of June. The greenback remains around 9 per cent weaker against major currencies this year and is still having its worst year since the dollar became a free-floating currency liberated from gold in 1972. • Copper price drops a fifth after Trump waters down tariff The performance of the US stock market has been even more striking. After the worst start to a new presidency in a century, US equities have outperformed all main peers since April 21, reflecting the 'Goldilocks' state of an economy that is 'not too hot, and not too cold', Will Denyer at Gavekal Research said. Trump's tariffs strategy has been emboldened by 'hard' economic data this week which showed the US the economy bounced back strongly with a 3 per cent annualised GDP expansion in the second quarter, after a 0.5 per cent contraction at the start of the year. Signs of tariff-induced inflation are also scarcely showing up in monthly price data, and while the labour market is slowing, demand for workers remains far above historical averages. The tariffs deadline also coincided with another bumper week of corporate earnings for American tech and AI giants that has charged up US market bulls. It's not just investors who are relieved at the state of the world at the start of August. The International Monetary Fund this week gave modest growth upgrades to most developing world economies, including the US, acknowledging that after the burst of tariff fears, the probable landing spot for American protectionism is likely to be lower than first feared. Even the US Federal Reserve, the country's beleaguered central bank, is inclined to think that tariffs are likely to have a one-time impact on raising American consumer prices, rather than marking the start of a new burst of inflation that triggers higher wages. • How Trump is delivering his pledges after 200 days Outside the US, growth forecasts for big economies that capitulated to Trump's demands are not being revised down drastically. The EU economy could still outperform forecasts as Germany's mass spending counteracts part of the hit from Trump's trade war. Goldman Sachs this week revised up Europe's GDP projections by 0.1 percentage points to 1.2 per cent this year and 1.3 per cent in 2025, after the bloc agreed to a broad 15 per cent tariff rate that will initially cover pharmaceuticals. Economists, however, are still divided over whether the resilience of the US and world economy means the tariff pain has simply been delayed, or whether there are other factors at play that will lead to an altogether more benign outcome for America and its trading partners. The widely held assumption among most forecasters is still that American households and businesses will suffer the brunt of higher import taxes, supply chain disruption, and the frozen investment as a result of the barrage of protectionism. On the flip side, the White House points to the 2018 tariffs episode as 'proof' that levies have no lasting effect on consumer prices and they did not prevent the US becoming the fastest growing economy in the G7 for the past two years. Freya Beamish, chief economist at TS Lombard, thinks market exuberance will come to a halt as US 'data over the next six months will be a rude awakening'. • Trump announces 90-day pause to higher tariffs on Mexico 'Inflation dynamics are deteriorating. Right now, it's as if the market actually believes that tariffs are going to be paid by the rest of the world and that Trump has pulled off some amazing deal. We've heard hitherto serious economists making such claims and can only assume they have taken leave of their senses. Unfortunately, the stock market reaction is likely to embolden the administration into further damaging policy moves,' she said. Looking ahead, few trade experts or diplomats expect Trump to stick to his word on his set tariff rates as the likes of the EU and Japan have been bounced into making investment pledges — like buying fanciful amounts of US energy — that they simply cannot meet. Even more worryingly, the president has shown he is willing to use the tariff stick against countries over any policy disagreements — over security, foreign policy, and in the case of Brazil, domestic court procedures against a former president. 'These are very high level deals that have been announced. A lot of work is going to have to go into filling the blanks,' Pierre-Olivier Gourinchas, chief economist at the IMF, warned.
Times
an hour ago
- Times
Pro-Palestinian groups announce ‘siege' on Labour MPs
Pro-Palestinian groups are planning to besiege Labour MPs, councillors and staff on Monday to force the party to take an even tougher stance against Israel. The Palestinian Youth Movement (PYM) has sent an eight-page booklet of instructions to 'solidarity groups' across the UK to take part in a national day of action against the Labour Party for its 'partnership in Israel's genocide on Gaza'. The document, titled 'Siege on Labour', sets out tactics for how supporters should target the offices of their local MPs, their regional Labour Party headquarters and Labour councillors. It says that now is an 'opportune moment' to 'exacerbate the political crisis in the party' after Sir Keir Starmer's announcement that Britain will recognise a Palestinian state. The document, seen by The Times, dismisses that announcement as 'meagre', arguing that recognition will be only of 'the puppet regime of the Palestinian Authority in the West Bank'. In a set of four demands, it says the government must go significantly further. It also demands that David Lammy, the foreign secretary, be immediately sacked and tried as a war criminal atthe Hague. The document vows to make 'Zionism a political crisis for the political class in this country' and calls on its supporters to 'identify and target their weakest pressure points'. Labour MPs, peers and groups campaigning against antisemitism have condemned the plans as a sinister attempt to intimidate elected politicians and their staff, and called on the police to protect them. Luke Akehurst, the Labour MP for North Durham, said: 'These intimidation tactics targeting our offices and staff are completely unacceptable. Harassment by threatening a 'siege' towards elected representatives and their hardworking caseworkers — who serve all constituents in their public service — crosses every line of democratic debate. 'Threats like these disrupt democracy by preventing constituents from being able to safely access their MP — which is everybody's right. 'This bullying does nothing to help Palestinians or Israelis and only serves to undermine the constructive dialogue needed to advance peace. MPs will not be intimidated into abandoning our principled approach to this complex issue.' The PYM is an international group of pro-Palestinian young people who played a key part in the campus protests that targeted universities across the United States last year. The Anti-Defamation League, an international non-governmental organisation founded to combat antisemitism, has warned that the PYM has expressed support for terrorism, including the Hamas-led attacks in Israel on October 7, 2023. Hamas is a proscribed terror group in the UK. Support for it is illegal and carried a maximum of punishment of 14 years in prison. PYM's members have praised as 'martyrs' those who have died in the conflict with Israel. The PYM said it was 'time for us to escalate' to take advantage of public opinion and the establishment of Jeremy Corbyn's new left-wing party. It said: 'The Labour Party is under immense pressure from the public, the media and from their voting base (with the announcement of the new left party) to take a stronger stance on Gaza.' It set out four demands for its 'siege' on Labour politicians and officials, including for Lammy to be tried. Its other demands are a full two-way arms embargo on Israel; an end to RAF reconnaissance surveillance flights over Gaza, which the it claims are 'gathering intelligence for the Israeli Defence Forces'; and for the British government to impose more sanctions and pressure other United Nations countries to do the same to force Israel to allow aid into Gaza. The document says: 'If the Labour Party is committed to facilitating the siege on Gaza, we, the people, declare a Siege On Labour.' The 'toolkit' includes tactics on staging sit-ins, pickets and rallies, and advice on how to 'mobilise widely'. It also suggests 'key messages' to print on posters for bus shelters and buildings and to post on social media. It advises supporters on how to behave after being arrested, instructing them to ignore police officers because 'there is no such thing as a friendly chat with a police officer'. It adds: 'Targeting Labour offices across the country allows us to take mass, co-ordinated, national action against a common target that is directly complicit in the genocide and wields power to grant our demands.' • Undercover with Palestine Action: 'Damage as much as possible' Alex Hearn, the co-director of Labour Against Antisemitism, said the PYM's demands showed that the government could never satisfy the more extreme pro-Palestinian groups. 'This sinister call to escalate and lay siege to Labour Party offices shows that despite the drive to recognise a Palestinian state, there is no pleasing extremists,' he said. 'Dismissing the Palestinian Authority as a puppet regime reveals the pro-Hamas leanings of this group, whose key messages amount to nothing more than disinformation. The danger of appeasement has been exposed.' Lord Walney, a cross-bench peer and the government's former adviser on political violence, said: 'Calling for a 'siege' is designed to intimidate MPs and is totally unacceptable. The threat level facing political representatives has increased greatly since the Gaza conflict began … the fact that the material refers to the Palestinian Authority in the West Bank as a puppet state suggests sympathy with Hamas's objectives or foreign state influence. 'I hope my colleagues will be vigilant and police forces will appropriately enforce the boundary between legitimate protest and criminal intimidation.' The PYM also accuses the Labour Party and the government of being 'complicit in the massacres in Gaza' through trade, intelligence-sharing and diplomatic relationship with Israel. The PYM has been approached for comment. The Labour Party declined to comment and said it would not share any information on security advice given to MPs and staff.
