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Reeves admits taxes are too high
Rachel Reeves has admitted that taxes are too high despite refusing to rule out further increases in future. Speaking before the House of Lords, the Chancellor said that a combination of rising taxes and a ballooning debt bill is holding back the economy. That is despite raising taxes by a record £40bn during her first Budget and repeatedly failing to say she will not raise levies further this year. 'We are living in an age of insecurity today, and economic policy has to respond to the moment which we live in,' she said. 'At the same time, we also have a challenging economic inheritance, with high levels of tax as a share of GDP, historic high levels of government debt, and also economic growth that really for the last 15 years has been very poor by historical standards, because of weak productivity growth.' Ms Reeves's appearance before the Lords came just hours after new figures revealed the Government borrowed more than £20bn in June alone, piling further pressure on Britain's debt interest bill. The Chancellor acknowledged this is a problem but said she is trying to reduce borrowing costs. '£1 in £10 the Government is spending is spent servicing Government debt,' she said. 'I am a Labour politician, I don't think there is anything progressive about spending £100bn per year - often to US hedge funds - when I would rather spend that money on the health service or defence or on better schools for our children. 'That is why I am going to stick to the fiscal rules, so that we can start to bring down the cost of servicing that debt.' However, the Office for Budget Responsibility has already warned the cost of servicing the UK's debt pile is unlikely to fall any time soon. The fiscal watchdog expects the Government to borrow tens of billions of pounds more each year than it previously forecast before Labour came to power. Current estimates show that national debt will rise to £3.3 trillion by 2029, up from £3.1 trillion under the Conservatives. The OBR predicts this will result in an annual debt interest bill of more than £130bn by the end of the decade, far higher than £111.1bn recorded this year. Despite her move to increase taxes and borrowing, the Chancellor warned that the Government cannot bow to backbenchers' requests to ramp up spending. 'You cannot do everything that everybody would like to do,' Ms Reeves told the Economic Affairs Committee. 'There are always going to be more demands on public resources than we have money available, and we have to prioritise. 'There is not a limitless pot of money, as much as people might like there to be, or sometimes think there is. Even with the additional money available, we still have to make priorities.' Ms Reeves declined to comment on what might constitute a sustainable level for the tax burden, instead arguing that it is critical to find other ways to boost economic growth. 'One of the big challenges we've faced is the difficulty in actually getting things done - whether it is building transport infrastructure, energy infrastructure, the homes that we need, the digital infrastructure which is so important,' the Chancellor said. She urged the Lords to pass the Government's planning reforms to help growth, arguing that every day counts when it comes to boosting building. 'Every day, week, month that passes is another day, week, month, that keeps the cost of infrastructure investment too high, and much higher than they are in comparable countries,' she said. 'The reason that HS2 is not coming to my home city of Leeds any time soon is because, as a country, we have cared more about the bats than we have about the commuter times. 'We have got to change that. I care more about a young family getting on the housing ladder than I do about protecting some snails.' Mel Stride, the shadow Chancellor, blamed Labour for the rising tax burden. 'Rachel Reeves has pushed taxes to a record high – but now she cannot say if they will ever be cut under a Labour government,' he said. 'Labour must recognise that we cannot keep increasing taxes. Businesses are closing, jobs are being slashed, inflation is spiralling and the economy is shrinking, all thanks to their economic mismanagement.' 06:49 PM BST Donald Trump says Jay Powell will be out in eight months Donald Trump has said Jay Powell will be out of his job as chairman of the Federal Reserve in eight months. Speaking at the White House, Trump said: 'I think he's done a bad job but he's gonna be out pretty soon anyway - in eight months he'll be out.' The comments suggest Trump will not seek to immediately remove Mr Powell before his four-year term ends on 16 May 2026. Trump will be given the option to pick a new chairman of the Federal Reserve when Mr Powell's term ends next year. It comes after Trump last week said it's 'highly unlikely' he will try and fire Mr Powell before his current term ends, 'unless he has to leave for fraud.' Trump's comments followed reports he had asked White House officials whether he should fire Mr Powell over concerns about the soaring costs of plans to renovate the Federal Reserve's headquarters in Washington D.C. 05:45 PM BST Donald Trump claims Jay Powell is keeping interest rates high for 'political reasons' Donald Trump has renewed attacks on Jay Powell by claiming the chairman of the Federal Reserve has kept interest rates high for 'political reasons'. Speaking from the White House, Trump called Mr Powell a 'numbskull' over concerns that America's 4pc interest rates are 'causing a problem for people that want to buy a home'. 'He keeps the rates too high and probably doing it for political reasons. The only time I remember him cutting rates, I mean he cut the rates just before the election to try and help Kamala.' 'I think he's done a bad job,' Trump added. 'I call him too late. He's too late all the time. He should have lowered interest rates many times. Europe lowered their rates 10 times, we lowered ours none.' 'Look, our economy is so strong now we're blowing through everything, we're setting records... But you know what, people aren't able to buy a house, because this guy is a numbskull.' Speaking at a meeting with Ferdinand Marcos Jr., the president of the Philippines, Trump also called on Mr Powell to cut interest rates to 1pc. 'We should be at 1pc we should be leading the word. Instead we're paying 4pc and if you look at what that means, that's over a trillion dollars of interest that we have to pay... With a striking of a pen we would be saving more than one trillion dollars.' 03:57 PM BST Reeves refuses to rule out wealth tax Rachel Reeves has refused to rule out a wealth tax, despite Lord Lamont, who served as Chancellor in the 1990s, warning that speculation risks undermining confidence in the economy. 'I still find it a bit strange the Government has not ruled out a wealth tax which some people in your party have been proposing,' said Lord Lamont, referring to former Labour leader Neil Kinnock's demands for a levy on the rich. 'Though I understand your reluctance to rule things out, you did before you took office rule out certain increases in taxation, you were quite explicit about that. Surely just the whiff or suspicion of a wealth tax is rather undermining confidence, or carries the risk of undermining confidence, so wouldn't it be far better just to rule it out?' The Chancellor declined the opportunity. 'In our manifesto we made a commitment around the key taxes that working people pay, income tax, national insurance and VAT,' she said, skirting around her Budget decision to raise National Insurance Contributions made by employers. 'But you will know from your own experience, Lord Lamont, that if you start saying no to other taxes, as soon as you don't say no, people will assume that is the one you are going to increase. 'So it is right, and with respect this is what you would have done and did do in my position, you rightly said tax is a matter for the budget and we will set out our policy there.' 03:19 PM BST Reeves says welfare rebellion has forced Britain to 'rely on kindness of strangers' Rachel Reeves said Britain was 'reliant on the goodwill of strangers' to keep its debt market afloat after the Government's U-turn on cuts to welfare spending. The Chancellor said she expected £5bn to face a £5bn cost as a result of the decision to back down to backbench rebels over cuts to Personal Independence Payments, known as Pip. She said this meant the Government had to borrow more and spend more on servicing that debt, which was money she would rather spend on 'health service, or on our defence or on better schools for our children'. The Chancellor told the House of Lords Economic Affairs Committee: 'Of course there is a cost for the changes on the welfare bill. 'The OBR will do their costings in the autumn and will set that out, probably to the tune of £5bn. But we've restated our commitment to the fiscal rules. Those rule are non-negotiable because it is the fiscal rules that provides that stability that underpins a successful, thriving, prosperous economy, and gives government bondholders the confidence to carry on buying. 'We are still very reliant on the goodwill of strangers in buying our government bonds. One in £10 of spending is spent servicing government debt. I'm a Labour politician. I don't think there's anything progressive about spending £100bn a year, often to US hedge funds, when I'd rather spend that money on the health service, or on our defence or on better schools for our children. 'That is why I am going to stick to those fiscal rules so we can bring down the costs of servicing that debt.' 03:04 PM BST Reeves: Companies should not always use immigration to fill vacancies Bosses should not keep resorting to immigration to fill job vacancies, the Chancellor has said. Rachel Reeves told peers that 'there are a lot of people here in Britain who are not working either because they are unemployed or because they are economically inactive'. She said: 'We've got 20pc of people who are of working age who are economically inactive and we've got an unemployment rate of just over 4pc. 'So I do not think that businesses should always resort to the immigration lever to fill vacancies. 'We need to do much more to train up people who are already in this country. 'There are those 650-700,000 vacancies in the economy. There are plenty of people of working age in the economy. With the right support they should be able to work.' 02:43 PM BST Investment is answer to economic woes, says Chancellor Rachel Reeves said the key problem faced by the UK economy was 'productivity', adding 'investment is the answer'. The Chancellor told peers Britain needed 'investment in human capital, investment in physical capital, and also investment in new technologies'. She told the House of Lords Economic Affairs Committee: 'We've got the lowest private investment and the lowest total investment as a share of GDP of any country in the G7. 'The result of that is our productivity performance has not kept pace with our competitors and similar countries around the world. 'That's why the fiscal rules that I've set out do treat investment spending different, because what you saw... was public investment as a share of GDP fall to 1.7pc. We are instead going to keep it at 2.5pc.' She added: 'The easy thing to do as a Chancellor is to cut capital spending because, frankly, you're not likely to be the government that sees the full benefit of that capital spending but we're not going to keep making those short-sighted wrong decisions, which is why we've set out those changes to the fiscal rules.' 02:16 PM BST Reeves facing 'difficulty getting things done' in growth push Rachel Reeves urged members of the House of Lords to speed up their approval of planning reforms as she complained of facing difficulty 'getting things done'. The Chancellor pointed to 'wide ranging' reforms of the planning system and other areas of government as a key pillar of her strategy to rekindle growth in the economy. She said: 'The Planning and Infrastructure Bill is before your house at the moment and I would encourage lords, when they are looking at that bill, to think about how quickly we can get it signed into law. 'Because the quicker we can do that, the quicker we can actually get things building in Britain again. 'One of the big challenges we've faced – and it is a similar challenge to other countries as well – is the difficulty in actually getting things done, whether it is building transport infrastructure, energy infrastructure, the homes that we need, the digital infrastructure that is so important now with the growth of data centres and technology and AI.' 01:58 PM BST Reeves to appear in front of Lords committee Rachel Reeves will be questioned by the House of Lords Economic Affairs Committee from 2pm. Peers will get the chance to ask the Chancellor about the latest borrowing figures and her first year at the Treasury. 01:49 PM BST Rising borrowing 'makes tax rises inevitable' Rachel Reeves is 'almost certain' to announce tax rises in the autumn after official figures showed Treasury borrowing hit a record high for June outside the pandemic, a think tank has said. The Chancellor would be unlikely to relax her fiscal rules to balance the books as this 'would risk an adverse market reaction, and could make a bad situation worse', said Tom Clougherty of the Institute of Economic Affairs. He said tax allowances and thresholds would likely be frozen 'for years to come' despite high inflation eroding incomes. 'Many more people are going to end up paying higher rates of tax without getting any richer in real terms,' he said. 'But it seems unlikely that will be enough. The question is whether the Government will drop its core tax pledge, and raise a broad-based tax like income tax, national insurance or VAT, or whether it will attempt another stealth tax raid, targeting businesses and savers. 'Either course risks further depressing a weak economy. The better approach would be to build a consensus renewed spending restraint, while also making a much more concerted effort to pursue cost-free, pro-growth regulatory reforms.' He added: 'The latest borrowing figures underline what many of us already thought – that the Government is almost certain to announce another set of tax increases at the autumn Budget.' 01:37 PM BST No need for Fed chief to step down, says Bessent The US treasury secretary said he sees no reason why the chair of the Federal Reserve should step down, following a flurry of attacks from Donald Trump. Scott Bessent said Jerome Powell should see through his term as head of the US central bank 'if he wants to'. Mr Bessent's comments come a day after he called on the Fed to conduct an exhaustive review of non-policy areas of operations, following accusations that there had been mismanagement of a costly renovation of the Fed's buildings. Mr Powell has faced repeated attacks from President Trump for the Fed's refusal to cut interest rates, which the US president said was costing the US billions of dollars. However, Mr Trump rowed back on threats to axe Mr Powell after a spike in borrowing costs on bond markets, signalling concerns about the independence of the Fed. Mr Bessent, who has been tipped as a potential successor to Mr Powell, told Fox News: 'There's nothing that tells me that he should step down right now. 'His term ends in May. If he wants to see that through, I think he should. If he wants to leabe early, I think he should.' Meanwhile, Federal Reserve vice chair Michelle Bowman said the central bank's ability to set monetary policy without political interference is 'very important'. She told CNBC: 'It's very important ... that we maintain our independence with respect to monetary policy. 'But we also, as part of that independence, have an obligation for transparency and accountability as well. But we also have an obligation, in my view, as we have throughout my time on the board here since 2018, to listen to a broad range of voices to understand how others are viewing the economy and how that should influence our decisions in monetary policy making.' 01:04 PM BST US stocks subdued ahead of earnings Wall Street slipped in premarket trading as investors geared up for a whirlwind day of company results. US stocks have begun to show the first signs of being impacted by Donald Trump's tariffs. General Motors saw its second-quarter core profit tumble 32pc to $3bn (£2.2bn), blaming steep tariff costs for shaving $1.1bn from its bottom line. The company's shares lost 3.5pc in premarket trading, while Ford also dropped 1pc. Meanwhile, Coca-Cola rose 1pc after beating second-quarter revenue estimates. Despite trade policy uncertainty out of Washington, the US economy's resilience has propelled major indexes to fresh all-time highs. In premarket trading, the Dow Jones Industrial Average and Nasdaq 100 were down 0.1pc and the S&P 500 was flat. 12:41 PM BST National debt near 96pc of GDP Public sector net debt, excluding public sector banks, stood at £2.87 trillion at the end of June, according to the ONS. This was estimated at 96.3pc of gross domestic product (GDP), which was 0.5 percentage points higher than a year earlier. It remains at levels last seen in the early 1960s. 11:59 AM BST Reeves's biggest Budget headache is not Starmer's welfare reversal Embarrassing about-turns on welfare and winter fuel payments may be fuelling speculation of an autumn tax raid. But public borrowing data on Tuesday show that policy changes are far from Rachel Reeves's biggest problem. The cost of servicing Britain's £2.7tn debt pile almost doubled in June compared with a year ago to £16.4bn as higher-than-expected inflation pushed up debt costs. The Office for National Statistics (ONS) said this was the second-highest interest bill since monthly records began in 1997, eclipsed only by June 2022 just after Vladimir Putin invaded Ukraine. It meant the Government had to borrow £20.7bn in June to plug the gap between tax receipts and revenues. That is much higher than a year ago and £3.5bn more than forecast by Britain's tax and spending watchdog in the spring statement. 11:40 AM BST Scrapping bank ring-fencing 'not sensible', warns Bailey The Governor of the Bank of England said it 'would not be sensible' for the Government to scrap the bank ring-fencing regime, after Rachel Reeves announced plans to reform the system last week. Andrew Bailey also stressed that the UK cannot 'compromise' on financial stability amid the Treasury's plans to rip up red tape across the sector. 'I do think the ring-fencing regime is an important part of the structure of the banking system,' he told MPs on the Treasury Select Committee. 'It makes the resolution of banks if they're in trouble much easier, and it benefits, particularly in terms of the UK, consumers, business and households. 'I'm sure there are things that can be improved and we will work constructively to get through that process.' 'I think it has established itself as part of the system and to me it would not be sensible to take it away at this point,' he clarified. The ring-fencing regime was brought in after the 2008 financial crisis to separate banks' retail and investment banking activities. 11:40 AM BST Scrapping bank ring-fencing 'not sensible', warns Bailey The Governor of the Bank of England said it 'would not be sensible' for the Government to scrap the bank ring-fencing regime, after Rachel Reeves announced plans to reform the system last week. Andrew Bailey also stressed that the UK cannot 'compromise' on financial stability amid the Treasury's plans to rip up red tape across the sector. 'I do think the ring-fencing regime is an important part of the structure of the banking system,' he told MPs on the Treasury Select Committee. 'It makes the resolution of banks if they're in trouble much easier, and it benefits, particularly in terms of the UK, consumers, business and households. 'I'm sure there are things that can be improved and we will work constructively to get through that process.' 'I think it has established itself as part of the system and to me it would not be sensible to take it away at this point,' he clarified. The ring-fencing regime was brought in after the 2008 financial crisis to separate banks' retail and investment banking activities. 11:25 AM BST Bailey warns over global financial crisis as Reeves pushes for growth Andrew Bailey issued a thinly veiled warning to Rachel Reeves not to pursue growth at the expense of regulation as the Chancellor seeks ways to boost the economy and rebalance the public finances. The Governor of the Bank of England insisted 'there isn't a trade off between financial stability and growth' days after Ms Reeves addressed banking leaders in her Mansion House speech. The Chancellor said red tape is a 'boot on the neck of businesses' and risks undermining the UK's dash for growth, as she urged Britain's regulators to ditch their 'excessive caution'. Mr Bailey said: 'I can understand when I hear people say 'the financial crisis is now way in the past, we've got passed that, that's all solved, that's all out of the way, move on'. 'For those of us who were veterans of sorting the problems of that out, I think we probably all feel in some ways were in different parts of the world, erm... no. 'Yes of course the world moves on. That was the experience of losing financial stability. We had a very serious recession in this country after that. So I do react to people who say that because, I'm sorry, this is the fundamental point about why financial stability is important.' He added: 'Success in financial stability is when nothing happens. The fact we've had market volatility this year and we haven't had a financial stability problem and we're not worrying about banks failing, we're not the market, is of course a success. 'It's not always easy to point to it and say, look, this is good news. But the UK banking system is very resilient.' Asked about the Chancellor's suggestion that red tape is a 'boot on the neck of businesses', he said: 'It's not a term I'd use.' 11:08 AM BST Bailey 'not unconcerned' by rising UK borrowing costs The Governor of the Bank of England said he was 'not unconcerned' by increased Government borrowing after official figures showed higher-than-expected borrowing across UK state finances last month. Andrew Bailey said the 'yield curve has steepened' referring to higher longer-term borrowing costs on bond markets. He told the Treasury Committee: 'The cost of borrowing has increased, the yield curve has steepened, but the important thing to say is that it is a global phenomenon. 'If anything, the pattern in the UK is in line with other markets and we have even seen steeper increases in other markets. 'What are the causes? In the short run it is greater uncertainty on two fronts. 'There is uncertainty on the trade front and uncertainty globally around fiscal policy. 'I'm not unconcerned but it's reflective of conditions.' 11:00 AM BST Bailey warns of switch away from US dollar Andrew Bailey said the Bank of England was watching closely as markets move away from dollar-based assets amid Donald Trump's tariff war. The Governor said markets were going through a 'major change', adding the 'most crowded trade' was the expected depreciation of the dollar. The pound has climbed nearly 8pc against the US currency so far this year, while the euro has gained 13pc amid the turmoil caused by Mr Trump's trade policy. Mr Bailey told the Treasury Select Committee that he expected a 'breakdown in established correlations in markets' to go on for a long time as long term investors take time to change their positions and the trade war continues. He said: 'It does depend on how the whole trade and tariff story plays out. We're not through it yet. We don't know much for certain but that's probably one thing we do know for certain.' He told MPs: 'We sense there's rebalancing going on which involves a reduction in exposure to dollar assets over time.' 10:28 AM BST Bailey blames rising borrowing costs on 'greater uncertainty' Andrew Bailey said the recent increase in long-term government borrowing costs was due to 'greater uncertainty'. The Governor of the Bank of England told MPs today that the increase in bond yields – a benchmark for the cost of servicing national debts – was a 'global phenomenon'. Appearing in front of the Treasury Select Committee, he said bond yields were rising due to uncertainty on trade policy, amid Donald Trump's global tariff war. He added that uncertain fiscal policy had also pushed up debt costs amid a shift 'towards greater government borrowing' over the last 10 years. 09:57 AM BST Housebuilders slump amid rise in borrowing costs Housebuilders' shares were hit by the surge in Treasury borrowing, amid doubts about interest rate cuts. Developers across the FTSE 100 and FTSE 250 slumped 1.2pc, with Vistry down 1.8pc and Barratt Redrow down 1.6pc. It comes after the surge in Government borrowing pushed up yields of UK debt on bond markets. Russ Mould, investment director at AJ Bell, said: 'Housebuilders were knocked by the public sector finance figures as the rise in gilt yields suggests the market believes interest rates could stay higher for longer. 'Housebuilders are desperately waiting for rates to come down as that could make mortgages more affordable and help more people get on the property ladder.' The FTSE 100 was down 0.1pc in early trading, while the domestically-focused FTSE 250 fell 0.3pc. 09:39 AM BST UK borrowing costs rise at faster pace than major economies The cost of government borrowing has continued to rise at a faster pace for Britain today than other major economies. The yield on 10-year UK gilts – a benchmark for the cost of servicing the national debt – has jumped four basis points to 4.64pc. Britain's borrowing costs were rising faster than global rivals on bond markets. Germany's 10-year bund yield was up two basis points to 2.63pc while 10-year US treasury yields were up one basis point to 4.39pc. 09:11 AM BST Pound slips as Reeves expected to raise taxes The value of the pound declined as Rachel Reeves was expected to raise to raise taxes after the Treasury overshot borrowing forecasts last month. Sterling was down 0.1pc against the dollar to $1.348 and dropped by 0.1pc versus the euro at €1.153 as borrowing hit a record high in June, excluding the pandemic. Alex Kerr of Capital Economics warned that 'things will probably get worse for the Chancellor'. He said: 'The Government's U-turns on spending cuts and potential upward revisions to the OBR's borrowing forecasts means the Chancellor will probably need to raise £15-25bn at the Autumn Budget to maintain the £9.9bn of headroom against her fiscal mandate. 'And given that she is struggling to stick to existing spending plans and we doubt the gilt market will tolerate significant increases in borrowing, she will probably have to raise taxes instead.' 08:38 AM BST Government borrowing costs jump as public finances 'exposed' The cost of government borrowing jumped higher today after the latest figures showing the Treasury borrowed more than expected last month. Investors sold bonds – which offer a benchmark for the cost of servicing the national debt – after official data indicated Britain's borrowing surged to a June record excluding the pandemic. The yield on 10-year gilts climbed nearly three basis points to 4.63pc, which was the sharpest rise across the world's major economies. Rising gilt yields mean the government has to pay higher returns to buyers of its debt. The ONS said Britain's debt interest costs nearly doubled in June, mainly as a result of so-called index-linked gilts, which are government bonds offering returns tied to the rate of inflation. Nabil Taleb, economist at PwC UK, said: 'Higher debt servicing costs as a share of total revenues leave the public finances more exposed to future economic shocks.' The rate of inflation has climbed in recent months, with the situation made worse by the fact bonds are linked to the retail prices index (RPI), a now discredited rate of inflation which is higher than the official designated consumer prices index (CPI). RPI was 4.4pc in June, compared to 3.4pc for CPI. 08:13 AM BST Reeves to impose 'sin taxes' and raid pensions to cover surging borrowing Rachel Reeves will raid pensions and impose 'sin taxes' to deal with a £20bn black hole in the public finances this autumn, economists have said. Pantheon Macroeconomics predicted the Chancellor's £9.9bn of headroom left in the public finances in spring would be wiped out by the time she delivers her Budget, with an extra £13bn needed on top of that. Chief UK economist Rob Wood said Ms Reeves has a 'major problem' created by U-turns on previously planned spending cuts and possible downgrades to OBR growth forecasts. He said: 'We expect 'sin tax' and duty hikes, freezing income tax thresholds for an extra year in 2029 and a pensions tax raid —reinstating the lifetime limit on pension pots and cutting relief — to fill most of the hole. 'The majority of those tax hikes would be backloaded to the end of the forecast horizon, avoiding fiscal tightening in the near-term. 'Sitting between a rock and a hard place — of wanting to avoid tax hikes but being unable to cut spending — Ms Reeves could tweak the fiscal rules to allow a forecast deficit of 0.5pc of GDP, giving another £17bn of headroom. 'The fiscal pain will, however, continue beyond the autumn. Defence spending will almost certainly have to rise faster than the government currently plans, for instance, necessitating further tax hikes or rule tweaks.' 08:02 AM BST UK stocks fall after as borrowing costs surge Stock markets in London made a lacklustre start to trading after official figures showed rising Treasury borrowing, which make tax rises almost certain later this year. The FTSE 100 declined 0.2pc to 8,999.11 while the mid-cap FTSE 250 slipped 0.1pc to 22,001.27. 07:49 AM BST Reeves 'spending money she doesn't have', say Tories The shadow chancellor said the higher-than-expected rise in Government borrowing proved Rachel Reeves is 'spending money she doesn't have'. Mel Stride said: 'Debt interest already costs taxpayers £100bn a year – almost double the defence budget – and it's forecast to rise to £130bn on Labour's watch. 'Labour's jobs tax and reckless borrowing is killing growth and fuelling inflation – paving the way for more tax hikes and more borrowing in the autumn. Make no mistake – working families will pay the price for Labour's failure and costly U-turns. 'Only the Conservatives, under new leadership, will break this cycle. Only the Conservatives believe in sound money and low taxes.' Shadow business secretary Andrew Griffith added: 'This level of borrowing is not remotely 'unexpected' given the out of her depth Chancellor. 'She is no more capable of balancing her books than a first year undergrad in freshers week.' 07:42 AM BST Rising debt costs outweigh National Insurance raid The jump in the cost of servicing the national debt outweighed the returns for the Chancellor from her National Insurance raid, the ONS said. Rachel Reeves's changes hikes to employer National Insurance contributions raked in an extra £3.1bn in June, taking the total 'compulsory social contributions' for the month to £17.4bn. However, this was dwarfed by an £8.4bn jump in the cost of central government debt to £16.4bn, mainly as a result of bonds linked to the rate of inflation. ONS acting chief economist Richard Heys said: 'Borrowing in the month of June was over £6bn higher than during the same month last year. 'The rising costs of providing public services and a large rise this month in the interest payable on index-linked gilts pushed up overall spending more than the increases in income from taxes and National Insurance contributions, causing borrowing to rise in June.' 07:32 AM BST Surging debt interest costs 'piles more pressure' on Reeves Government debt interest payments were the second highest for June since monthly records began in 1997, heaping more pressure on the Chancellor. The Treasury paid £16.4bn in debt interest costs, which was £2.4bn more than the OBR predicted would be the case back in March. Dennis Tatarkov, senior economist at KPMG UK, said higher borrowing 'piles more pressure on public finances'. He said: 'Higher than expected interest payments as well as weaker revenues have pushed borrowing above the OBR's projection for the second month in a row. 'Furthermore, the longer-term outlook for public finances remains difficult. Recent U-turns on welfare and persistent growth headwinds could open a gap against fiscal targets, which could require further tax rises or spending cuts in the autumn Budget. 'To the extent that ongoing deficits point to lingering budgetary pressures, we would expect the OBR to acknowledge these at the next fiscal event.' 07:22 AM BST Treasury committed to fiscal rules, says minister The Treasury remains committed to the 'tough fiscal rules' set by the Chancellor, a minister has said, making tax rises more likely in the Budget. Chief Secretary to the Treasury Darren Jones said: 'We are committed to tough fiscal rules, so we do not borrow for day-to-day spending and get debt down as a share of our economy. 'This commitment to economic stability means we can get on with investing in Britain's renewal, including fixing our NHS, strengthening our national defence and building hundreds of thousands of affordable homes through our Plan for Change.' 07:18 AM BST Treasury borrowing costs surge amid rising inflation The Treasury in June paid nearly double the level of interest payments on its debt than compared to the same month last year, official figures show. The interest payable on central government debt jumped from £8.4bn in June last year to £16.4bn last month, mainly as a result of rising inflation, which pushed up the returns it must pay on index-linked gilts. The Treasury has borrowed £57.8bn so far this financial year, the ONS said, which was £7.5bn more than the same period last year. 07:04 AM BST Good morning Thanks for joining me. The Treasury borrowed more than official forecasts last month, cementing the case for Rachel Reeves to raise taxes in the autumn. Public sector net borrowing rose by £20.7bn in June, according to the Office for National Statistics (ONS), which was the highest figure for the month on record excluding the pandemic. It meant the Treasury borrowed £3.5bn more than the £17.1bn that had been forecast for the month by the Office for Budget Responsibility (OBR). Borrowing was £6.6bn higher than the same month last year. So far this financial year, public sector borrowing hit £57.8bn, which was in line with the OBR forecast. The Treasury in June paid nearly double the level of interest payments on its debt compared to the same month last year, mainly as a result of bonds linked to the rate of inflation, which has climbed in recent months. It comes as economists warned the Chancellor she faces a potential £30bn black hole in the public finances when she comes to deliver her Budget later this year. Ms Reeves has said repeatedly that she is committed to her fiscal rules and would not reopen departmental spending budgets, leaving her with little option but to raise taxes to keep the nation's finances in order. She has faced pressure from backbenchers to impose a wealth tax, while Angela Rayner is pushing for councils to be given new powers to tax tourists. Here is what you need to know. 5 things to start your day Trump tariffs risk 'pushing up UK borrowing costs' | US policies threaten to pile pressure on price of servicing national debt Vauxhall owner slumps to £2bn loss after botched bet on hydrogen | Stellantis blames restructuring costs and US tariffs for slip into red Millions to be forced to work for longer under state pension reform | Labour opens door to later retirement age after launching review three years ahead of deadline BP accused of 'chronic underperformance' by hedge fund Elliott | Activist investor says oil giant needs 'decisive and effective leadership' as new chairman announced Lucy Burton: The MeToo movement has made men scared to mentor women at work | Useless managers afraid of big emotions are blindly ignoring half of their workforce What happened overnight Asian share markets drifted lower after scaling a near four-year peak ahead of an onslaught of corporate earnings. MSCI's broadest index of Asia-Pacific shares outside Japan hit its highest level since October 2021 in early Asian hours but was last down 0.4pc. The index is up nearly 16pc this year. The S&P 500 and the Nasdaq notched record-high closes on Monday. The Japanese markets returned to action after a holiday on Monday following the weekend's election where the ruling coalition suffered a defeat in upper house elections, although Prime Minister Shigeru Ishiba vowed to remain in his post. Japanese shares briefly jumped at the open but reversed course to trade lower by Tuesday afternoon, as the election results were largely priced in and were not as bad as investors had feared. The yen rallied 1pc on Monday, recouping some of the losses from past weeks and was last slightly weaker at 147.73 per dollar. On Wall Street, the Dow Jones Industrial Average fell less than 0.1pc, to 44,323.53, the S&P 500 rose 0.1pc, to 6,305.68, and the Nasdaq rose 0.4pc, to 20,974.18. In the bond market, the yield on benchmark 10-year US Treasury notes fell to 4.387pc from 4.423pc late on Sunday. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Yahoo
21 hours ago
- Business
- Yahoo
Mali court dismisses Barrick's appeal to release four employees
A court in Mali has dismissed an appeal by Barrick Mining to free four employees detained since November last year, reported Reuters. According to Barrick, the employees, arrested on charges including money laundering and violating financial regulations, are facing baseless allegations. The rejection of the appeal by Judge Samba Sarr was confirmed by the company's lawyer, Alifa Habib Kone. Barrick Mining and the Mali Government have been engaged in a dispute over a new mining code since 2023. The code seeks to increase taxes and government stakes in gold mines including the Loulo-Gounkoto complex, which is 80% owned by Barrick. Tensions escalated with the suspension of operations and the seizure of Barrick's gold exports by the Malian authorities. The four Barrick employees have been held in pre-trial detention in Bamako, as stated on the company's website. Barrick has refuted the charges against its staff and continues to negotiate with Mali's military-run government. The standoff has significant implications, as Mali accounts for 14% of Barrick's gold production, with $949m (C$1.29bn) in revenue generated in the first nine months of the previous year. In addition to the detained employees, Mali issued an arrest warrant for Barrick CEO Mark Bristow, based in Toronto, last December for money laundering and financial regulation violations. This development occurs amidst a broader trend of gold-rich West African countries, led by military juntas, seeking to renegotiate mining agreements to capitalise on high gold prices. Last month, Barrick Mining excluded its Mali gold complex from its 2025 production forecast, as tensions rose following a two-year dispute over new mining legislation in Mali. "Mali court dismisses Barrick's appeal to release four employees" was originally created and published by Mining Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
a day ago
- Business
- Daily Mail
STEPHEN GLOVER: The pensions 'triple lock' must end. It pains me to say it, but Britain is no longer a rich nation and we can't afford it
When will Labour wake up to the fact that this country is living way beyond its means? Until it does, the rest of us will continue to inhabit a fool's paradise. Last month alone the Government borrowed nearly £21 billion – far more than most analysts expected and £6.6 billion more than in June last year. It is all but certain that taxes, already at a peacetime high, will go up again, and significantly, in October's Budget.
Yahoo
a day ago
- Business
- Yahoo
Are you leaving money on the table? 6 signs that you could be overpaying on your taxes
Do you like paying more in taxes than you have to? Probably not. Overpaying on taxes is one of the most common and avoidable mistakes I see as a financial coach. Every year, new clients unknowingly hand over more money to the IRS than necessary — not because they're rich, reckless or shady, but because they simply don't know what to look for at tax time. So let's break down the biggest ways you may be giving the IRS more than your fair share, and how you can fix it. 1. You're celebrating when you get a big tax refund Approximately 64 percent of all tax returns filed in 2024 resulted in refunds, based on IRS data through Dec. 27, 2024. In fact, the average tax refund for the most recent tax season was $3,138. If you got that amount back, you might be celebrating, but guess what? That was your money, and the government just borrowed it interest-free. Receiving a tax refund, especially a sizable one, is a sign that you overpaid in taxes throughout the year. When my clients have received large refunds, we've worked with their tax advisors to adjust their withholdings and increase their cash flow throughout the year. That extra money in each paycheck has helped to: Pay down high-interest credit card debt Make extra car loan payments Earn passive income in a high-yield savings account Contribute to retirement savings Save up for their next vacation How to fix it If your refund was more than a few hundred dollars, it's worth consulting with a tax professional to adjust your W-4 withholdings. You can use the extra money in your paychecks to meet your financial goals throughout the year, rather than waiting until the next tax season to get the money back. 2. You're filing under the wrong status Your tax filing status affects your standard deduction, tax brackets and eligibility for certain credits. A common tax mistake occurs when single parents qualify as 'head of household' but file as 'single.' Let's say you're a single mom with one child, and you earn $60,000 a year. If you select single as your filing status, your standard deduction for 2025 is $15,750 (under the Trump administration's new tax guidelines). But as head of household, your standard deduction is $23,625. The higher deduction amount reduces your tax liability and keeps more of your money in your pocket. As a bonus, head of household filers receive a lower tax rate. Not accounting for the higher standard deduction, the single mom earning $60,000 would pay nearly $1,400 less in taxes. How to fix it There are five filing status options, and your choice can have a big impact on your tax burden. For example: If you're married, should you file taxes jointly or separately? You'll also have to decide whether to claim the standard deduction or itemize deductions. Check with your tax professional to ensure you are filing under the optimal status. 3. You're managing investments without a tax game plan I see this a lot with newer investors: You get a good return on investments, so you sell them without realizing what kind of taxes you're on the hook for. Short-term capital gains (investments held for one year or less) are taxed like regular income, with tax rates of up to 37%. Long-term gains (held over a year) are taxed at 0%, 15% or 20%, depending on your income. And if you have investments that have lost value, you can sell those to offset gains. It's called tax-loss harvesting, and it can seriously lower your tax bill if done right. If you've recently been unemployed, switched jobs or taken a pay cut this year, it could be an opportunity to do a Roth conversion — moving money from a Traditional IRA or 401(k) into a Roth IRA to pay the taxes now so you don't have to pay taxes later. Read more: How to avoid paying capital gains taxes on investments How to fix it Any changes in your investments can trigger a potential tax bill you weren't planning on.I don't recommend tax loss harvesting or Roth conversions without the help of a licensed financial advisor and a tax professional. I assure you that what you'll pay in expert help can save you thousands over time.A dip in income or losses in your investment can have a bright side for your taxes and your long-term investing strategy — if you move strategically. 4. You're not using tax-friendly accounts first I've had countless clients tell me they started investing in a brokerage account because it was easy through their bank or an app, before contributing the maximum to their tax-friendly accounts first. Building savings in any high-yield vehicle builds financial resiliency, but prioritizing saving in tax-friendly accounts first can also help reduce your tax liability. Here's why that's a big deal: Traditional IRA or 401(k) contributions reduce how much you pay in taxes. For example, if you invest $1,000 in a traditional IRA, the income used to calculate your tax liability will be $1,000 less. Roth IRA withdrawals are tax-free if they meet certain criteria. For example, if you invest $1,000 in a Roth IRA and that amount grows to $5,000, that entire $5,000 will not be taxed. HSA (Health Savings Account) contributions can lower your taxes if you have a high-deductible health insurance plan (HDHP). The 'big beautiful bill' adds ACA bronze and catastrophic plans as qualified HDHPs. For example, if you invest $1,000 in an HSA, your taxable income will be lower by $1,000, and the earnings and withdrawals in the HSA will be tax-free if you use it for qualifying health expenses. How to fix it If you're not maxing out your retirement account before putting money in a brokerage or high-yield savings account, you're likely paying more taxes — both now and later. Consider moving the money in your brokerage account into one of these types of accounts to either save taxes now or in the future. 5. You're not claiming enough deductions for your business or side hustle Small businesses take many forms — and in some cases, your side hustle counts as a business. Side hustlers often forget to track their expenses, which means they could be overpaying on their taxes. For example, if you use your phone to promote your business on Instagram or answer client calls, part of your phone bill could be deductible. The same goes for things like subscriptions, mileage, office supplies and even a portion of your home, if you conduct business there. Read more: Common tax mistakes businesses make every year And if you're a solo entrepreneur and earning income from a side hustle or business, you can open a SEP IRA or Solo 401(k) to save for retirement and reduce your taxable income. How to fix it Don't be afraid to ask about all expenses if you're unsure. Whenever I incur a new expense, particularly a large one, I always consult with my tax advisor to determine whether I can deduct worst-case scenario is that she'll tell me no, but I've been pleasantly surprised at how many times she's said yes! 6. You're not working with a vetted tax nerd I love a good DIY moment, but taxes are not the time to wing it. I'm a money coach whose parents and brother were all accounting experts, and even I have never once done my taxes without consulting a tax professional. If your situation is even slightly complex (you run a business, have investments, bought a house or had major life changes, like a birth or death), it's worth getting help. But don't hire just anyone. Find someone who understands your specific situation. Because I run a consulting business, I needed a tax pro who actually understood my business to help me find the right deductions. Not all tax professionals are created equal, and the one that's best for you may not be right for me. How to fix it When shopping for a tax professional, ask for references and make sure they are knowledgeable about the latest tax code, especially since Trump's tax and spending bill passed in July 2025. The bill also ended the IRS Direct File program, which was used by more than 140,000 taxpayers in 2024 to file their federal income tax returns for free. I also encourage you to meet with your tax partner quarterly, or mid-year at a minimum, to check in on your taxes and ensure you're not caught by surprise during tax season. Questions to ask your tax partner You don't have to wait until tax time to clarify your tax strategy. Bring the following questions to your tax advisor during their off-season so you'll have plenty of time to create a plan if you need to make changes before filing. Have I maxed out all the tax-advantaged accounts I'm eligible for? Double-check if you can still contribute to IRAs, HSAs, FSAs or retirement plans through your business. Am I using the best filing status for my situation? Ask your tax professional to run scenarios under different statuses to show the difference. What deductions or credits am I eligible for that I might be missing? Ask specifically about education credits, the saver's credit or self-employment deductions if they apply to you. Also, ask whether any of your regularly claimed deductions or tax credits are impacted by the new tax bill, and what that means for your money. Should I adjust my withholding so I'm not overpaying during the year? If you got a big refund last year, this one's especially important. Would a Roth conversion or tax loss harvesting make sense for me this year? If you lost money in investments, your income dropped or you expect to be in a higher bracket, this could save you money long term. Does Trump's Big, Beautiful Bill have you feeling anxious? With the passage of the Trump administration's so-called Big, Beautiful Bill, several popular tax breaks were axed. Proponents of the new law claim that it will reduce the tax burden for many Americans, but skeptics aren't so sure. If any of the following scenarios apply to you, your tax situation may be changing for 2025. Paying for school for yourself or a family member Saving for retirement Managing student loans Running a small business Receiving tips as part of compensation Receiving Medicaid benefits With the big changes to the tax code, it's more important than ever to consult with a licensed tax professional to be sure you're claiming everything you're eligible for and meeting the requirements needed to qualify for certain tax credits. Final thoughts: There are no bonus points for paying more than necessary Paying taxes is a part of adulting. While you shouldn't try to pay less than your legal obligation, overpaying isn't going to help you reach your money goals faster. Learning how to lower your tax bill is one of the smartest money moves you can make, and all the moves mentioned above were available even before the bill passed. You don't have to become a tax expert, but you do need a healthy wealth plan that includes an efficient tax strategy. Whether you're investing for the first time, running a side hustle or trying to build generational wealth, paying the right amount of taxes frees up more of what you earn and supports your path toward financial freedom.
Daily Mail
a day ago
- Business
- Daily Mail
Britain is drowning in debt as UK borrowing soars and pressure grows for major tax hikes
Britain is drowning in debt with borrowing jumping to a five-year high, the latest figures reveal. Rachel Reeves will now face intensifying pressure to put up taxes to deal with the spiralling cost of servicing the debt pile. Borrowing, which makes up the shortfall between the Government's income through tax and the amount it spends, climbed last month to a larger than expected £20.7billion. That was the highest level for June since 2020 and £6.6billion more than a year ago. The surge was fuelled by a sharp increase in debt interest payments, up from £8.4billion to £16.4billion. The figures highlight the staggering cost of servicing the UK's debt mountain, which now stands at a towering £2.87trillion. Debt interest payments are expected to surpass £110billion this financial year. The Chancellor told a House of Lords committee hearing yesterday that the UK was 'still very reliant on the goodwill of strangers' who finance Britain's debt by buying government bonds. She added: 'I'm a Labour politician. I don't think there's anything progressive about spending £100billion a year, often to US hedge funds, when I would rather spend that money on the health service or on defence or on better schools.' Ms Reeves said that meant she would stick to her fiscal rules, which require the Government to balance the books on day-to-day spending and target an eventual reduction in debt. Failure to do so could mean bond investors demand even higher rates to lend to the UK. Yields have already risen since Labour came to power a year ago. Higher inflation also contributes to raise debt interest costs. Bank of England governor Andrew Bailey told MPs in a separate parliamentary hearing that he was 'not unconcerned' by the rising cost of borrowing. The dire financial situation will add up to tough decisions in Ms Reeves' autumn Budget, when she could face filling in a financial black hole of more than £20billion in order to meet her fiscal rules. Her predicament has been worsened after the Government caved in over welfare reforms that could have saved £5billion a year. Tom Clougherty, from think-tank the Institute of Economic Affairs, said the borrowing figures meant tax rises were 'inevitable'. 'Given the country's deepening economic malaise, high borrowing costs, and the Government's failure to implement even minor spending cuts, it is hard to see another way out,' he added. Speculation is rife the Chancellor will raise money through measures such as freezing income tax thresholds – dragging millions into paying tax at higher rates – or raiding pension savings. Some suggest Ms Reeves could even abandon election pledges not to increase income tax, employee National Insurance or VAT. Another option could be a hike on business taxes but that would bitterly dismay firms still reeling from the Chancellor's £25billion hike in employer National Insurance contributions. The employer NI hike, which took effect in April, has delivered an extra £7.5billion to Treasury coffers so far this year. Hated inheritance tax has also brought in £2.2billion, up by more than £100million since last year. Shadow Chancellor Sir Mel Stride said: 'Rachel Reeves is spending money she doesn't have. Make no mistake, working families will pay the price for Labour's failure and costly U-turns.' The borrowing fears add to the darkening economic picture under Labour after unemployment rose, GDP shrank for two months in a row and inflation hit 3.6 per cent, the highest level since the start of last year. And it comes after the Office for Budget Responsibility raised fears over the state of the public finances, saying Britain 'cannot afford the array of promises that it has made to the public'. Ms Reeves would not commit to lowering taxes but said she wanted to reduce the tax burden by increasing GDP. Appearing before the House of Lords economic affairs committee, she again refused to rule out a wealth tax, saying tax is 'a matter for the Budget'. But she called on employers to hire British workers, saying: 'I do not think that businesses should always resort to the immigration lever to fill vacancies.'
