Wednesday’s Budget announcement has continued to make headlines in the UK. The Financial Times reports that the government’s borrowing costs rose to their highest level in 2021 on Thursday, due to investor concerns over the amount of debt resulting from the Budget. Although some have downplayed the situation, others have warned that the rise in rates could lead to a major financial crisis.
The Daily Telegraph states that UK Chancellor Rachel Reeves is receiving backlash from the markets for her debt-fueled spending plans. According to an interview with Bloomberg, Reeves has reassured the markets that public finances are on a stable trajectory, and that her “number one commitment” is fiscal stability. However, economists warn that interest rates will fall more slowly as a result of the Budget.
The Guardian reports that the Chancellor has been warned that an extra £9bn in tax rises may be necessary to avoid another round of austerity for some public services. Paul Johnson, the director of the Institute for Fiscal Studies, claims that Reeves is not being realistic in her plans and is effectively pretending she can provide government departments with generous funding while reining in public spending later.
The Times discloses that the total cost of sickness benefits may reach £100bn per year by the end of the parliamentary term. This is due to a surge in claims after the pandemic, which has become permanent due to a decline in the population’s health. The UK is an outlier in the developed world in the numbers not decreasing after the pandemic passed. Work and Pensions Secretary Liz Kendall is committed to tackling the issue, calling the trend “unacceptable.
Read the full article from The BBC here: Read More
