UK’s Labour government hikes taxes in first budget

Britain's Chancellor of the Exchequer Rachel Reeves poses with the red budget box outside her office on Downing Street in London, Britain October 30, 2024. (Reuters)
Britain's Chancellor of the Exchequer Rachel Reeves poses with the red budget box outside her office on Downing Street in London, Britain October 30, 2024. (Reuters)
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Updated 30 October 2024
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UK’s Labour government hikes taxes in first budget

Britain's Chancellor of the Exchequer Rachel Reeves poses with the red budget box outside her office on Downing Street in London
  • Reeves said £25 billion would come from hiking employers’ national insurance — a payrolls tax used to help pay for social care
  • Changes to inheritance tax will raise more than £2 billion while the government is also hiking taxation on capital gains and property purchases

LONDON: Britain’s new Labour government on Wednesday announced major tax hikes and higher borrowing to meet Prime Minister Keir Starmer’s aim of investing for long-term growth.
In the highly-anticipated fiscal update — the first under the center-left government after 14 years of Conservative rule — finance minister Rachel Reeves said tax increases would raise an additional £40 billion ($52 million).
Addressing parliament in a speech lasting more than one hour, Reeves also confirmed changes to fiscal rules that will allow the government to invest billions more in public services.
“This government was given a mandate,” Reeves told MPs.
“To restore stability to our country and to begin a decade of national renewal. The only way to drive economic growth is to invest, invest, invest,” she insisted.
Labour won a landslide general election in July and had already announced a raft of economic measures, including improved workers’ rights and minimum wages, a vast green-energy plan and plans for mass building of homes.
Ahead of the budget, it also drew strong criticism for scrapping a winter-fuel benefit scheme for millions of pensioners, hurting Starmer’s approval rating in polls.
“I am restoring stability to our public finances and rebuilding our public services,” Reeves said Wednesday.
Reeves said £25 billion would come from hiking employers’ national insurance — a payrolls tax used to help pay for social care.
Changes to inheritance tax will raise more than £2 billion while the government is also hiking taxation on capital gains and property purchases as part of its plans to claw back money.
The pound won back ground as Reeves spoke, while London’s stock market was little changed.
“At this stage, massive tax rises have not spooked financial markets,” said Kathleen Brooks, research director at traders XTB.
The government kept its pledge not to raise income taxes, employee national insurance charges, or value added tax.
Outgoing Tory leader Rishi Sunak, Britain’s former prime minister, said the budget contains “broken promise after broken promise.”
Ahead of her tax and spend plans, Reeves made a technical change to the way UK debt is measured to allow her to borrow more, even though the country’s public sector borrowing is now at levels last seen in the 1960s.
To boost investment, the chancellor will use a wider measure of debt that takes into account the future returns on investment.
Reeves on Wednesday said the extra investment in capital infrastructure projects would start to “repair the fabric of our nation.”
The government will invest billions of pounds to rebuild schools, hire teachers and fund childcare.
In a surprise move, she extended the freeze on fuel duty until next year.
The cash-strapped National Health Service will receive a substantial boost, with the day-to-day health budget receiving an increase of nearly £23 billion.
Alongside the budget, Reeves said Britain’s economy was set to grow faster than forecast this year and next.
The nation’s gross domestic product will expand 1.1 percent in 2024 and by 2.0 percent next year — above estimates given in March by the Office for Budget Responsibility (OBR), Britain’s fiscal watchdog.
Britain is benefiting from its annual inflation rate dropping to under the Bank of England’s 2.0-percent target, easing a cost-of-living crisis.
The International Monetary Fund this month also estimated that Britain’s economy would grow 1.1 percent in 2024.
Looking beyond next year, the OBR on Wednesday downgraded Britain’s growth forecasts for the 2026-2028 period.


Thailand protests Myanmar’s navy firing at Thai fishing boats

Thailand protests Myanmar’s navy firing at Thai fishing boats
Updated 3 sec ago
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Thailand protests Myanmar’s navy firing at Thai fishing boats

Thailand protests Myanmar’s navy firing at Thai fishing boats
  • Prime Minister Paetongtarn Shinawatra questioned claims that the fishing boats had intruded into Myanmar’s territorial waters
  • Thailand seeking more details on the incident and a quick release of four Thai nationals who were among the 31 fishermen detained
BANGKOK: Thailand protested an incident involving Myanmar’s navy firing on Thai fishing vessels, Prime Minister Paetongtarn Shinawatra said on Sunday, after one fisherman drowned, two were injured and dozens were detained from one of the boats.
Shinawatra questioned claims that the fishing boats had intruded into Myanmar’s territorial waters when Myanmar’s navy opened fire on the vessels on Saturday.
The Thai defense ministry earlier said two of 15 Thai fishing vessels were fired on when they were 4-5.7 nautical miles (7.4-10.6 km) inside Myanmar’s territorial waters near the southern Thai province of Ranong.
“It is inconclusive,” Shinawatra said, when asked by reporters whether Thai fishing boats encroached on Myanmar’s territorial waters.
“We don’t support violence whatever the circumstances,” she said, adding that Thailand was seeking more details on the incident and a quick release of four Thai nationals who were among the 31 fishermen detained.
Myanmar’s ruling junta did not immediately respond to a telephone request for comment.
Thai Defense Minister Phumtham Wechayachai said a letter protesting the use of force was sent to Myanmar through a local border mechanism, demanding clear details about what happened and a quick return of the Thai boat and crew detained.
Thai Foreign Minister Maris Sangiampongsa also issued a letter of concern over the incident to the Myanmar government and summoned the Myanmar ambassador for a meeting on Monday, seeking clarification about what happened and a quick release of the four Thai nationals.
Myanmar has been in crisis since 2021 when the military seized power, toppling an elected government and sparking an armed rebellion by crushing protests with lethal force.

Pakistan national airline hopes to resume Europe flights soon after regulator lifts ban

Pakistan national airline hopes to resume Europe flights soon after regulator lifts ban
Updated 7 min 39 sec ago
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Pakistan national airline hopes to resume Europe flights soon after regulator lifts ban

Pakistan national airline hopes to resume Europe flights soon after regulator lifts ban
  • The European Union Aviation Safety Agency suspended PIA’s authorization to operate in the EU in June 2020
  • Once PIA gets approval for UK flights, London, Manchester, and Birmingham would be the most sought-after destinations

KARACHI: Pakistan International Airlines (PIA) said on Sunday it expects to resume European routes soon and is eyeing several UK destinations after the EU aviation regulator lifted its bar on the flag carrier.
The European Union Aviation Safety Agency (EASA) suspended PIA’s authorization to operate in the EU in June 2020 over concerns about the ability of Pakistani authorities and its Civil Aviation Authority (PCAA) to ensure compliance with international aviation standards.
“PIA plans to approach the UK’s Department for Transport (DfT) for UK route resumption, as EASA clearance is a prerequisite for their decision,” PIA spokesman Abdullah Hafeez Khan told Reuters.
EASA and UK authorities suspended permission for PIA to operate in the region after Pakistan began investigating the validity of pilots’ licenses following a deadly plane crash that killed 97 people.
Khan said the airline expects to resume flights to Europe, starting with Paris, within the next three to four weeks.
Once PIA gets approval for UK flights, Khan said London, Manchester, and Birmingham would be the most sought-after destinations.
PIA and the government, which is aiming to sell a 60 percent stake in the carrier, had urged EASA to lift the ban, even provisionally. The ban cost the airline 40 billion rupees ($144 million) annually in revenue.
Khan said the company has sufficient cash flow to add new routes. Decisions on leasing new aircraft will be made after the government finalizes privatization discussions, he said.
The loss-making national carrier has a 23 percent stake in Pakistan’s domestic aviation market, but its 34-plane fleet can’t compete with Middle Eastern carriers which hold a 60 percent market share, due to a lack of direct flights, despite having agreements with 87 countries and key landing slots.
The government’s attempt to privatize the airline fell flat when it received only a single offer, well below its asking price.
“With Europe now, and upcoming UK routes, we anticipate increased revenue potential and hence a rise in PIA’s value during the privatization process,” Khan said.


New EU chiefs visit Kyiv on first day of mandate

New EU chiefs visit Kyiv on first day of mandate
Updated 01 December 2024
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New EU chiefs visit Kyiv on first day of mandate

New EU chiefs visit Kyiv on first day of mandate
  • The European Union’s new leadership team is keen to demonstrate it remains firm on backing Kyiv at a perilous moment for Ukraine
  • Questions are swirling around the future of US support once Donald Trump assumes office in January

Kyiv: The EU’s new top diplomat Kaja Kallas and head of the European Council Antonio Costa arrived in Kyiv Sunday in a symbolic show of support for Ukraine on their first day in office.
“We came to give a clear message that we stand with Ukraine, and we continue to give our full support,” Costa told media outlets including AFP accompanying them on the trip.
The European Union’s new leadership team is keen to demonstrate it remains firm on backing Kyiv at a perilous moment for Ukraine nearly three years into its fight against Russia’s all-out invasion.
Questions are swirling around the future of US support once Donald Trump assumes office in January and there are fears he could force Kyiv to make painful concessions in pursuit of a quick peace deal.
Meanwhile, tensions have escalated as Russian President Vladimir Putin has threatened to strike government buildings in Kyiv with his new Oreshnik missile after firing it at Ukraine for the first time last month.
The Kremlin leader said the move is a response to Kyiv getting the green light to strike inside Russia with American and British missiles, and he has threatened to hit back against the countries supplying the weaponry.
As winter begins Russia has also unleashed devastating barrages against Ukraine’s power grid and on the frontline Kyiv’s fatigued forces are losing ground to Moscow’s grinding offensive.
“The situation in Ukraine is very, very grave,” Kallas, a former prime minister of Estonia, said. “But it’s clear that it comes at a very high cost for Russia as well.”
Ceasefire?
The new EU leaders — the bloc’s top officials along with European Commission chief Ursula von der Leyen — were set to hold talks with Ukraine’s President Volodymyr Zelensky.
Zelensky on Friday appeared to begin staking out his position ahead of any potential peace talks.
He called on NATO to offer guaranteed protections to parts of Ukraine controlled by Kyiv in order to “stop the hot stage of the war,” and implied he would then be willing to wait to regain other territory seized by Russia.
“If we speak ceasefire, (we need) guarantees that Putin will not come back,” Zelensky told Britain’s Sky News.
Kallas said that “the strongest security guarantee is NATO membership.”
“We need to definitely discuss this — if Ukraine decides to draw the line somewhere then how can we secure peace so that Putin doesn’t go any further,” she said.
Diplomats at NATO say there appears little prospect of the alliance granting Ukraine membership soon given opposition from a raft of members cautious of getting dragged into war with Russia.
Kallas said the EU “shouldn’t really rule out anything” in terms of the question of sending European troops to help enforce any ceasefire.
“We should have this strategic ambiguity around this,” she said.
’Transactional language’
Trump has cast doubt on continuing Washington’s vast aid for Ukraine and called on EU countries to do more.
Europe together has spent around $125 billion on supporting Ukraine since Russia’s 2022 invasion, while the United States alone has coughed up over $90 billion, according to a tracker from the Kiel Institute.
Kallas said the EU would use a “transactional language” to try to convince Trump that backing Kyiv was in the interest of the US.
“Aid for Ukraine is not charity,” she said. “A victory for Russia definitely emboldens China, Iran, North Korea.”
The new EU foreign policy chief said the bloc would continue seeking to put Ukraine in the “strongest” position — if and when Kyiv chose it was time to negotiate with Moscow.
But she conceded that it was becoming “increasingly difficult” for the 27-nation bloc to agree on new ways to ramp up support for Ukraine.
“This war has been going on for quite some time and it is harder and harder to explain it to our own people,” she said. “But I don’t see any option.”


Russian drones target Kyiv in overnight strike

Russian drones target Kyiv in overnight strike
Updated 01 December 2024
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Russian drones target Kyiv in overnight strike

Russian drones target Kyiv in overnight strike
  • Russia has regularly sent missiles and drones at Ukrainian settlements far beyond the front line

KYIV: Russia launched attack drones at Kyiv in its latest overnight air strike on the Ukrainian capital, city officials said on Sunday.
Air defenses destroyed around a dozen drones over the city, according to military administrator Serhiy Popko. No injuries were reported after debris fell on one city district, he said.
Reuters correspondents heard explosions above the city later in the morning during the second air-raid alert of the day.
Russia has regularly sent missiles and drones at Ukrainian settlements far beyond the front line of its nearly three-year-old invasion, targeting the energy grid in particular as winter sets in.


War has no winners, Taiwan president says in visit to Hawaii

War has no winners, Taiwan president says in visit to Hawaii
Updated 01 December 2024
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War has no winners, Taiwan president says in visit to Hawaii

War has no winners, Taiwan president says in visit to Hawaii
  • Taiwan President Lai Ching-te is making a sensitive two-day trip to Hawaii
  • He is on his way to three Pacific island nations that maintain formal ties with Taiwan

TAIPEI: War has no winners and peace is priceless, Taiwan President Lai Ching-te said on Saturday in Hawaii after visiting a memorial to the attack on Pearl Harbor on a trip to the United States that has angered Beijing.
Lai is making a sensitive two-day trip to Hawaii that is officially only a stopover on the way to three Pacific island nations that maintain formal ties with Taiwan, which China claims as its territory.
Speaking to members of the overseas Taiwan community and Hawaii politicians, including members of Congress Ed Case and Jill Tokuda, Lai referred to his visit to the USS Arizona Memorial earlier in the day and laid a wreath in memory of those who died in the 1941 Japanese attack.
“Our visit to the memorial today in particular reminds us of the importance of ensuring peace. Peace is priceless and war has no winner. We have to fight — fight together — to prevent war,” Lai said in English, in a speech carried live on television in Taiwan.
As Lai was attending the event, China said it had complained to Washington for arranging for his transit through US territory, while vowing “resolute countermeasures” against a potential arms sale to Taiwan that the US announced hours before Lai started his trip.
China’s foreign ministry lodged “stern representations” over the transit, China’s Taiwan Affairs Office said in a statement.
“We are firmly opposed to official exchanges between the United States and Taiwan, and we are firmly opposed to the ‘transit’ of leaders of the Taiwan region to the United States under any name and for any reason,” it said.
Security sources have told Reuters that China could launch a new round of war games around Taiwan in response to his visit, his first overseas trip since assuming office in May, having won election in January.
China has staged two rounds of major war games around Taiwan so far this year.
In his speech Lai switched to Taiwanese, also known as Hokkien, and said that by uniting together, all difficulties could be overcome. “Taiwan’s democracy can become a model for the international community,” he said.
Lai and his government reject Beijing’s sovereignty claims and say they have a right to visit other countries.
After Hawaii, Lai will go to the Marshall Islands, Tuvalu and Palau, with another stopover in the US territory of Guam. Hawaii and Guam are home to large US military bases.