UK's Much-Feared Wave of Job Cuts Is Failing to Materialize
A threatened avalanche of job cuts after Chancellor of the Exchequer Rachel Reeves unveiled her tax-raising budget has so far failed to materialize, with memories of how difficult it was to rehire workers following the pandemic persuading many firms to hang onto staff instead.
The prospect of a £26 billion ($32.7 billion) hike in payroll taxes combined with another hefty increase in the minimum wage from April triggered a raft of warnings from business leaders including Stuart Machin, CEO of Marks & Spencer Group Plc, and billionaire James Dyson. Surveys too pointed to hefty cuts, with the closely watched PMI showing jobs being shed at a pace seen during the financial crisis.
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2 hours ago
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NHS faces paying more for US drugs to avoid future Trump tariffs
Britain faces paying more for US drugs as part of a deal to avoid future tariffs from Donald Trump. The NHS will review drug pricing to take into account the 'concerns of the president', according to documents released after a trade agreement was signed earlier this year. White House sources said it expected the NHS to pay higher prices for American drugs in an attempt to boost the interests of corporate America. A Westminster source said: 'There's an understanding that we would look at the drug pricing issue in the concerns of the president.' The disclosure is likely to increase concerns about American interference in the British health service, which has long been regarded as a flashpoint in trade talks. It comes after Rachel Reeves announced a record £29 billion investment in the NHS in last week's spending review. The Chancellor's plans will drive spending on the health service up towards 50 per cent of all taxpayer expenditure by the mid-2030s, according to economists at the Resolution Foundation. The Telegraph has also learnt that under the terms of the trade deal with America, the UK has agreed to take fewer Chinese drugs, in a clause similar to the 'veto' given to Mr Trump over Chinese investment in Britain. The White House has asked the UK for assurances that steel and pharmaceutical products exported to the US do not originate in China, amid fears the deal could be used to 'circumvent' Mr Trump's punishing tariffs on Beijing. Mr Trump is enraged by how much more America pays for drugs compared with other countries and considers it to be the same issue as he has raised on defence spending. Just as the US president has heaped pressure on European nations to increase the GDP share they allocate to defence, he thinks they should spend more on drug development. An industry source said: 'The way we've been thinking about it and many in the administration have been thinking about it, it's more like the model in Nato, where countries contribute some share of their GDP.' Britain and the US 'intend to promptly negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients', the trade deal reads. Pharmaceutical companies are also pushing for reductions in the revenue sales rebates they pay to the NHS under the voluntary scheme for branded medicines pricing, access and growth (VPAG) – a mechanism that the UK uses to make sure the NHS does not overpay. Last week, Albert Bourla, Pfizer's chief executive, said non-US countries were 'free-riding' and called for a US government-led push to make other nations increase their proportionate spend on innovative medicines. He said White House officials were discussing drug prices in trade negotiations with other countries. 'We represent in UK 0.3pc of their GDP per capita. That's how much they spend on medicine. So yes, they can increase prices,' Mr Bourla said. Industry sources said there was no indication yet on what the White House would consider to be a fair level of spending. Whatever the benchmark, Britain will face one of the biggest step-ups. UK expenditure on new innovative medicines is just 0.28pc of its GDP, roughly a third of America's proportionate spending of 0.78pc of its GDP. Even among other G7 nations, the UK is an anomaly. Germany spends 0.4pc of its GDP while Italy spends 0.5pc. Most large pharmaceutical companies generate between half and three quarters of their profits in the US, despite the fact that America typically makes up less than a fifth of their sales. This is because drug prices outside of the US can cost as little as 30pc of what Americans pay. Yet, pharmaceutical companies rely on higher US prices to fund drug research and development, which the rest of the world benefits from. A month ago, Mr Trump signed an executive order titled 'Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients', which hit out at 'global freeloading' on drug pricing. It stated that 'Americans should not be forced to subsidise low-cost prescription drugs and biologics in other developed countries, and face overcharges for the same products in the United States' and ordered his commerce secretary to 'consider all necessary action regarding the export of pharmaceutical drugs or precursor material that may be fuelling the global price discrimination'. Trung Huynh, the head of pharma analysis at UBS, said: 'The crux of this issue is Trump thinks that the US is subsidising the rest of the world with drug prices. 'The president has said he wants to equalise pricing between the US and ex-US. And the way he wants to do it is not necessarily to bring down US prices all the way to where ex-US prices are, but he wants to use trade and tariffs as a pressure point to get countries to increase their prices. 'If he can offset some of the price by increasing prices higher ex-US, then the prices in America don't have to go down so much.' Mr Huynh added: 'It's going to be very hard for him to do. Because [in the UK deal] it hinges on the NHS, which we know has got zero money.' Under VPAG, pharmaceutical companies hand back at least 23pc of their revenue from sales of branded medicines back to the NHS, worth £3bn in the past financial year. The industry is pushing for this clawback to be cut to 10pc, which would mean the NHS would have to spend around 1.54bn more on the same medicines on an annual basis. The Government has already committed to reviewing the scheme, a decision which is understood to pre-date US trade negotiations. A government spokesman said: 'This Government is clear that we will only ever sign trade agreements that align with the UK's national interests and to suggest otherwise would be misleading. 'The UK has well-established and effective mechanisms for managing the costs of medicines and has clear processes in place to mitigate risks to supply.'
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6 hours ago
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Britain Sent Jets to Middle East That Could Support Israel
By Britain has sent fighter jets to the Middle East to protect its assets and 'potentially to support our allies,' Chancellor of the Exchequer Rachel Reeves said. 'It does not mean that we are at war and we have not been involved in these strikes or this conflict,' Reeves told Sky News. 'It's a precautionary move and at the same time we are urging deescalation.'
Yahoo
7 hours ago
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Reeves vows to shield UK from Israel-Iran price shock
Chancellor Rachel Reeves says the government will do "everything in [its] power" to protect people in the UK from the knock-on economic effects of the conflict between Iran and Israel. She would not "take anything off the table" in response to the threat of rising energy costs, she told the BBC's Sunday with Laura Kuenssberg programme. The global oil price rose sharply on Friday following the initial attacks by Israel and Iran's subsequent response. A rise in the cost of oil pushes up petrol and diesel prices and can fuel inflation more broadly. Following Russia's full scale invasion of Ukraine in 2022, oil prices spiked to nearly $130 a barrel, contributing to higher prices for UK shoppers on everything from transport to food. However the cost of a barrel of oil, currently around $75, is still lower than it was in January. "There is no complacency from myself or the Treasury," Reeves told the BBC. In 2022, following the start of the Ukraine war, the Conservative government responded to higher energy prices by stepping in to help households with their bills. "We are not anywhere near that stage at the moment," the chancellor said. Household energy bills respond slowly to rising wholesale energy prices, and average bills, as set by the price cap, are due to come down in July. If the conflict continues, and in particular if there is disruption to shipping in the Strait of Hormuz, the waterway off the south coast of Iran, the price of oil and gas could rise further. However, oil market experts say there is currently less upward pressure on the price of oil than there was three years ago. How the Israel-Iran conflict could affect energy prices Reeves said the situation in the Middle East was part of the reason that she had raised spending on both defence and energy security, in her announcement last week, which outlined the government's budgets for the rest of the parliament. "A lack of investment in our own domestic energy production has left us exposed," she said. "The investment [announced in the Spending Review] in nuclear energy, in offshore wind, in onshore wind, in carbon capture and storage, is all about ensuring we are more self-sufficient as a nation," she said. Many of those investments will take several years to complete, but some of the government's planned investments could have an impact "in the shorter term" such as investment in home insulation, she added. Lord John Browne, former chief executive of the energy giant BP, said he also believed it was time to "push very hard" on energy security, and on the transition away from fossil fuels. Lord Browne, who now chairs BeyondNetZero, a fund investing in carbon transition technologies, told Laura Kuenssberg some of the government's plans were "too bullish" and would take more time than planned. Shadow chancellor Mel Stride said the implications of the latest conflict for "oil prices, equity prices... trading and inflation and therefore interest rates and the general state of the world economy" were very important. He said the UK economy needed to be "much stronger" to cope with the challenges it is now facing, adding that the government had made the wrong choices by increasing taxes on business. Plans for borrowing and spending had kept inflation higher, he said. How the Israel-Iran conflict could affect energy prices Reeves boosts NHS and housing as some budgets squeezed Crisis - which crisis? Israel-Iran another huge challenge for government Error in retrieving data Sign in to access your portfolio Error in retrieving data
