Sterling steady, gilts yields hold higher as Reeves delivers spending review
LONDON, June 11 (Reuters) - Sterling was little changed and UK government bond yields held higher on Wednesday, as British finance minister Rachel Reeves delivered a spending review dividing up more than 2 trillion pounds ($2.7 trillion) of public spending.
Britain's 10-year gilt yield was last up 6 bps to 4.6% , holding higher on the day and underperforming its peers. Bond yields across other big European government markets were up around 2 bps.
Sterling was steady at around $1.349 and 84.70 pence per euro .
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North Wales Chronicle
36 minutes ago
- North Wales Chronicle
Government ‘putting its money where its mouth is' with £200m for Acorn scheme
Ministers confirmed they are meeting in full the request for development funding for the Acorn project in Aberdeenshire – the first time a government has provided funding of this scale for such a project to proceed. The scheme, which proposes storing emissions from across Scotland under the North Sea, had previously been overlooked for support despite repeated calls from the Scottish Government and others for it to be backed. With the UK Government also pledging to support the Viking carbon capture and storage (CCS) project in the Humber, Mr Miliband insisted the two schemes will 'support industrial renewal' with 'thousands of highly skilled jobs'. According to the sector, Acorn could support about 15,000 jobs at its peak, with up to 20,000 jobs at the Viking project. As it develops, it is planned the Acorn site will link up with the former oil refinery at Grangemouth via more than 200 miles of pipelines. An existing 175 miles of gas pipes will be repurposed for this, with 35 miles of new pipeline also being built, allowing CO2 from the Grangemouth site to be transported to Acorn's storage facilities under the North Sea. The move is seen by many as being key in securing a future for the facility, where some 400 workers were recently made redundant. Speaking as he visited the site near Peterhead, Aberdeenshire, Mr Miliband said: 'This Government is putting its money where its mouth is and backing the trailblazing Acorn and Viking CCS projects. 'This will support industrial renewal in Scotland and the Humber with thousands of highly-skilled jobs at good wages to build Britain's clean energy future. 'Carbon capture will make working people in Britain's hard-working communities better off, breathing new life into their towns and cities and reindustrialising the country through our Plan for Change.' Mr Miliband visited the site the day after Rachel Reeves promised funding for Acorn in her spending review – although the Chancellor did not put a figure on how much support would be given in her statement to MPs. Scottish Secretary Ian Murray said afterwards: 'The £200 million funding confirmed for the Acorn carbon capture project will help to support the design and preparation as it continues to progress. 'This is about revitalising our industrial communities and creating long-term economic opportunities for Scottish workers.' Tim Stedman, chief executive of Storegga, the lead developer of Acorn, said: 'We warmly welcome the UK Government's support for the Acorn project and the commitment to development funding that will enable the critical work needed to reach final investment decision.' He added the 'milestone' is 'key not only for Acorn but for establishing Scotland's essential CCS infrastructure needed to grow and scale the UK's wider carbon capture and storage industry'. Mr Stedman continued: 'We look forward to working with Government in the months ahead to understand the details of today's commitment, and to ensure the policy, regulatory and funding frameworks are in place to build and grow a world-leading UK CCS sector.' Graeme Davies, executive vice-president at Harbour Energy, which is leading the Viking project, said the commitment in the spending review 'sends a strong signal' that the project is 'an infrastructure-led economic growth priority' for the Parliament. He added: 'We will work with Government on the critical steps needed to progress Viking CCS towards a final investment decision.' However climate campaigners at Friends of the Earth said the money should instead be invested in public transport, energy efficiency and measures to support oil workers to transition to jobs in the renewables sector. Caroline Rance, head of campaigns at Friends of the Earth Scotland, said: 'This is an enormous handout of supposedly scarce public money that will only directly benefit greedy oil and gas companies. 'Politicians are paying hundreds of millions to keep us locked into an unaffordable energy system which is reliant on fossil fuels and is destroying the climate. 'Carbon capture technology has 50 years of failure behind it, so businesses, workers and the public are being sold a lie about its role in their future. 'Building new fossil fuel infrastructure will undermine the energy transition and embolden oil firms to keep on drilling in the North Sea. 'Both the UK and Scottish governments should instead be backing climate solutions that can improve people's lives such as upgrading public transport, ensuring people live in warm homes and creating green jobs for the long-term.'
The Guardian
an hour ago
- The Guardian
Does Labour's spending review signal a return to austerity?
Rachel Reeves usually avoids any mention of the word 'austerity' in connection with her fiscal policies, but on Wednesday, she decided to tackle the argument head on. 'In this spending review, total departmental budgets will grow by 2.3% a year in real terms,' she told MPs as she announced the next stage of her spending review. 'Compare that to the Conservatives' choice of austerity … Austerity was a destructive choice for both the fabric of our society and our economy, choking off investment and demand and creating a lost decade for growth, wages and living standards.' The chancellor argues that her decision to lift departmental budgets by 2.3% on average over the course of this parliament shows this cannot be compared with the coalition period, when spending fell by 2.9% on average. Some departments are faring particularly well. The Department of Health and Social Care will receive 2.8% more on average over the course of the parliament, taking its budget from £189bn in 2023-24 to £246bn by 2028-29. But focusing only on this week's announcement, which covers the three years from 2026-27, the settlement looks much tighter, with departmental budgets rising only 1.5% on average. Taking out certain big-ticket items of government spending, the situation looks tougher still. According to the Resolution Foundation, everything outside of health, defence, education and overseas aid will fall by 1.3% on average – a total of £2.4bn in cuts. Some departments are being particularly badly hit, including the Home Office, which is facing 1.4% annual cuts over the next three years; and the environment department, the budget of which will drop 2.3% each year on average. Sharon Graham, the general secretary of the Unite union, said: 'Spending cuts will be seen as austerity; those are the facts. Labour needs to pick up the pace on change, otherwise it will be stuck in the political slow lane while other voices get louder.' The chancellor says that the significant rise in capital spending will help offset the impact of reduced day-to-day spending for some departments. Better technology and equipment will help make processes more efficient, for example in the NHS where new scanners and testing machines should help ease the burden on doctors and nurses. Economists also point out that the growth in day-to-day spending is still set to outstrip even the OBR's relatively bullish growth forecasts. Paul Johnson, the director of the Institute for Fiscal Studies, said: 'This is not a period of austerity. This is a long period during which spending will be growing faster than the economy which, given current OBR estimates – which are more optimistic than most – is set to grow by 1.5% a year.' Reeves faces two main problems, however, when persuading the public they are not experiencing austerity. One is that the cuts are being made from an artificially inflated baseline, based on Conservative spending plans that were never realistic in the first place. Andy King, an economist and former chief of staff at the Office for Budget Responsiblity, said the £400bn uplift outlined by Reeves was 'basically the price tag for taking implausible out of the spending plans'. He said: 'Was it a spending spree? Not really. Was it austerity? Not really. It looks like a pretty conventional and sensible way of allocating the spending envelope.' The second is that unlike during the previous Labour government, Reeves is increasing overall departmental budgets after years of cuts. Local government, for example, will receive average real-terms rises of 1.1% a year over the next three years. But at the end of that period its central government funding will be 50% lower than it was in 2010. For those on the left, those previous cuts are even more reason to open the spending taps now, even if it means raising taxes at the autumn budget to do so. Theo Harris, an economist at the New Economics Foundation, said: 'To deliver the change people voted for, the government should free itself from its self-imposed fiscal rules, recognise the value of social spending and be willing to tax wealth fairly. This may not be austerity, but it doesn't look like the start of a decade of renewal.' Those close to Reeves, however, point out that she has already announced one of the biggest tax-hiking budgets in recent history to fund an immediate splurge in government spending – something Labour supporters have long called for. 'In place of decline, I choose investment,' Reeves said on Wednesday. 'These are Labour choices.'
Daily Mail
an hour ago
- Daily Mail
QUENTIN LETTS: Mrs Badenoch was perkier than usual. Does she finally glimpse hope?
Does Kemi Badenoch finally glimpse hope? The rotten economic growth figures were published shortly before she made a speech in the City of London. By that time the nation had been subjected to downbeat verdicts on the government's spending splurge and to the sight and sound of Rachel Reeves on the breakfast airwaves. Captain of sinking pedalo urges passengers not to abandon ship. Mrs Badenoch strolled into the low-ceilinged, implausibly-chandeliered function room of one of those modern hotels on the edge of the Square Mile. The event was the FTSE 250+ conference, an assembly of 'key risk-takers' seeking 'sharp perspectives from the front lines of our turbulent, opportunity-rich markets'. A fruit-juice-and-Danish-pastries affair. The session was chaired by an economist, Kallum Pickering, who bluntly told the Tory leader 'we're all a bit grumpy'. Skinny, bearded Kallum explained that the audience – youthful, cologned – felt 'like a stalled engine but with a bit of clear road we could be pumping pistons'. He was resentful of political embuggeration and did not exonerate the last Tory government. Kemi rather agreed with him. She thought Net Zero targets were nuts. She was at ease with these people. It was an easier gig for her, say, than a hall full of public sector workers. She recalled her own City days when she came to 'loathe compliance culture'. The room warmed to that. These were people whose lives are made a misery by human-resources nags. She attacked big corporate outfits that 'profited from bureaucracy'. Did she mean the 'big four' accountancy firms? The audience had not expected her to swipe at their bigger rivals. It gave a purr of approval. Time and again she attacked the 'bloated' state and a Labour cabinet that lacked business experience. A mention of Ms Reeves's fictitious curriculum vitae earned a laugh. Nigel Farage's lot wanted to nationalise industries, keep big benefit bills yet loosen tax bands. 'It's a scam. It's my job to expose this stuff. These are not serious people.' Kallum stroked his beard and pointed out that Reform was ahead in the opinion polls, with the Tories trailing in third place, a distant Austin Allegro with smoke billowing from its bonnet. Kemi: 'We have four years of Labour. From the way people are discussing the opinion polls you'd think there was an election next year. We have to tell people the truth.' Just before Christmas she had spoken to the Canadian Tory leader Pierre Poilievre, who at that point had a 23-point lead in the opinion polls. He has since lost both an election and his parliamentary seat. Things changed fast. Mrs Badenoch can be a dull performer. This time she was perkier. Maybe it was because she could say wonkish things and know that the audience would follow. Maybe it was because of 'events'. In the past fortnight Reform has had internal squabbles and taken a peculiar turn leftwards economically, while taking an anti-liberty step towards a burka ban. Has Mr Farage sacrificed both his authenticity and his cheerfulness? Then came Wednesday's spending review, with its mad billions and the inevitability of tax rises. Dreadful for the country but possibly a reprieve for Mrs Badenoch's Tories. 'It's going to be a revolution,' she said of her plans, breezily. 'We need to unleash animal spirits.' Animal spirits! Helen Whately, shadow welfare secretary, is more mouse than lion. Kemi feared 'the bond vigilantes' were circling over Ms Reeves. The Government's economic policy was 'in a death spiral' and this created a gap for the centre-right. 'That is the space I fill.' Coolly informal, she addressed them conversationally, more a colleague than a would-be political leader. 'I'm on your side,' she cooed, 'but I need you to be on mine, too.' She implored them to 'speak up' and 'tell your customers to speak up, too'. Was that a gurgling 'help, I'm drowning'? Or was it a sense, at last, that her refusal to panic in recent months might finally start to produce buds of a political recovery?
