Latest news with #Exchequer
Glasgow Times
11 hours ago
- Business
- Glasgow Times
Reeves' Nics hike stunting growth and pushing up food prices, Bank says
The Chancellor put up employers' contributions in her first budget, with the increases coming into effect in April this year. Increased national insurance contributions (Nics) and uncertainty caused by the tax rise have 'weighed on growth', according to businesses, the bank's latest monetary policy report said. Chancellor of the Exchequer Rachel Reeves responded to the Bank's decision during a visit to South Wales (Matthew Horwood/PA) The report also noted that higher labour costs are contributing to food price inflation, partly because of increases in minimum wages and the impact of the increase in Nics. A 'relatively high proportion of staff' in food manufacturing and retail are paid at or close to the national living wage, which increased by 6.7% in April. 'Furthermore, overall labour costs of supermarkets are likely to have been disproportionately affected by the lower threshold at which employers start paying Nics, in part because a relatively high proportion of supermarket staff is employed part-time,' the report said. Most of the wage costs, but only part of the Nics increase so far, have been passed on to consumers, putting up prices by about 1% to 2%, with consumers facing further increases in the second half of 2025. Food prices in shops are forecast to be 5% higher in the autumn than they were a year ago. Helen Dickinson, chief executive at the British Retail Consortium, said: 'Government policy will add £7 billion to retailer costs this year, from higher employment costs to the introduction of a new packaging tax. 'Food prices have already been climbing steadily, and the BRC has warned this is only the beginning. 'If the autumn budget once again lands on the shoulders of retailers, then it will only serve to fan the flames of food inflation, with poorer families being hit the hardest by the Treasury's decisions.' BUT the @OBR_UK's forecast for growth in 2026 and 2027 remains significantly above the @bankofengland. This will be uncomfortable for the OBR and suggests markdowns are coming, increasing the extent to which @RachelReevesMP will need to tighten policy to keep to her fiscal rules. — JamesSmithRF (@JamesSmithRF) August 7, 2025 A summary of economic intelligence from the Bank's agents, who have confidential conversations with business chiefs around the country, suggested other government policies were also causing concerns. Firms indicated investment was being withheld or delayed because of uncertainty related to weak demand, tax, regulation and wider government policy, including Deputy Prime Minister Angela Rayner's Employment Rights Bill. A combination of Nics and the legislation to increase workers' rights are hitting the labour market, the report said. Higher costs related to Nics have already had an impact and 'new employment rights legislation may dampen labour demand further'. The Bank reduced interest rates to 4% from 4.25% and raised its economic growth forecast for this year, predicting that GDP (gross domestic product) will grow by 1.25% in 2025, up from its previous estimate of 1%. The Chancellor said the rate cut was partly down to Labour's stewardship of the economy. Interest rates have now been cut five times in a row since Labour came into power. Labour is returning stability to the UK economy. — The Labour Party (@UKLabour) August 7, 2025 It was 'good news for homeowners, good news for businesses', she said. 'Interest rates have now come down five times since Labour came into office, in part because of the stability that we've managed to return to the economy after the chopping and changing, the mini-budget under the Conservatives and (former prime minister) Liz Truss.' But she faces another difficult set of choices in her budget this autumn, with the Bank's growth forecasts well below those from the Office for Budget Responsibility. James Smith, research director at the Resolution Foundation economic think tank, said: 'There was bad news for the Chancellor from the Bank of England today as its forecasts remain more pessimistic on growth than the Office for Budget Responsibility, suggesting bad news is coming at the autumn budget. 'Bank rate is now 4% – its lowest level since March 2023. While this will be broadly welcomed by mortgagors, around 700,000 families will still see repayments rise as they come off five-year fixed-rate deals. 'There was also bad news from the Bank of England for families struggling with the cost of living: inflation is set to be higher than previously expected, with food inflation rising further in the coming months, and real wage growth set to hit a brick wall this year.'
South Wales Argus
14 hours ago
- Business
- South Wales Argus
Reeves' Nics hike stunting growth and pushing up food prices, Bank says
The Chancellor put up employers' contributions in her first budget, with the increases coming into effect in April this year. Increased national insurance contributions (Nics) and uncertainty caused by the tax rise have 'weighed on growth', according to businesses, the bank's latest monetary policy report said. Chancellor of the Exchequer Rachel Reeves responded to the Bank's decision during a visit to South Wales (Matthew Horwood/PA) The report also noted that higher labour costs are contributing to food price inflation, partly because of increases in minimum wages and the impact of the increase in Nics. A 'relatively high proportion of staff' in food manufacturing and retail are paid at or close to the national living wage, which increased by 6.7% in April. 'Furthermore, overall labour costs of supermarkets are likely to have been disproportionately affected by the lower threshold at which employers start paying Nics, in part because a relatively high proportion of supermarket staff is employed part-time,' the report said. Most of the wage costs, but only part of the Nics increase so far, have been passed on to consumers, putting up prices by about 1% to 2%, with consumers facing further increases in the second half of 2025. Food prices in shops are forecast to be 5% higher in the autumn than they were a year ago. Helen Dickinson, chief executive at the British Retail Consortium, said: 'Government policy will add £7 billion to retailer costs this year, from higher employment costs to the introduction of a new packaging tax. 'Food prices have already been climbing steadily, and the BRC has warned this is only the beginning. 'If the autumn budget once again lands on the shoulders of retailers, then it will only serve to fan the flames of food inflation, with poorer families being hit the hardest by the Treasury's decisions.' BUT the @OBR_UK's forecast for growth in 2026 and 2027 remains significantly above the @bankofengland. This will be uncomfortable for the OBR and suggests markdowns are coming, increasing the extent to which @RachelReevesMP will need to tighten policy to keep to her fiscal rules. — JamesSmithRF (@JamesSmithRF) August 7, 2025 A summary of economic intelligence from the Bank's agents, who have confidential conversations with business chiefs around the country, suggested other government policies were also causing concerns. Firms indicated investment was being withheld or delayed because of uncertainty related to weak demand, tax, regulation and wider government policy, including Deputy Prime Minister Angela Rayner's Employment Rights Bill. A combination of Nics and the legislation to increase workers' rights are hitting the labour market, the report said. Higher costs related to Nics have already had an impact and 'new employment rights legislation may dampen labour demand further'. The Bank reduced interest rates to 4% from 4.25% and raised its economic growth forecast for this year, predicting that GDP (gross domestic product) will grow by 1.25% in 2025, up from its previous estimate of 1%. The Chancellor said the rate cut was partly down to Labour's stewardship of the economy. Interest rates have now been cut five times in a row since Labour came into power. Labour is returning stability to the UK economy. — The Labour Party (@UKLabour) August 7, 2025 It was 'good news for homeowners, good news for businesses', she said. 'Interest rates have now come down five times since Labour came into office, in part because of the stability that we've managed to return to the economy after the chopping and changing, the mini-budget under the Conservatives and (former prime minister) Liz Truss.' But she faces another difficult set of choices in her budget this autumn, with the Bank's growth forecasts well below those from the Office for Budget Responsibility. James Smith, research director at the Resolution Foundation economic think tank, said: 'There was bad news for the Chancellor from the Bank of England today as its forecasts remain more pessimistic on growth than the Office for Budget Responsibility, suggesting bad news is coming at the autumn budget. 'Bank rate is now 4% – its lowest level since March 2023. While this will be broadly welcomed by mortgagors, around 700,000 families will still see repayments rise as they come off five-year fixed-rate deals. 'There was also bad news from the Bank of England for families struggling with the cost of living: inflation is set to be higher than previously expected, with food inflation rising further in the coming months, and real wage growth set to hit a brick wall this year.'
ITV News
14 hours ago
- Business
- ITV News
Chancellor defends UK Government funding for Wales
Chancellor of the Exchequer Rachel Reeves has defended the level of the UK Government's spending in Wales during a visit to a coal tip remediation site near Port Talbot. Meeting Welsh Finance Secretary Mark Drakeford MS, she pointed to £118m allocated in the recent Spending Review over three years to improve disused coal tips across Wales. "The whole of the United Kingdom has benefited from coal in Wales and therefore it's right that the UK make sure that these communities are now safe" she said. The visit comes just one day after Eluned Morgan completed one year as First Minister, during which time she insisted she would "call out" Labour MPs in Westminster if they "get it wrong for Wales". Reeves said she continues to work closely with the First Minister and said the partnership has provided money for rail improvements in North and South Wales, "the biggest settlement since devolution", and a fall in NHS waiting lists in England and Wales. She also defended the UK Government's controversial rise in employers' National Insurance contributions. Previously Mark Drakeford called out the decision and said it was "wrong" that Wales' public services faces a shortfall of up to £65m due to the increases. Reeves justified the move, saying it was necessary to improve public services in Wales and England. She said: "We have now delivered millions more appointments in England and Wales over the last year in our NHS but that was only possible because we raised the money..." "I do recognise the challenges raises in National Insurance creates but without that money we would not be able to secure our public finances."
Western Telegraph
15 hours ago
- Business
- Western Telegraph
Reeves' Nics hike stunting growth and pushing up food prices, Bank says
The Chancellor put up employers' contributions in her first budget, with the increases coming into effect in April this year. Increased national insurance contributions (Nics) and uncertainty caused by the tax rise have 'weighed on growth', according to businesses, the bank's latest monetary policy report said. Chancellor of the Exchequer Rachel Reeves responded to the Bank's decision during a visit to South Wales (Matthew Horwood/PA) The report also noted that higher labour costs are contributing to food price inflation, partly because of increases in minimum wages and the impact of the increase in Nics. A 'relatively high proportion of staff' in food manufacturing and retail are paid at or close to the national living wage, which increased by 6.7% in April. 'Furthermore, overall labour costs of supermarkets are likely to have been disproportionately affected by the lower threshold at which employers start paying Nics, in part because a relatively high proportion of supermarket staff is employed part-time,' the report said. Most of the wage costs, but only part of the Nics increase so far, have been passed on to consumers, putting up prices by about 1% to 2%, with consumers facing further increases in the second half of 2025. Food prices in shops are forecast to be 5% higher in the autumn than they were a year ago. Helen Dickinson, chief executive at the British Retail Consortium, said: 'Government policy will add £7 billion to retailer costs this year, from higher employment costs to the introduction of a new packaging tax. 'Food prices have already been climbing steadily, and the BRC has warned this is only the beginning. 'If the autumn budget once again lands on the shoulders of retailers, then it will only serve to fan the flames of food inflation, with poorer families being hit the hardest by the Treasury's decisions.' BUT the @OBR_UK's forecast for growth in 2026 and 2027 remains significantly above the @bankofengland. This will be uncomfortable for the OBR and suggests markdowns are coming, increasing the extent to which @RachelReevesMP will need to tighten policy to keep to her fiscal rules. — JamesSmithRF (@JamesSmithRF) August 7, 2025 A summary of economic intelligence from the Bank's agents, who have confidential conversations with business chiefs around the country, suggested other government policies were also causing concerns. Firms indicated investment was being withheld or delayed because of uncertainty related to weak demand, tax, regulation and wider government policy, including Deputy Prime Minister Angela Rayner's Employment Rights Bill. A combination of Nics and the legislation to increase workers' rights are hitting the labour market, the report said. Higher costs related to Nics have already had an impact and 'new employment rights legislation may dampen labour demand further'. The Bank reduced interest rates to 4% from 4.25% and raised its economic growth forecast for this year, predicting that GDP (gross domestic product) will grow by 1.25% in 2025, up from its previous estimate of 1%. The Chancellor said the rate cut was partly down to Labour's stewardship of the economy. Interest rates have now been cut five times in a row since Labour came into power. Labour is returning stability to the UK economy. — The Labour Party (@UKLabour) August 7, 2025 It was 'good news for homeowners, good news for businesses', she said. 'Interest rates have now come down five times since Labour came into office, in part because of the stability that we've managed to return to the economy after the chopping and changing, the mini-budget under the Conservatives and (former prime minister) Liz Truss.' But she faces another difficult set of choices in her budget this autumn, with the Bank's growth forecasts well below those from the Office for Budget Responsibility. James Smith, research director at the Resolution Foundation economic think tank, said: 'There was bad news for the Chancellor from the Bank of England today as its forecasts remain more pessimistic on growth than the Office for Budget Responsibility, suggesting bad news is coming at the autumn budget. 'Bank rate is now 4% – its lowest level since March 2023. While this will be broadly welcomed by mortgagors, around 700,000 families will still see repayments rise as they come off five-year fixed-rate deals. 'There was also bad news from the Bank of England for families struggling with the cost of living: inflation is set to be higher than previously expected, with food inflation rising further in the coming months, and real wage growth set to hit a brick wall this year.'
Extra.ie
a day ago
- Business
- Extra.ie
Ireland's record corporate tax take -- but don't tell Trump
The Exchequer looks on course for another year of bumper corporate tax receipts, despite threats of tariffs from the US. Latest Government figures show that the amount of tax collected from multinational firms located here was €1.2billion last month – a jump of €900million on July 2024. It is understood that a large, one-off payment brought about the increase. July's taking brings the total corporate tax amount collected so far this year to €14.3billion – which is €1.8billion ahead of the same period last year. Pic:US president Donald Trump this week namechecked Ireland as he pledged to introduce tariffs of up to 250% on pharmaceutical and semiconductor imports. But senior Government sources last night played down fears that the White House may use our strong corporation tax against Ireland, saying that they believe the framework agreement between the EU and US 'gives as much protection as could be hoped for'. However, they also said that the jump in corporation tax revenues highlights the 'highly volatile' nature of the income stream. The Government has taken in €58billion in taxes so far this year, up by €5.6billion on the same period last year. Pic: File When once-off tax revenues of €1.7billion arising from the Apple tax ruling are excluded, 'underlying' tax revenues stood at €56.2billion, a €3.9billion increase on last year. The increase in tax receipts is fuelled by rising corporation tax revenues. In a statement yesterday evening, the Department of Finance said that 'July is not ordinarily a significant month for corporation tax'. Nonetheless, receipts of €1.2billion were collected last month, 'a sharp increase of €0.9billion on July last year, underlining the exceptional month-to-month volatility in this highly concentrated revenue stream'. Pic: Gareth Chaney/Collins Photos Tax revenues across the board saw increases last month and remain ahead of 2024 levels. Income tax receipts rose by €100million year-on-year to €2.9billion in July. Non-tax revenue to the end of July was €2.3billion, up by €1.9billion on the same period last year, largely driven by transfers to the Exchequer of around €14billion from the Apple tax fund. Finance Minister Paschal Donohoe said tax revenues are broadly 'where we expected to be at this point in the year'. However, he added that the country should not take record corporation tax revenues as a given in recent years, 'particularly in the context of a deeply uncertain international trading environment'. Pic: Leah Farrell / © The latest Exchequer numbers came as Mr Trump announced details of a new Apple pledge to invest $100billion (€85billion) in US manufacturing, which will raise concerns about the firm's Irish operations and the level of investment it is planning here. The news came less than 48 hours after Mr Trump threatened on Monday to introduce tariffs of up to 250% on pharmaceutical imports and on semiconductors 'within the next week or so'. This was despite the European Union saying last week that it was under the impression that pharma would be included in the agreement it reached with the White House, which will see additional tariffs of 15% imposed on exports to the US. 'We'll be putting an initially small tariff on pharmaceuticals, but in one year, one-and-a-half years maximum, it's going to go to 150% and then it's going to go to 250% because we want pharmaceuticals made in our country,' Mr Trump said on Monday. 'They [pharmaceutical companies] make a fortune with pharmaceuticals, and they make in China and Ireland and everything else. This is a, you know, this is a separate class than the 15% tariffs on sort of everything.' Speaking to a top Government source dismissed concerns that July's tax revenues will invoke a strong reaction from Washington. 'The feeling is that the deal agreed between the US and EU gives as much protection as could be hoped for. I don't think the latest Exchequer returns change that,' they said.
