Latest news with #FiscalPolicy
RNZ News
12-08-2025
- Business
- RNZ News
Auckland Mayoral candidate Kerrin Leoni releases fiscal policy
Auckland Mayoral candidate Kerrin Leoni is the main contender to incumbent mayor Wayne Brown. Photo: Supplied / NZ Herald Auckland Mayoral candidate Kerrin Leoni has released her fiscal policy, after mistakenly telling media it would be announced on Sunday. The Auckland councillor and main contender to incumbent mayor Wayne Brown unveiled her 'Value for Money' Fiscal Plan on Tuesday afternoon. A key part of her plan is a "ratepayer shield" policy, which would require 75 percent council majority or a public referendum to be held before the council sells any of its strategic assets. Under Mayor Brown's leadership, the council sold its stake in Auckland Airport in 2024. She committed to saving the council $100 million by cutting spending on consultants by 40 percent and bringing more services in-house. "My plan is simple: protect what we own, spend smarter, not harder, and invest in the basics that make life better for Auckland families. We'll cut the waste, starting with the millions spent on consultants and not the services you rely on," she said. "This isn't about spending more or spending less, it's about spending smart. Every dollar saved on consultants is a dollar we can invest in fixing that pothole on your street or keeping your local pool open." Leoni pledged to cap residential rate increases at or below inflation after year two of her term. "Wayne Brown promised to fix Auckland, but under his watch, rates have gone up 21.7 percent, city debt has increased by over a billion dollars, and he still sold our airport shares," she said. "Aucklanders deserve better than selling the family silver while still raising their rates." Leoni said Auckland was facing an infrastructure crisis and she would prioritise fixing roads, upgrading stormwater to prevent flooding, and stopping raw sewage from polluting beaches and harbours. She said Auckland generated 38 percent of the country's GDP but was getting "short-changed" when it came to investment. She said as mayor, she would push the government to return the GST it charges on rates to the council, to get funding for infrastructure, something Brown had also advocated for . Brown has been approached for comment. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Daily Mail
08-07-2025
- Business
- Daily Mail
Labour's retreat on welfare reforms leaves Britain vulnerable to bond traders, warns ALEX BRUMMER
Never has Mark Carney's 2017 assertion that Britain is dependent on the 'kindness of strangers' felt so real. The former Bank of England governor, now Canadian Prime Minister, made his remarks in the context of Brexit. It is not divorce from the European Union, however, but the failure of successive governments to get to grips with the size of the state which has so empowered the bond markets. Pledges to reduce levels of UK government debt as a percentage of output have featured in eight of the last ten fiscal plans unveiled by Chancellors of the Exchequer, says the Office for Budget Responsibility (OBR) in its latest fiscal risks report. Yet despite the declared targets, underlying debt has jumped by 24 per cent of national output over the past 15 years and by 60 per cent over two decades. The consequence is that the yield on government long-term bonds, gilt-edged stock, is higher now in Britain than at any time since the start of the 21st Century. A failure to get a grip, symbolised by retreat on welfare reforms, increasingly leaves Britain vulnerable to bond traders. That was seen most clearly during Liz Truss's brief period as Prime Minister in 2022. It has also reared its head when Labour took the helm a year ago despite an eye-popping £40billion tax raising budget last October. It notoriously failed to steady the ship. Bond yields spiked last week when it was feared that Chancellor Rachel Reeves might leave the Government after the retreat from welfare cuts. Amid the chaos, the hope is that despite tears in the Commons, the Chancellor would stick with her 'iron clad' fiscal commitments. Investment bank Goldman Sachs notes that 'the UK bond market sell-off largely stems from concerns about fiscal discipline'. Reneging on the welfare reform cuts is serious enough. But the 'UK now faces a structural deficit worsened by growth and employment forecasts'. The Labour narrative is that the problem can be fixed by tax rises in the Autumn with wealth in the line of sight. The OBR fiscal report suggests that this would only be a palliative unless fundamental changes to pensions and welfare can be delivered. Britain lacks the US anchor of a 'reserve' currency and Silicon Valley propelled growth to see off the pressure from the bond vigilantes. Vulnerability to the type of foreign speculator that Harold Wilson famously described as 'gnomes of Zurich' is profound. The switch in the UK from defined benefit (gold-plated) pension schemes to defined contribution pension plans, more likely to invest in equities than bonds, mean cornerstone buying of gilts will trend down. The OBR estimates that pension fund holdings of gilts will plunge from 29.5 per cent of gross domestic product in 2024-25 to 10.9 per cent by the 2070s. Foreigners, the Carney 'strangers', presently hold around 30 per cent of the debt stock. Overseas holders cannot but be aware that the UK has the third highest borrowing costs of any advanced economy but for tiny Iceland and New Zealand. Ideally, Britain would grow its way out of debt. It has the research universities, tech, science, creativity and financial innovation to do so with the right tax breaks for digital and cyber investment. It cannot do so while the albatross of rocketing pension, welfare and NHS spending hovers. The 'triple lock', costing the Exchequer three times more than projected at £15.5billion, needs to be revised. The unfunded public sector pension fund liability is ballooning along with public sector pay. An unreformed welfare system will need to be tackled. The number of working-age people classed as inactive since the pandemic has climbed to 780,000, above pre-Covid levels. It is driven by 660,000 citing long-term sickness as a cause of not working. The OBR estimates the extra welfare cost at £6.8billion a year and forgone tax revenues at £8.9billion. It is more attractive to go on the sick than claim unemployment benefit which is meaner and requires recipients to look for a job. Such changes dare not speak their name on the Left. If they don't happen, it will be mercurial gilt markets, rather than our elected politicians, that will have the biggest say.
Bloomberg
03-07-2025
- Business
- Bloomberg
Glapinski Says Surprise Polish Rate Cut Isn't Start of a Cycle
Poland's central bank Governor Adam Glapinski pushed back against growing market expectations that a surprise interest rate cut on Wednesday has kicked off an easing cycle. Glapinski described the quarter percentage point reduction as a 'cautious adjustment' and highlighted risks to inflation including loose fiscal spending, the uncertainty around energy prices and trade tensions. The next decisions will depend on incoming data, he told reporters in Warsaw on Thursday.
Daily Mail
03-07-2025
- Business
- Daily Mail
Gilts stage cautious rebound as Starmer backs Reeves to stay as Chancellor
UK government bond yields fell today after the Prime Minister ruled out sacking Chancellor Rachel Reeves, easing market concerns that sparked heavy losses yesterday. Keir Starmer said Reeves will remain in the job 'for years to come' after rumours of her imminent departure sparked a gilt market rout that saw long-term Government borrowing costs skyrocket on Wednesday. Ten and 30-year gilt yields – the interest on government debt that moves inversely to the price of the bond – were down 8 and 10 basis points, respectively by midday. However, the bounce falls short of losses suffered in the previous session, demonstrating lingering market uncertainty on the outlook for UK fiscal policy. Investors' expectations for UK inflation are well ahead of G7 peers as bumper public sector pay increases, a national insurance hike for employers and a higher living wage drive price rises in the wider economy. The consumer price index registered at 3.4 per cent in the 12 months to May, according to the Office for National Statistics, and inflation is not forecast to return to the Bank of England's 2 per cent target for some time. There are also concerns about Britain's ability to manage its finances as the Government's difficulty passing cuts to public spending clashes with its reticence to raise taxes amid weak economic growth. In response, investors sell UK government bonds and thereby drive up the cost of long-term borrowing. Ten-year gilt yields are 35bps to 4.5 per cent over the last 12 months, while 30-year yields are up 65bps to 5.3 per cent. Chief investment officer at Axa IM Chris Iggo said: 'Markets have taken the view that the government is politically unable to follow through on promises i.e. reduce welfare spending, ramp up defence spending and not increase income taxes. 'Despite a huge majority in parliament, the Labour government appears to have lost any room for manoeuvre when it comes to fiscal policy. 'Markets sense that abandoning the fiscal rules – allowing the deficit to increase relative to the previous baseline – might become politically tempting. 'Therefore, that means an increased fiscal risk premium in UK government bonds, which recalls the dramatic period in September 2022, when markets responded to then the Prime Minister Liz Truss's attempt to cut taxes to boost economic growth.'
Zawya
03-07-2025
- Business
- Zawya
Sterling steadies after selloff, fiscal worries prevail
Sterling edged higher on Thursday, stabilising after fiscal concerns and uncertainty about Rachel Reeves' future as Britain's finance minister sparked a selloff across UK assets in the previous session. Markets had been monitoring developments around a welfare bill in parliament where divisions within the Labour party forced Prime Minister Keir Starmer to back down on large spending cuts, leaving a hole in public finances. The selloff gathered steam on fears that Reeves would be replaced, but was contained as Starmer gave the finance minister his full backing. The government has been trying to stick to its self-imposed fiscal rules to try to build investor confidence. However, analysts warn that politically-difficult tax hikes might be needed to balance public accounts and avoid extra borrowing. "The immediate issue is that the government left a very narrow margin in March against their fiscal rules they set themselves," said a group of analysts led by Jim Reid at Deutsche Bank. "So unless we got a big burst of growth before the budget, then the government would need to announce further tax rises or spending cuts if they still want to meet the fiscal rules." Sterling edged up 0.1% to $1.365 after sinking 0.8% in the previous session - its biggest daily drop in more than two weeks. The currency also firmed 0.3% against the euro , which last fetched 86.3 pence. The relief was also visible in bond markets, where the yield on the 10-year gilt dropped 9 basis points. Yields had spiked on Wednesday, with those on the benchmark note at one point registering their largest one-day jump since October 2022. Higher yields would generally support the domestic currency, so Wednesday's reaction highlighted investors' pessimism. Global investors have been grappling with ballooning public debt in developed markets and have also been demanding greater premiums to hold them. Yields on British bonds are among the highest in the developed world. Wednesday's plunge in British assets immediately drew comparisons with Liz Truss' short-lived premiership in 2022, which was derailed by a bond market selloff. Traders expect the Bank of England to cut interest rates by 25 basis points again in September, according to data compiled by LSEG. All eyes will now be on a pivotal U.S. jobs report later in the day that could help gauge the Federal Reserve's monetary policy trajectory. (Reporting by Johann M Cherian Editing by Mark Potter)
