Latest news with #capitalinvestment
Sky News
16 hours ago
- Business
- Sky News
The big mistake Labour think Nigel Farage has made - and how the chancellor hopes to capitalise
Next week, the chancellor will unveil the first spending review since 2021. It will set Whitehall budgets for the remainder of this parliament and it will be a big moment for a government struggling to tell a story about what it is trying to achieve to voters. Rachel Reeves, flanked by transport workers in a bus depot in Rochdale, knows it. She came to the North West armed with £15bn of funding for trains, trams and buses across the Midlands and the North. Much more will be announced next week when the chancellor sets out her capital spending plans for the remainder of the parliament, having loosened her fiscal rules in the budget for capital investment. More is coming. Next week, the chancellor is expected to announce plans to spend billions more on a new railway line between Manchester and Liverpool, as well as other transport schemes for northern towns and cities. This will be the backbone of the "Northern Arc" that Greater Manchester Mayor Andy Burnham has been arguing for as a northern version to the much-vaunted Oxford-Cambridge growth corridor. Labour will pour £113bn into capital investment over the course of this parliament and there is an economic and political imperative for a chancellor to talk up capital spending in rail and roads, houses, power stations. On the economic side, she is in search for growth and hopes investment in infrastructure will create jobs and fire up the economy. On the politics, Labour need to show voters in their red wall seats that it is the Starmer government and not Nigel Farage that will improve the lives of working people. Ms Reeves spent a lot of time in her speech talking about the need to invest right across the country. She is overhauling the Treasury's "Green Book" that assesses value for money for public projects to make sure that funding decisions don't just get concentrated in the South East but are weighted to the Midlands and the North. 2:44 She also, in reiterating her commitment to her fiscal rule to not borrow to fund day-to-day government spending (the annual budgets for our schools, councils, courts, police, hospitals), sought to draw out the "choice" between Labour and Reform, as Labour seeks to capitalise on Mr Farage's decision last week to promise up to £80bn worth of new spending - including scrapping the two-child benefit cap and increasing winter fuel payments - while not explaining exactly how they could be paid for. Expect to hear lots more from Labour in the coming weeks about how Mr Farage is an iteration of Liz Truss, ready to pursue "fantasy economics" and trash the economy. Labour are gleeful that Mr Farage has opened up this line of attack and think it was an uncharacteristic political misstep from the Reform leader. "Farage was a politician for vibes, now he's turned himself into a politician of policy and he didn't need to do that yet," observed one senior Labour figure. But if that is the sell, here is the sting. While the Chancellor has loosened her fiscal rules for capital spending, she is resolute she will not do the same when it comes to day-to-day departmental spending, and next week harsh cuts are on the way for some departments, with Yvette Cooper at the Home Office, Angela Rayner at local government, and Ed Miliband at energy still wrangling over their settlements. Ms Reeves was at pains in Rochdale to talk about the extra £190bn the government has put into day-to-day spending in this parliament in order to see off the charges of austerity as those spending cuts kick in. Her allies point to the £300bn in total Ms Reeves has poured into capital projects and public services over this parliament. "You just can't say we aren't a tax-and-spend government," said one ally. But this isn't just a chancellor fighting Mr Farage, she is also battling with those in her own party, under extreme pressure to loosen her fiscal rules, or tax more, as MPs - and her prime minister - demand she spends more on welfare and on getting the UK warfare-ready. You can see it all playing out. After a local election drubbing, the chancellor U-turned on her seemingly iron-clad decision to take the winter fuel allowance away from all pensioners. Now, I'm hearing that the prime minister is pressing to lift the two-child benefit cap (no matter his chief of staff is opposed to the idea, with the cap popular with voters) and MPs are demanding a reverse to some disability cuts (one government insider said the backbench revolt is real and could even force a defeat despite Sir Keir's whopping 165-strong working majority). Meanwhile, the prime minister is under pressure from US President Donald Trump for NATO to lift defence spending to 3.5% of GDP. Spending demands and rising borrowing costs, there is no wonder that attention is already moving towards possible tax rises in the Autumn budget. Ms Rayner, the deputy prime minister, wrote to the chancellor, arguing for targeted wealth taxes. Andy Burnham, the Greater Manchester mayor, told me this week on Electoral Dysfunction that he wanted more taxes on assets and a revaluation of council tax bands so those with large, valuable homes pay more. "We have not taxed assets and wealth properly and I'd come up with something that can be controversial but council tax has not been revalued since the early 90s so there are homes in London worth tens of millions of pounds that pay less council tax than many average properties here in Greater Manchester so I would look at reforms in that space," Mr Burnham told me this week. "I would look further at land taxation and land taxation reform. If you put in new infrastructure, what I learned through Crossrail, Elizabeth Line - you lift the values of that land. "So why don't we capture some of that uplift from that? I personally would go for a land value tax across the country. So there are things that you can do that I think can be seen to be fair, because we haven't taxed those things fairly. "I've said, and I'll say it again, we've overtaxed people's work and we've undertaxed people's assets and wealth and that balance should be put more right." I asked the chancellor on Wednesday if Ms Rayner and Mr Burnham had a point, and would she level with people that taxes might have to go up again as she struggles with spending demands and self-imposed borrowing constraints - she, of course, swerved the question and said the priority for her is to growth the economy. These questions will, I suspect, only get louder and more frequent in the run-up to the budget should borrowing costs continue to go up alongside demands for spending. The chancellor, at least, has a story to tell about rewiring the economy as a means to national renewal. But with the spoils of infrastructure investment perhaps decades off, Ms Reeves will find it hard to frame this spending review as a reboot for working people rather than a kicking for already stretched public services.
Daily Mail
a day ago
- Business
- Daily Mail
Chancelbore of the Exchequer: Weary factory workers steal the show in the background at Rachel Reeves' trains and spending speech
Rachel Reeves made a serious speech about a serious subject in Rochdale today, vowing to to pour money into local public transport and revealing she will U-turn on cuts to winter fuel payments. But staff at Mellor Bus didn't appear to be gripped by her lengthy address. Lined up behind the Chancellor of the Exchequer at their site in in Rochdale, Greater Manchester they appeared pretty disinterested in proceedings. Ms Reeves spoke and took questions for almost an hour, during which it was the staff's display of ennui that caught the eye of people watching. Some remained totally passive as she blamed the Tories for looming spending curbs and talked up £15.6billion of capital investment for mayoral authorities in the North and Midlands. But others appeared restless as the event dragged on, catching the eye of those watching on social media. One quipped: 'Poor guys now looking bored, fidgeting, swallowing yawns. Not a great visual.' And another added: 'I wonder how much productivity is lost by these seemingly daily and horribly lengthy sermons by Starmer/Reeves, etc?! 'Company employees standing around, clearly bored to tears and not working! Mad!!' A common feature of recent political speeches by ministers - also including the PM - is a row of workers from whichever manufacturing site they have chosen as a backdrop. Keir Starmer was similarly backed by a huge crescent of workers in Glasgow on Monday as he unveiled the strategic spending review. The package unveiled by Ms Reeves includes funding to extend the metros in Tyne and Wear, Greater Manchester and the West Midlands, along with a renewed tram network in South Yorkshire and a new mass transit systems in West Yorkshire. The borrowing-funding splurge on major investment is being overshadowed by intense haggling over day-to-day budgets. Ms Reeves is due to announce spending plans for the next three years in a week's time, but several Cabinet ministers have yet to reach settlements with the Treasury. Tensions with Home Secretary Yvette Cooper surfaced today with warnings that cuts for police will mean some crimes effectively being ignored. Ed Miliband is also embroiled in horse-trading over Net Zero funding, while Angela Rayner is said to be holding out over cash for housing and local government. Economists have been warning that Ms Reeves faces having to hike taxes again and break her fiscal fules, with demands for defence spending heaping more pressure on the government's books. In her speech, the Chancellor said: 'Over the next week you will hear a lot of debate about my so-called self-imposed fiscal rules. 'Contrary to some conventional wisdom, I didn't want to come into politics because I care passionately about fiscal rules. 'I came into politics because I want to make a difference to the lives of working people, because I believe as strongly now as I did when I was inspired to join the Labour Party almost 30 years ago that every person should have the same opportunities to thrive and to succeed.'
Japan Times
3 days ago
- Business
- Japan Times
Japan's firms raised capital spending ahead of U.S. tariffs
Japanese businesses increased capital investment at a faster pace in the first quarter of this year just as U.S. President Donald Trump's administration touted the coming tariff campaign that kicked off in March. Capital expenditure on goods excluding software gained 1.8% in the three months through March from the previous quarter, when such outlays rose by 1.3%, the Finance Ministry reported Monday. The reading compares with a 1.4% gain in corporate investment reported in the preliminary reading of Japan's gross domestic product. The latest data will be factored into a revised GDP report due for release on June 9. Compared with a year ago, investment including software increased 6.4%, beating the median estimate of a 3.8% gain. Profits rose 3.8% from a year earlier and sales advanced 4.3%. Business spending holds the key to the country's economic growth as inflation keeps a lid on household spending and Trump's tariff campaign clouds the trade outlook. The data will be used to revise the first quarter GDP report after the preliminary reading showed a contraction driven by weak trade figures and stalling consumption. "There will be little impact on the revised GDP figures,' said Takeshi Minami, chief economist at Norinchukin Research Institute. "I think the GDP results will remain negative, as consumption continues to struggle and the tariffs hit exports. I expect negative growth to continue in the April-June period.' The value of sales and capital investment both reached record levels, with food and steel companies increasing outlays to boost production capacity, a ministry official said. The tariffs are expected to dent exporters' competitiveness and may reduce their willingness to invest in facilities and raise wages. A 25% tariff on steel and aluminum took effect in March, followed by the assessment of a levy at the same rate on autos and a 10% across-the-board tax starting in April. The across-the-board duty will rise to 24% in early July, barring a trade deal. "I think capital investment in machinery is slowing down,' Minami said. "The impact of tariffs will become clearer in the April-June period, so I don't think we will see an improvement in capital investment figures.' Japan's biggest carmakers are likely to take a hit of more than $19 billion from the tariffs as they are heavily reliant on the U.S. market. Toyota, the world's biggest carmaker, will probably sustain the worst hit. Monday's data come as the government steps up a campaign to encourage corporate investment. An expert panel of the Ministry of Economy, Trade and Industry recommended that when companies have excess funds on hand, they channel the money into capital investment rather than share buybacks, according to an interim report. The Bank of Japan on May 1 said the slowdown in overseas economies is likely to weigh on exports and production, causing business investment to decelerate. It said that companies are expected to maintain investment to cope with labor shortages and to enhance digitalization and decarbonization. Japan continues to seek reprieves from the U.S. tariffs while the United Kingdom reached a deal and China agreed upon a tariff truce with Trump. Japan's top trade negotiator Ryosei Akazawa said over the weekend that the latest round of discussions with the Trump administration has put the two nations on track for a deal as early as this month. Akazawa may return to the United States this week, according to NHK. At home, Prime Minister Shigeru Ishiba's government approved an emergency measure last week to help businesses and households deal with the impact of the tariffs.
Bloomberg
3 days ago
- Business
- Bloomberg
Japan's Firms Raised Capital Spending Ahead of US Tariffs
Japanese businesses increased capital investment at a faster pace in the first quarter of this year just as the Trump administration touted the coming tariff campaign that kicked off in March. Capital expenditure on goods excluding software gained 1.8% in the three months through March from the previous period, when such outlays rose by 1.3%, the Finance Ministry reported Monday. The reading compares with a 1.4% gain in corporate investment reported in the preliminary reading of Japan's gross domestic product. The latest data will be factored into a revised GDP report due for release on June 9.
Forbes
6 days ago
- Business
- Forbes
Investment In The Small Business Community
Virtually every large producing firm in the U.S. started as a small business, usually in a home or garage, financed by the personal savings of the entrepreneur, and family and friends. Microsoft and Amazon come to mind. Most starts, of course, will not replicate those growth experiences. But drive down the Main Street of any U.S. city and you will pass the storefronts of America's largest employer – small business. Investment comes in two forms: time and money. Both are in short supply but necessary for a successful small business. Entrepreneurs work long hours, which is necessary to efficiently employ the capital available. Depending on the industry of the business, buildings are needed, as well as a wide variety of physical capital. A dishwasher is critical for a restaurant but not for a construction firm. The quality of the equipment and management impact the productivity of the employees, which directly affects unit labor costs. And labor costs are, for most firms, the largest item in the P&L. It's hard to discern any trend in capital spending; the 2008 recession clearly tanked investment spending, as have all recessions. Clearly, the fear associated with Y2K drove the highest levels of investment spending in the last 50 years, which fell sharply after we all saw what actually happened (which was not much). Investment spending picked up around 2016 but hit a wall with Covid, and has been subdued since. Actual Capital Outlays. NFIB Small Business Economic Trends. April 2025. Reporting on their most recent outlays, there appears to be little variation between 2019 and 2025 in the type of specific investments in capital equipment. Most expenditures are paid for in the purchase period, not financed. Vehicles and equipment dominated the shopping list, although taken together, facilities expenditures were almost as frequent as vehicle purchases. Capital Expenditures. NFIB Small Business Economic Trends. There was a lot of inflation at the end of the 2019-2025 period. However, there is not much evidence of it in the size of expenditures, other than a shift from outlays below $10k to the $10k-$50k category. They buy what they need to run their business and figure out ways to absorb higher costs. Apparently, most small business borrowing is for cash flow management, not for the financing of major equipment and facilities purchases. Expenditure Spending. NFIB Small Business Economic Trends. Employees get paid by the hour of work provided, delivering variable amounts of value. Owners are compensated in the bottom line of the P&L. Owners don't 'punch a clock,' they just work. They are the most valuable asset of the firm. Their focus too often is diverted by mandated compliance activities of dubious value. Their investment of time is critical to the success of the firm, and regulators should avoid unnecessarily diverting their attention from their main job – building a successful business.
