Latest news with #publicspending
The Independent
9 hours ago
- Business
- The Independent
Starmer warned of need for ‘chunky tax rises' to pay for new military spending
Sir Keir Starmer has been warned he will need to make 'really quite chunky tax increases' to pay for his plans to increase defence spending. The Prime Minister said he was '100% confident' cash would be available for all plans laid out in the new strategic defence review, which includes extra attack submarines, £15 billion on nuclear warheads and thousands of new long-range weapons. The Government has promised to increase defence spending to 2.5% of gross domestic product (GDP) by 2027, and has an ambition – but no firm commitment – to hike it to 3% in the next parliament. Paul Johnson, the director of the Institute for Fiscal Studies (IFS) think tank, warned the Government faces tough financial choices over the plans, as it also grapples with other key areas of public spending. He told Times Radio: 'It looks like the Government wants to reinstate the winter fuel payment. It's thinking about the two-child limit for benefits. We've got a spending review next week. 'And if we are really going to spend another £10-£15 billion a year on defence, whilst inevitably we're going to spend more and more on health and pensions and so on, you really do have to ask that question, what are the choices that you're going to make?' Mr Johnson added: 'I mean, bluntly, it really does seem to me that the only choice that is available, if we're going to go through all of those things, is some really quite chunky tax increases to pay for it. 'But of course, that's not something the Prime Minister or the Chancellor is willing actually to say.' Sir Keir earlier declined to rule out another raid on the aid budget to fund increased defence spending, and signalled he was hopeful that the extra investment could be supported by a growing national economy. The Prime Minister was asked to say that he would not go back to the budget in search of funds to meet his 3% goal, as he set out his plans during a visit to Glasgow. He replied: 'On the aid budget, it was a difficult decision that we had to take in order to get to 2.5% and I am absolutely clear that in the meantime we have to ensure that we do other work on aid, working with other countries, other institutions, to pull levers to trigger the money that we need for aid. 'But the best way to pay for increase in any public spending is to grow our economy. And that is the focus when it comes to defence or any other spending – wealth creation.' Mr Johnson however warned that 'very poor levels of economic growth' meant the Government had 'some really, really tough choices to make'. The Prime Minister also said the terms of the strategic defence review had been set 'on the premise that we will be spending 2.5% of GDP on our defence'. He added: 'Obviously, since then, what we've done is then put the date on that – 2027-2028 – the highest sustained increase in defence spending since the Cold War, a date I think that was earlier than some people thought it would be, but also set out that ambition to hit 3% in the next parliament. 'So I'm 100% confident that this can be delivered because that was baked in from the very start of the review as one of the first conversations we had with the reviewers.'
Bloomberg
18 hours ago
- Business
- Bloomberg
Reeves Says Tories Cost UK Taxpayer £1.4 Billion in Failed Covid Contracts
Deficient pandemic-era contracts for protective equipment cost the British taxpayer £1.4 billion ($1.9 billion), the UK's Labour government said on Monday, blaming the former Conservative administration for 'reckless handling' of public money. The estimate includes £762 million that's unlikely ever to be recovered from suppliers because substandard gowns, masks and visors weren't inspected in a timely manner, the Treasury said in a statement. About £182 million has already been clawed back, and Chancellor of the Exchequer Rachel Reeves is 'going further and faster' to get back the remaining £468 million, Britain's finance ministry said.
Zawya
19 hours ago
- Business
- Zawya
Kuwait poised for heavy borrowing in 2025-2028
Kuwait is expected to be among the largest regional borrowers in the next few years to bridge its widening fiscal gap due to low oil prices and massive allocations for public servants wages and social spending. During 2025-2028, the deficit in the budgets of the Gulf OPEC oil producer is expected to swell sharply from its relatively low level in 2024, the US rating agency S&P said. In a report this week, the agency said the deficit, driven by lower crude income and high public spending, is projected to account for an average 8.9 percent during that period. The shortfall could surge to nearly 14 percent in the current fiscal year 2025-2026, which started on 1 April, up from just two percent in 2024, it said. The agency did not provide deficit figures but Kuwait's GDP stood at around $163 billion in 2024 and is forecast to rise by one-four percent in the next three years barring unexpected developments in the oil market, according to National Bank of Kuwait (NBK). This means GDP could range between $165 billion and $170 billion, with the budget deficit averaging around $15 billion during that period. 'Kuwait and other Gulf countries are following a strategy to maintain a huge financial cushion to maintain their strong credit rating,' Saudi economist Ihsan Buhlaiga told Zawya Projects. 'This is demonstrated in their intensified efforts to build up their overseas assets, mainly those of their sovereign wealth funds…this means whenever there is a budget deficit, they will fund it through borrowing rather than withdrawing from those assets.' Kuwaiti officials said last week the Gulf state could borrow $10-20 billion during 2025-2026 to cover the deficit following the approval of a debt law in March. Zawya reported last week that Kuwait could issue its debut debt tranche very soon after the government cleared the country's multi-billion sovereign wealth fund, and the central bank to borrow funds. Analysts said borrowing could gain momentum in the following years if oil prices remain below the $70 price assumed by Kuwait in its budgets and given the relatively small revenues from other sources. Kuwait has also been unable to trim spending as more than two thirds of the expenditure is allocated for wages and subsidies, which cannot be cut. Finance Ministry figures showed non-oil revenues would provide only around KWD2.6 billion ($8.5 billion) of the 2025-2025 budgeted revenues of KWD18.9 billion ($62 billion). The figures also showed salaries would eat up KWD14.8 billion ($49 billion) of the budgeted spending of about KWD24.5 billion ($81 billion), nearly 60 percent. Allocations for subsidies were set at KWD4.5 billion ($14.8 billion), nearly 18 percent of the total. NBK said in a recent report that Kuwait was forced to cut capital spending by around 1.7 percent in the 2025-2026 budget while allocations for wages to public servants and social aid to citizens swelled by nearly 9.1 percent over the previous budget. 'The decline in capital expenditure represents a continuation of a downward trend in such spending over the past four years despite the pressing need for funding infrastructure projects in line with Vision 2035,' the report said. Kuwaiti officials said last week that borrowing this year would be used mainly to fund infrastructure projects with a value of more than $7 billion. (Reporting by Nadim Kawach; Editing by Anoop Menon) (
The Sun
4 days ago
- Business
- The Sun
Labour must ignore the protests of their union pals and cut Whitehall back down to size
Axe the Blob SOARING numbers of Government pen-pushers have been a massive drain on the public purse. Worse, as the Civil Service has ballooned, productivity has collapsed. 1 Slashing 80,000 unnecessary jobs over the next two years would save the Chancellor £5billion while protecting services, according to a report by two senior mandarins. Their findings are damning. Tens of thousands of workers hired for no reason; salaries way over the odds; work being done in duplicate. Depressingly, there is now one member of HR staff for every one-and-a-half civil servants. And while private sector workers struggle to save, gold-plated Government pensions mean some will earn more in retirement than in their jobs. That can't carry on. The brutal truth for the Tories is that they lost all control as the workforce grew to its second largest ever. Labour — desperate to reduce spending — must ignore the protests of their union pals, and cut Whitehall back down to size. WFH FURY Civil servants will STRIKE over two-day work from home order as bosses order them back in after waiting times rose Glass houses But the Prime Minister and his Chancellor would probably do better to concentrate on delivering solutions themselves. The PM accused Reform of offering 'fantasy economics' and compared its plans to Liz Truss's disastrous mini Budget of 2022. Yet rowing back on welfar e and giving unions huge pay rises has left Rachel Reeves facing a black hole of her OWN of anything between £30billion and £60billion. The best way for Labour to take on Reform's surge is by delivering economic growth and putting money back in voters' pockets. What rights? THANKFULLY a compensation claim made by the brother of the Manchester Arena bomber has been thrown out. But how did Hashem Abedi's sickening demand over 'equality rights' ever get so far? Time and again, the State has rolled over for his terror-loving family. Hashem received £350,000 in legal aid — despite refusing to come to court. His suicide bomber brother Salman raked in tens of thousands in benefits and student loans while plotting his outrage. Even after being jailed for 55 years Hashem was given a cushy kitchen job, only for him to brutally attack guards. Let this be the last time this monster is ever indulged.
Khaleej Times
5 days ago
- Business
- Khaleej Times
UK PM Starmer warns Farage's 'fantasy' fiscal plans would crash the economy
British Prime Minister Keir Starmer warned that Nigel Farage would crash the economy if his Reform UK party ever won power, describing his tax and spending plans as a fantasy in a speech attacking the man who has become Labour's chief threat in the polls. Starmer's Labour Party suffered a bruising set of local election results earlier this month after less than a year in power, losing ground to Reform, which also now leads national opinion polls. Farage has pitched a right-wing agenda of lowering immigration and cutting taxes, while also courting workers who may have become disaffected with Labour over Starmer's efforts to cut public spending. But Starmer said Farage's economic plan was similar to that of former Conservative Prime Minister Liz Truss, who resigned in October 2022 after less than two months in power when her 'mini budget' of unfunded tax cuts sent markets into a tailspin. "We were elected to fix that mess," Starmer said of Truss's economic legacy on Thursday. "Now in government, we are once again fighting the same fantasy - this time from Farage. The same bet in the same casino: that you can spend tens of billions of pounds in tax cuts, without a proper way of paying for it." Farage, one of Britain's most recognisable politicians, was only elected to parliament for the first time last year, when Reform won five seats. But he has spent more than a decade campaigning from outside the mainstream of British politics, forcing successive governments to shift policies on Europe and immigration out of a fear his populist appeal could turn voters against them.
