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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/oct/30/uk-budget-deficit-consumer-spending-spain-economy-gdp-business-live
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| UK faces new £20bn budget black hole – business live | UK faces new £20bn budget black hole – business live |
| (35 minutes later) | |
| 12.24pm GMT | |
| 12:24 | |
| Goldman CEO: Hope we can fill our London HQ.... | |
| Lloyd Blankfein, the CEO of Goldman Sachs, has a new hobby -- baiting the UK government over its Brexit strategy. | |
| Blankein has just tweeted a photo of Goldman’s new European headquarters, currently being built in the City of London. | |
| Jolly impressive it looks too.... but Blankein hints that Goldman might not fill the site, if it is forced to relocate staff overseas because of Brexit. | |
| In London. GS still investing in our big new Euro headquarters here. Expecting/hoping to fill it up, but so much outside our control.#Brexit pic.twitter.com/XwrIcqwM1t | |
| This is Blankfein’s second pointed tweet of the month. Two weeks ago, he couldn’t resist telling his 66,000 followers how much he loves Germany’s financial capital, Frankfurt. | |
| Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time there. #Brexit | |
| For balance, we should note that the weather in London is rather splendid today.... | |
| nice and sunny in London today | |
| 11.56am GMT | |
| 11:56 | |
| Over in the City, sterling has risen this morning despite the IFS’s gloomy prognosis. | |
| The pound has gained over half a cent against the US dollar to $1.318, largely driven by expectations that the Bank of England will raise interest rates from 0.25% to 0.5% on Thursday. | |
| It could be a split decision; some BoE policymakers, including deputy governor Jon Cunliffe and Dave Ramsden, have sounded a little nervous about a rate hike recently. | |
| But the BoE, led by governor Mark Carney, has dropped a lot of hints that a rate hike is coming.... so it would be real shock if it doesn’t happen. | |
| Kallum Pickering of German bank Berenberg explains: | |
| When it comes to monetary policy, talk matters almost as much as action. Now that the market is ready and waiting for a hike this week, the BoE would risk a major hit to its credibility if it did not meet this expectation. In short, if the BoE didn’t intend to hike it probably would have told us by now. | |
| Updated | |
| at 11.58am GMT | |
| 11.28am GMT | 11.28am GMT |
| 11:28 | 11:28 |
| If you’re just tuning in, here’s the key message from the IFS today : | If you’re just tuning in, here’s the key message from the IFS today : |
| A large productivity downgrade in the Budget would almost certainly mean a higher borrowing forecast https://t.co/QcsZzOhn0u #Budget2017 pic.twitter.com/6bONkiunSx | A large productivity downgrade in the Budget would almost certainly mean a higher borrowing forecast https://t.co/QcsZzOhn0u #Budget2017 pic.twitter.com/6bONkiunSx |
| As you can see, Britain is probably going to have to borrow more than expected over the next few years, and a lot more if the Office for Budget Responsibility concludes that UK productivity growth will remain ‘very weak’ in the next few years. | As you can see, Britain is probably going to have to borrow more than expected over the next few years, and a lot more if the Office for Budget Responsibility concludes that UK productivity growth will remain ‘very weak’ in the next few years. |
| 10.34am GMT | 10.34am GMT |
| 10:34 | 10:34 |
| Back in London, the Institute of Fiscal Studies is briefing experts about its new assessment of the UK economy, ahead of next month’s budget. | Back in London, the Institute of Fiscal Studies is briefing experts about its new assessment of the UK economy, ahead of next month’s budget. |
| Helen Miller, the head of tax research at the IFS, is tweeting some key charts. | Helen Miller, the head of tax research at the IFS, is tweeting some key charts. |
| They show how Philip Hammond is in a real fix if, as seems likely, Britain’s weak productivity growth drives up Britain’s deficit by £20bn by 2020-21. | They show how Philip Hammond is in a real fix if, as seems likely, Britain’s weak productivity growth drives up Britain’s deficit by £20bn by 2020-21. |
| This one, for example, highlights how health spending has been pretty modest since the financial crisis, once you adjust for population changes. | This one, for example, highlights how health spending has been pretty modest since the financial crisis, once you adjust for population changes. |
| NHS budget usually grows faster than GDP. Not true in recent years #budget2017 pic.twitter.com/CvbajB1FuT | NHS budget usually grows faster than GDP. Not true in recent years #budget2017 pic.twitter.com/CvbajB1FuT |
| This chart shows how government is already planning further public spending cuts over this parliament..... | This chart shows how government is already planning further public spending cuts over this parliament..... |
| Would cost £15bn to stop public service spending falling in per head terms #budget2017 pic.twitter.com/ym2ILyp3Cy | Would cost £15bn to stop public service spending falling in per head terms #budget2017 pic.twitter.com/ym2ILyp3Cy |
| ....while Britain’s environment department has suffered the biggest spending cuts since 2010. | ....while Britain’s environment department has suffered the biggest spending cuts since 2010. |
| Departments needing to cut spending now are same ones that were previously squeezed #budget2017 pic.twitter.com/56OH6SLZkm | Departments needing to cut spending now are same ones that were previously squeezed #budget2017 pic.twitter.com/56OH6SLZkm |
| The Justice department has also been squeezed - and there are now signs that this is causing real damage: | The Justice department has also been squeezed - and there are now signs that this is causing real damage: |
| Prisons is area where we have data (from @instituteforgov) showing signs of strain. Not a pretty picture #budget2017 pic.twitter.com/qQOZsBBiP8 | Prisons is area where we have data (from @instituteforgov) showing signs of strain. Not a pretty picture #budget2017 pic.twitter.com/qQOZsBBiP8 |
| But where could Hammond raise money from? He could increase national insurance, or abandon cuts to corporation tax. But would the House of Commons approve?.... | But where could Hammond raise money from? He could increase national insurance, or abandon cuts to corporation tax. But would the House of Commons approve?.... |
| We have options for increasing taxes but none seem likely in political climate. Revenue from anti-avoidance measures v uncertain #budget2017 pic.twitter.com/eCeOicZodZ | We have options for increasing taxes but none seem likely in political climate. Revenue from anti-avoidance measures v uncertain #budget2017 pic.twitter.com/eCeOicZodZ |
| 10.16am GMT | 10.16am GMT |
| 10:16 | 10:16 |
| Breaking: Economic confidence across the eurozone has hit its highest level in around 16 years. | Breaking: Economic confidence across the eurozone has hit its highest level in around 16 years. |
| Euro area economic confidence just hit its highest level since 2001. pic.twitter.com/cwl9lS0ihT | Euro area economic confidence just hit its highest level since 2001. pic.twitter.com/cwl9lS0ihT |
| Following Spain’s decent growth figures this morning, it’s fresh evidence that 2017 is turning into a vintage year for the eurozone. The lack of a debt crisis is helping the region to catch up with Britain, just as the UK economy slows.... | Following Spain’s decent growth figures this morning, it’s fresh evidence that 2017 is turning into a vintage year for the eurozone. The lack of a debt crisis is helping the region to catch up with Britain, just as the UK economy slows.... |
| For the first time in over five years, Eurozone economic sentiment has been higher than UK economic sentiment for three consecutive months. pic.twitter.com/fM1HSNYU9s | For the first time in over five years, Eurozone economic sentiment has been higher than UK economic sentiment for three consecutive months. pic.twitter.com/fM1HSNYU9s |
| 10.08am GMT | 10.08am GMT |
| 10:08 | 10:08 |
| Bank of England: Consumer credit growth strong, but mortgage approvals fall | Bank of England: Consumer credit growth strong, but mortgage approvals fall |
| Newsflash: British consumers are still racking up bills on their credit cards. | Newsflash: British consumers are still racking up bills on their credit cards. |
| New figures from the Bank of England shows that borrowing via credit cards jumped by by 9.3% year-on-year last month. Britons now owe £69.4bn on their credit cards, up from £69.0bn in August. | New figures from the Bank of England shows that borrowing via credit cards jumped by by 9.3% year-on-year last month. Britons now owe £69.4bn on their credit cards, up from £69.0bn in August. |
| This may be a sign that rising inflation, and falling real wages, is forcing more people to borrow to make ends meet. | This may be a sign that rising inflation, and falling real wages, is forcing more people to borrow to make ends meet. |
| In total, all consumer credit grew by almost 10% per year since June, dipping slightly in September to 9.9%. | In total, all consumer credit grew by almost 10% per year since June, dipping slightly in September to 9.9%. |
| The Bank of England also reports that the number of mortgage approvals fell by exactly 1,000 last month to 66,232. That’s close to the recent average, but may show a cooling in demand... | The Bank of England also reports that the number of mortgage approvals fell by exactly 1,000 last month to 66,232. That’s close to the recent average, but may show a cooling in demand... |
| 9.51am GMT | 9.51am GMT |
| 09:51 | 09:51 |
| Here’s another neat chart from the IFS, showing how chancellors like to hit the public with tax rises shortly after a general election (perhaps hoping that we’ll have forgotten by the time we vote again) | Here’s another neat chart from the IFS, showing how chancellors like to hit the public with tax rises shortly after a general election (perhaps hoping that we’ll have forgotten by the time we vote again) |
| But, as Paul Johnson warned on the Today programme.... parliament isn’t in the mood to raise taxes. | But, as Paul Johnson warned on the Today programme.... parliament isn’t in the mood to raise taxes. |
| Updated | Updated |
| at 9.55am GMT | at 9.55am GMT |
| 9.41am GMT | 9.41am GMT |
| 09:41 | 09:41 |
| The BBC’s Kamal Ahmed points out that the new budget black hole might be bigger than £20bn (as explained at 7.57am, it all depends on productivity...) | The BBC’s Kamal Ahmed points out that the new budget black hole might be bigger than £20bn (as explained at 7.57am, it all depends on productivity...) |
| If productivity growth remains at 0.4%, poorer econ growth wd result in £53bn more borrowing by 2021/22 if no other action taken @TheIFS | If productivity growth remains at 0.4%, poorer econ growth wd result in £53bn more borrowing by 2021/22 if no other action taken @TheIFS |
| 9.37am GMT | 9.37am GMT |
| 09:37 | 09:37 |
| Here’s another stunning fact from the IFS: Britain’s economy would be 15% bigger, even adjusted for population increases, if it had continued to grow at its pre-crisis pace since 2008. | Here’s another stunning fact from the IFS: Britain’s economy would be 15% bigger, even adjusted for population increases, if it had continued to grow at its pre-crisis pace since 2008. |
| Instead, the economy didn’t really bounce back from its very sharp downturn after the financial crisis. | Instead, the economy didn’t really bounce back from its very sharp downturn after the financial crisis. |
| Weak productivity has been backdrop to all budgets since 08 #budget2017 @TheIFS pic.twitter.com/ZAENl0c92t | Weak productivity has been backdrop to all budgets since 08 #budget2017 @TheIFS pic.twitter.com/ZAENl0c92t |
| 9.31am GMT | 9.31am GMT |
| 09:31 | 09:31 |
| Apologies, we had a technical glitch with the comments this morning (OK, I might have forgotten to press the ‘On’ button). They’re turned on now..... | Apologies, we had a technical glitch with the comments this morning (OK, I might have forgotten to press the ‘On’ button). They’re turned on now..... |
| 9.26am GMT | 9.26am GMT |
| 09:26 | 09:26 |
| The Institute for Fiscal Studies’ report is online here. | The Institute for Fiscal Studies’ report is online here. |
| It concludes with a grim assessment of the challenge facing ‘Spreadsheet Phil’ Hammond: | It concludes with a grim assessment of the challenge facing ‘Spreadsheet Phil’ Hammond: |
| The first Budget of a new parliament is often the best chance a Chancellor has to set out her stall. She can raise taxes if need be, set an agenda for the next five years, and set in train economic and fiscal reforms. Mr Hammond, though, has been dealt a very tricky hand indeed. The political arithmetic makes any significant tax increase look very hard to deliver. It looks like he will face a substantial deterioration in the projected state of the public finances. | The first Budget of a new parliament is often the best chance a Chancellor has to set out her stall. She can raise taxes if need be, set an agenda for the next five years, and set in train economic and fiscal reforms. Mr Hammond, though, has been dealt a very tricky hand indeed. The political arithmetic makes any significant tax increase look very hard to deliver. It looks like he will face a substantial deterioration in the projected state of the public finances. |
| He will know that seven years of “austerity” have left many public services in a fragile state. And, in the known unknowns surrounding both the shape and impact of Brexit, he faces even greater than usual levels of economic uncertainty.... | He will know that seven years of “austerity” have left many public services in a fragile state. And, in the known unknowns surrounding both the shape and impact of Brexit, he faces even greater than usual levels of economic uncertainty.... |
| Which is why the chancellor may decide to ditch his goal of balancing the books by the mid 2020s... | Which is why the chancellor may decide to ditch his goal of balancing the books by the mid 2020s... |
| 9.12am GMT | 9.12am GMT |
| 09:12 | 09:12 |
| Liberal Democrat leader Sir Vince Cable tweets: | Liberal Democrat leader Sir Vince Cable tweets: |
| IFS warning on #Budget18. Stop treating public #investment as spending. #industrial strategy to boost #Productivity. #exitfrombrexit | IFS warning on #Budget18. Stop treating public #investment as spending. #industrial strategy to boost #Productivity. #exitfrombrexit |
| 9.04am GMT | 9.04am GMT |
| 09:04 | 09:04 |
| And... here’s why the government’s deficit reduction strategy has spluttered. | And... here’s why the government’s deficit reduction strategy has spluttered. |
| Deficit reduction has been "almost entirely driven" by tax rises and spending cuts, not economic growth @TheIFS | Deficit reduction has been "almost entirely driven" by tax rises and spending cuts, not economic growth @TheIFS |