Tax cuts designed to boost economic growth amid soaring inflation are expected to be at the centre of British Chancellor Kwasi Kwarteng’s emergency mini-budget on Friday.
In his first major announcement since being propelled into the second-most powerful office in the UK government earlier this month, Mr Kwarteng is scheduled to unveil a package aimed at easing the cost-of-living crisis.
The former Eton schoolboy, whom Prime Minister Liz Truss handed the difficult task of steering the economy through the crisis, will also outline the vast cost of the energy assistance pledged by her administration.
Billions in tax cuts
Mr Kwarteng is reportedly preparing to announce that 120,000 claimants will have to take active steps to find work or lose benefits.
On Wednesday, he confirmed pledges made by Ms Truss during her campaign for Downing Street, such as the reversal of the national insurance increase ordered by former chancellor Rishi Sunak.
He also confirmed on Twitter that a health and social care levy planned for April 23 would also not come into effect.
Mr Sunak was lambasted by critics for his 1.25 percentage point increase to national insurance. This took effect in April as part of a plan to help the economy to recover from the Covid-19 pandemic.
The proceeds of the higher tax was earmarked to further fund the National Health Service and social care budget.
Mr Kwarteng is also expected to take aim at the planned rise in corporation tax from 19 per cent to 25 per cent from April 2023, while green levies are set to be removed.
Such moves would amount to £30 billion in tax cuts.
Banks are lobbying hard for tax cuts. There are three elements ministers must consider: corporation tax, the surcharge on profits and the levy on balance sheets.
Mr Kwarteng may also retain plans to cut the surcharge on banks’ profits from 8 per cent to 3 per cent. He could go further, by tapering the surcharge to zero.
He could also do away with the levy on banks’ balance sheets — a measure the industry has been pushing for years.
Both the levy and the surcharge were introduced after the financial crisis and banks see them as unfair hangovers from that time.
They also argue that unless the government moves on the levy, the UK will end up with a more onerous regime than the EU, whose own bank levy used to finance its Single Resolution Fund lifts from 2024.
But making a final call on these taxes could take time. Mr Kwarteng could therefore launch a review into taxes on UK financial services firms compared with their international peers, examining whether Britain is at a competitive disadvantage.
He may also lay out a shake-up of wide areas of policy, including forwarding a plan to scrap unnecessary EU rules so that Britain can forge its own systems.
‘Find higher-paid jobs or work more hours’
In a sign of what may lie ahead, Deputy Prime Minister Therese Coffey said the Truss administration wants to get more benefits claimants into work and to take up unfilled vacancies in the economy.
Speaking to LBC Radio on Thursday, Ms Coffey said ministers were determined to drive economy growth by several means such as shifting people from benefits to jobs.
“That is including getting more people … working in many unfilled vacancies, as well as people doing a very limited amount of work today,” she said.
“That is why we continue to extend the number of people who are currently on benefits about how we can help them find perhaps higher-paid work or about taking up more hours.
“This is a combined approach in order to recognise that we want to improve the lives and prosperity of people in this country.”
Timing is crucial
The chancellor’s announcement is due after an expected interest rates increase by the Bank of England on Thursday. Britain’s central bank is under pressure to bump up interest rates again, on top of other increases in recent months.
Inflation in the UK is fast outpacing other major economies but the US Federal Reserve and other banks are acting more aggressively to get prices under control.
The central bank raised its benchmark rate last month by half a percentage point to 1.75 per cent, the biggest increase in 27 years.
Most economists forecast policymakers to lift the bank's key rate by 0.50 percentage points to 2.25 per cent, repeating its August increase that had been the biggest rise since 1995.
Its latest decision was delayed a week during the mourning period for Queen Elizabeth II.
Pound slumps
The pound fell below $1.13 for the first time in 37 years after the Fed’s announcement that it would raise interest rates by another 75 basis points.
The Fed’s effort to curb inflation pushed the dollar to a two-decade high.
But sterling rose against a weakening dollar early on Thursday before the Bank of England's expected announcement. The pound was up 0.5 per cent at $1.13255 against the dollar at 10am UK time. Against the euro, it was flat at 87.24 pence.
The pound has softened 16 per cent against the dollar this year.
'Inflation could climb higher'
Mr Kwarteng's package threatens to ultimately push inflation higher as a result of strengthening demand, US bank Citi said.
“While the capping of energy prices is disinflationary in the first instance, we continue to see many of these measures as boosting demand and increasing the risk of more embedded inflation,” wrote Citi analysts in a research note.
Commentators also warn the measures will ravage public finances that are already reeling from huge spending during the coronavirus crisis.
Barclays Bank analysts estimate that the government's total cost-of-living expenditure could reach a colossal £235bn ($267bn).
Sky-high inflation is meanwhile crippling economic activity and threatens to plunge Britain into recession later this year, the Bank of England itself forecast in August.
UK inflation eased in August to 9.9 per cent after striking a 40-year peak of 10.1 per cent in July but remains elevated, with the central bank predicting 13 per cent later this year.
The current rate is almost five times the central bank's target of 2.0 per cent.
Governor Andrew Bailey has expressed confidence in bringing down inflation, arguing that Britain was “heavily exposed” to surging gas prices after major supplier Russia invaded neighbouring Ukraine.
Libya's Gold
UN Panel of Experts found regime secretly sold a fifth of the country's gold reserves.
The panel’s 2017 report followed a trail to West Africa where large sums of cash and gold were hidden by Abdullah Al Senussi, Qaddafi’s former intelligence chief, in 2011.
Cases filled with cash that was said to amount to $560m in 100 dollar notes, that was kept by a group of Libyans in Ouagadougou, Burkina Faso.
A second stash was said to have been held in Accra, Ghana, inside boxes at the local offices of an international human rights organisation based in France.
TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
Lexus LX700h specs
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The five pillars of Islam
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
THE SPECS
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COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
A list of the animal rescue organisations in the UAE
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Native Invader
Decca
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More coverage from the Future Forum
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
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- Do not leave electric scooter in locations that obstruct traffic or pedestrians
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The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
What are the main cyber security threats?
Cyber crime - This includes fraud, impersonation, scams and deepfake technology, tactics that are increasingly targeting infrastructure and exploiting human vulnerabilities.
Cyber terrorism - Social media platforms are used to spread radical ideologies, misinformation and disinformation, often with the aim of disrupting critical infrastructure such as power grids.
Cyber warfare - Shaped by geopolitical tension, hostile actors seek to infiltrate and compromise national infrastructure, using one country’s systems as a springboard to launch attacks on others.
Which honey takes your fancy?
Al Ghaf Honey
The Al Ghaf tree is a local desert tree which bears the harsh summers with drought and high temperatures. From the rich flowers, bees that pollinate this tree can produce delicious red colour honey in June and July each year
Sidr Honey
The Sidr tree is an evergreen tree with long and strong forked branches. The blossom from this tree is called Yabyab, which provides rich food for bees to produce honey in October and November. This honey is the most expensive, but tastiest
Samar Honey
The Samar tree trunk, leaves and blossom contains Barm which is the secret of healing. You can enjoy the best types of honey from this tree every year in May and June. It is an historical witness to the life of the Emirati nation which represents the harsh desert and mountain environments
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The specs: 2019 Infiniti QX50
Price, base: Dh138,000 (estimate)
Engine: 2.0L, turbocharged, in-line four-cylinder
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The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Porsche Macan T: The Specs
Engine: 2.0-litre 4-cyl turbo
Power: 265hp from 5,000-6,500rpm
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Speed: 0-100kph in 6.2sec
Top speed: 232kph
Fuel consumption: 10.7L/100km
On sale: May or June
Price: From Dh259,900
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
UAE currency: the story behind the money in your pockets
SPEC SHEET
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Front camera: 12MP ultra-wide, f/2.4, Smart HDR, Centre Stage; full HD @ 25/30/60fps
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Finish: Space grey, starlight, pink, purple, blue
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About Okadoc
Date started: Okadoc, 2018
Founder/CEO: Fodhil Benturquia
Based: Dubai, UAE
Sector: Healthcare
Size: (employees/revenue) 40 staff; undisclosed revenues recording “double-digit” monthly growth
Funding stage: Series B fundraising round to conclude in February
Investors: Undisclosed
UAE currency: the story behind the money in your pockets
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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%3Cp%3EThe%20UAE%20flag%20was%20first%20unveiled%20on%20December%202%2C%201971%2C%20the%20day%20the%20UAE%20was%20formed.%C2%A0%3C%2Fp%3E%0A%3Cp%3EIt%20was%20designed%20by%20Abdullah%20Mohammed%20Al%20Maainah%2C%2019%2C%20an%20Emirati%20from%20Abu%20Dhabi.%C2%A0%3C%2Fp%3E%0A%3Cp%3EMr%20Al%20Maainah%20said%20in%20an%20interview%20with%20%3Cem%3EThe%20National%3C%2Fem%3E%20in%202011%20he%20chose%20the%20colours%20for%20local%20reasons.%C2%A0%3C%2Fp%3E%0A%3Cp%3EThe%20black%20represents%20the%20oil%20riches%20that%20transformed%20the%20UAE%2C%20green%20stands%20for%20fertility%20and%20the%20red%20and%20white%20colours%20were%20drawn%20from%20those%20found%20in%20existing%20emirate%20flags.%3C%2Fp%3E%0A
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
