Good morning. We start today with news about the UK chancellor’s plans to plug a £22bn hole in the UK’s public finances. Rachel Reeves yesterday set out a series of “incredibly tough choices” as she paved the way for Budget tax rises in the autumn.
Reeves announced emergency savings, including a £1.5bn cut to winter fuel payments for better-off pensioners, the axing of road and hospital schemes and the dropping of plans to cap social care costs.
But she said this would not be enough, confirming that a Budget on October 30 would be painful. A multiyear public spending review would take place at the same time, she added.
“There will be difficult decisions around spending, around welfare and around taxes,” Reeves said, while insisting that “working people” would be spared increases in income tax, value added tax and national insurance.
Although Reeves blamed the Tories for the fiscal “mess”, her support for above-inflation public sector wage rises — including a 22 per cent two-year pay offer to striking junior doctors in England — added fuel to budgetary pressures.
Shadow chancellor Jeremy Hunt dismissed the claim as a “sham” designed to soften up the British public for tax rises in the autumn Budget. He said Reeves had had access to the books before the election. Read the full story.
For more, sign up for Inside Politics, Stephen Bush’s comprehensive and witty guide to UK politics and policy.
Here’s what else I’m keeping tabs on today:
Economic data: Germany reports preliminary July inflation data, while the EU, France, Germany, Hungary and Mexico publish preliminary second-quarter GDP figures.
EU-Vietnam: EU foreign affairs chief Josep Borrell meets Vietnamese officials in Hanoi to discuss foreign affairs, security and climate policy.
Results: Airbus, BP, Diageo, Foxtons, Glencore, L’Oréal, Microsoft and Nomura report.
Five more top stories
1. Exclusive: Hungary’s recent decision to ease visa restrictions for Russian visitors is an open door to spies and EU leaders should take urgent countermeasures, the bloc’s biggest political party has said. In a letter seen by the Financial Times, Manfred Weber, chair of the European People’s party, said the move raised “serious national security concerns”.
2. Donald Trump promised thousands of bitcoin fans at the weekend that he would make the US “the bitcoin superpower of the world” as he sought to deepen his ties to an industry fed up with its perceived persecution at the hands of the Biden administration. The comments mark an about-turn for Trump who once derided bitcoin as a “scam”.
The Fed’s Trump dilemma: The US central bank will not want to look as if it is prejudging policies as inflationary during election season, writes Krishna Guha, a former member of the management committee of the New York Fed.
For more, sign up for the US Election Countdown newsletter, the FT’s essential guide to the twists and turns of the 2024 presidential election.
3. Grant Thornton is leading a charge by mid-sized US accounting firms to rethink their global operations in ways that could radically alter the industry below the dominant Big Four. The firms are racing to meet the needs of increasingly multinational clients while seeking to make better use of their global networks to spread the cost of technology and staff.
4. A group of bondholders in Intrum, Europe’s largest debt collector, is preparing to try to block a crucial restructuring of its own €5.4bn borrowings after facing the threat of a writedown on their holdings. The aggrieved bondholders said the deal “did not respect temporal priority”. Daniel Thomas has more.
5. Amazon’s Prime Video is undercutting rival Netflix on advertising pricing as it battles for marketers’ attention in an increasingly crowded field of ad-funded streaming services. Multiple executives at rival services, as well as advertising bosses, said Amazon was pricing its spots more cheaply than Netflix, although at a higher rate than others such as Disney. Read more about the increasingly competitive market for streaming ads.
The Big Read
The current US administration has depended heavily on Mexican President Andrés Manuel López Obrador’s help with stemming migration, an issue on which Republicans have constantly attacked Joe Biden. López Obrador has in turn maximised his leverage over the Democratic administration to push through leftwing nationalist reforms that opponents say have weakened democracy in Mexico. Will the tacit bargain survive after their respective terms end?
We’re also reading . . .
‘Super shoes’: To understand what makes certain shoes so fast, the FT worked with experts to dissect the technology behind record-breaking footwear.
AI battle lines: The global chip war could turn into a cloud war as governments see artificial intelligence-capable data centres as a strategic resource, writes economic historian Chris Miller.
Paris Olympics: Star gymnast Simone Biles has billed her performance at the Games as her “redemption tour” three years after her shock withdrawal from most of her events in Tokyo.
Chart of the day
With birth rates falling, academics and charities in the UK are calling for a national policy for providing fertility treatment across the NHS. A rising number of women are seeking private IVF treatments in England, with only 24 per cent of IVF cycles funded by the NHS in 2022, compared with 32 per cent in 2019, according to an independent regulator.
Take a break from the news
Concerns about not just water and energy consumption but also context have prompted a rethink of the swimming pool. The glinting azure rectangles of David Hockney are ceding to more organic designs: plant-fringed edges, silvery decking and lake-green linings melting into their settings, creating the rewilded pool.
Additional contributions from Benjamin Wilhelm and Jonathan Moules
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