Rishi Sunak ‘very confident’ about economic outlook; says cost of living package won’t fuel inflation – business live

Show key events only Live feed Show key events only 19m ago 09. 28 The Institute of Fiscal Studies says Sunak’s £15bn package is redistributive – meaning the poorest households will now be “approximately compensated” for the rising cost of living. High earners will still be worse off overall.

That’s due to tax rises such as the health and social care levy [a 1. 25% tax on earnings] and the freeze to income tax thresholds which will drag more people into higher tax bands. The measures announced yesterday mean that on average, the poorest households will now be approximately compensated for the rising cost of living.

Many low earners will now be better off this year than last. High earners will still tend to be worse off. https://t.

co/6YOeU5BRDQ pic. twitter. com/nln3b25IRS — Institute for Fiscal Studies (@TheIFS) May 27, 2022 “Mr Sunak is engaging in some serious redistribution from rich to poor – albeit against a backdrop of rising inequality.

” – @PJTheEconomist Read our response to yesterday’s announcements on the new cost of living support and the energy profits levy here> https://t. co/6YOeU5BRDQ pic. twitter.

com/AIbNofUSkM — Institute for Fiscal Studies (@TheIFS) May 27, 2022 30m ago 09. 17 Labour: second home owners shouldn’t receive multiple £400 payments Wealthy people who own a second home in the UK will actually receive £800 of support — because the £400 energy bill grant is applied to each household. So if you own several properties, it would be a four-figure windfall.

Shadow chancellor Rachel Reeves says this is simply not right — and shows that the government have rushed the package out to distract from Sue Gray’s report into Partygate. She told Sky News: . css-knbk2a{height:1em;width:1.

5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “If the Government hadn’t have been resisting Labour’s calls for a windfall tax and this additional support for months, the Government could have taken the time to get this package right. “It is not right that if you own a second or a third home you should get this £400 payment multiple times. You can now get a situation where somebody who’s incredibly wealthy gets £400 on three or four occasions because they own so many properties.

“This is only happening because this package has been rushed through because the Government has been resisting this. ” What are the cost of living payments – and how much can you get? Read more Sunak argues that this universal payment is the best “practical” way to get help out there, and that the impact will be limited. He told BBC Breakfast: .

css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “Second homes account for one or two per cent of the property stock. ” Sunak says second homes getting the extra £400 energy bill grant will account for “one to two per cent of the property stock” — Natasha Clark (@NatashaC) May 27, 2022 According to the Department for Levelling Up, Housing and Communities’s English Housing Survey , English households owned around 495,000 second homes within the UK in 2018-19, out of the almost 25m homes in the UK.

So they’ll be collecting around £200m of support on their energy bills — unless they follow the chancellor’s lead and give it to charity. . .

. . Rishi Sunak tells GMB he hopes people will “join me in giving that money to charity” if they don’t need the £400 energy bill help — Natasha Clark (@NatashaC) May 27, 2022 Updated at 09.

27 BST 49m ago 08. 57 Sunak: I’ll give £400 energy discount to charity; other rich people should too One criticism of the chancellor’s £15bn support package is that every household will receive £400, regardless of their wealth. That’s because Sunak has decided not to claw back the existing £200 reduction on energy bills this autumn, and instead doubled it.

The chancellor says this universal payment is the best way to get help to everyone who needs it, including those on middle incomes who need support too. But Sunak clearly doesn’t need the money –he and Indian heiress wife Akshata Murty made their debut on the Sunday Times Rich List last week, thanks to their £730m fortune. Rishi Sunak and Akshata Murty join UK rich list with combined £730m fortune Read more So he’ll be handing it to charity.

‘Of course, I will be giving that away to charity’ Rishi Sunak defended the decision to give everyone – even the very richest households – a £400 energy bill discount https://t. co/YBVMC6pd1n pic. twitter.

com/FJ149iqSkm — ITV News Politics (@ITVNewsPolitics) May 27, 2022 And the chancellor suggests others who don’t need the extra support should do the same. He tells Sky’s Niall Paterson: . css-knbk2a{height:1em;width:1.

5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “You, like me, can also give that money to charity if you don’t need it. I’m sure you will, and set an example. Rishi Sunak on Sky News urges rich people who receive government energy bill discount to give it to charity — John Stevens (@johnestevens) May 27, 2022 Updated at 08.

59 BST 1h ago 08. 46 Sunak very confident about the outlook for UK economy Rishi Sunak also says he feels ‘ very confident’ about the UK’s economic outlook. The chancellor told Radio 4 that the surge in energy prices, and the UK’s tight jobs market, were pushing up inflation: .

css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “We are experiencing inflation pressures from both a tight labour market, although that is something to celebrate, but also the energy price shock,” “I’m very confident about the outlook for our economy over time. ” The chatter at the World Economic Forum this week was that some countries are likely to be pulled into recession by the shocks hitting the world economy — which could even lead to a global recession.

One investor told me that it would be ‘tight’ whether the UK avoided recession or not. Updated at 08. 47 BST 1h ago 08.

43 Introduction: Sunak says cost of living package will have ‘minimal impact’ on inflation Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets. A day after announcing £15bn of fresh help for the cost of living crisis, Rishi Sunak is hitting the TV and radio studios to explain his screeching u-turn on an energy windfall tax. Not that the chancellor sees it that way.

Speaking on Sky News this morning, Sunak argues that he’s taken a pragmatic approach on taxing the surging earnings at the energy sector. Sunak argues the government wanted to find a way to tax those profits fairly (as Labour have been pushing for for months), but waited for Ofgem’s estimate for energy bills this autum (they’re set to shoot to £2,800, intensifying the cost of living squeeze), before deciding the 25% levy on profits. The chancellor argues: .

css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} It was right to wait until we had some more certainty about what would happen to energy bills in the autumn. Chancellor Rishi Sunak says he didn’t announce the windfall tax/energy levy in the spring statement because he needed to “take the time to get that right”.

He says extra help has been unveiled now because there’s more certainty about energy bill rises in the autumn. — Rob Powell (@robpowellnews) May 27, 2022 Shadow chancellor Rachel Reeves warns that the government simply took too long to act, when it was “blindingly obvious to everybody else” that help was needed. And more could still be needed next year, she tells BBC Breakfast: .

css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “I think the big question that still needs to be answered is how are we going to stop ourselves from being in exactly the same position this time next year? “All economists are saying that the energy prices aren’t going down any time soon. So, what longer-term measures are the Government going to take to ensure we’re not back here this time next year? Sunak also dropped a big hint that electricity producers (who avoided the ‘energy profits levy’) will face extra tax too.

Sunak says he thinks “extraordinary profits” are being made in that sector due to elevated gas prices due to war in Ukraine, so the goverment will “urgently look” at the scale of those profits and decide what to do: . css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} We do have plans in place to reform that market.

France, Italy, Spain, Portugal and Greece have all taken steps to reform those markets. We have a plan to do the same thing, Sunak says, so his team are figuring out how quickly they can do that and what the appropriate steps would be in the interim. Chancellor Rishi Sunak also heavily hints that electricity generators could be included in plans to raise money saying they think there are “extraordinary profits” being made.

Adds they are working to understand that and bring in long term reform & more interim measures. — Rob Powell (@robpowellnews) May 27, 2022 But. .

. . if other countries have managed it, why is the UK behind? Our financial editor Nils Pratley says the Treasury simply started its work “too late” (here’s his analysis).

Sunak’s design for the windfall tax is complex, but is it good? | Nils Pratley Read more Chancellor Sunak also brushes aside concerns that the new package will be inflationary. The impact will be ‘minimal’, he insists — much less than 1% — because most of the package is targeted at those most in need, and money is being raised (through the windfall tax, which could rais £5bn) to help pay some of the bill. .

css-knbk2a{height:1em;width:1. 5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} “The combination of those two things is the responsible approach” And he also pledges that benefits and pensions should rise well ahead of inflation next year, when they are uprated in line with this September’s inflation reading, which could be as high as 10%. That could push up the benefits bill by £25bn, Sky estimates: If inflation is as expected this autumn (c.

10%) then a rough calculation suggests it could push up the pensions/benefits bill by maybe £25bn. That’s more than the ENTIRE package today (£15bn). It’s MASSIVE.

But because this isn’t a Budget HMT doesn’t have to show its workings… pic. twitter. com/lGk2mrvkuH — Ed Conway (@EdConwaySky) May 26, 2022 Sunak doesn’t dispute that figure – saying his package is a ‘bridge’ to get people to that point next year.

Chancellor Rishi Sunak says people should be reassured that next year pensions & benefits will rise well in excess of what inflation is forecast to be (likely 9/10%) & he says the support announced is a “bridge to that”. — Rob Powell (@robpowellnews) May 27, 2022 The agenda 1. 30pm BST: US PCE price index inflation report for April 3pm BST: University of Michigan index of consumer sentiment Updated at 09.

16 BST Topics Business Business live Economics Stock markets Cost of living crisis Rishi Sunak Reuse this content.