LONDON’S BUSINESS NEWSPAPER
GUNNING FOR THE TITLE ARSENAL FIVE CLEAR AFTER WIN OVER MAN UNITED P20
ALL ABOARD FROM PARIS TO THE ALPS ON THE ORIENT EXPRESS P16
NO ROOM FOR TAXCUTS IN BUDGET
MONDAY 23 JANUARY 2023
ISSUE 3,920
CITYAM.COM
FREE
ECONOMISTS SAY TAX CUTS UNLIKELY IN MARCH BUDGET DESPITE £11BN WINDFALL FROM FALLING ENERGY PRICES JACK BARNETT JEREMY Hunt and Rishi Sunak will likely hold fire on tax cuts at the 15 March budget despite being handed an estimated £11bn windfall from energy prices falling to pre-Russia Ukraine war levels, according to top economists’ predictions gathered by City A.M. Brits will have to wait until the run up to the next general election, which has to happen before January 2025, for the taxman to put money back in their pockets, experts reckon. A stalling UK economy, compounded by soaring inflation and the government’s debt interest bill swelling due to the Bank of England’s aggressive interest rate hikes, has squeezed the country’s finances.
As a result, the Chancellor “really doesn’t have much room to manoeuvre,” Carl Emmerson, deputy director at the economic think tank the Institute for Fiscal Studies, told City A.M. James Smith, research director of another think tank, the Resolution Foundation, which focuses on lower and middle income families, agreed. “With crowd-pleasing tax cuts likely to come far closer to the election, and further away from our current period of high inflation, the upcoming budget is not likely to be one where tax policy shifts markedly,” Smith told City A.M. Speculation about what tax and spending decisions Hunt will announce in under two months has grown recently, driven by a rapid fall in gas prices reducing the cost of the govern-
ment capping energy bills at £2,500 by around £11bn. But hopes of a tax giveaway are fading as the government seeks to maintain the confidence of the financial markets, which was lost after Liz Truss and Kwasi Kwarteng’s £45bn tax-cutting mini-budget in September. “It is far too early for the government to swing back into a major give-away budget, just a few months on from the fallout from Kwasi-nomics,” Smith said. Hunt reversed nearly all of Truss and Kwarteng’s mini-budget on 17 November, putting the tax burden on course to its highest level since the end of World War Two and tightening the cost of living crisis’s grip. John O’Connell, chief executive of the Taxpayers’ Alliance, told City A.M.: “Taxpayers are fed up of their record high tax bills, with no end in sight.” £ CONTINUED ON PAGE 2
YEAR OF THE RABBIT City enjoys Chinese New Year celebrations CITY A.M. REPORTER THOUSANDS of Londoners yesterday lined the city’s streets to watch this year’s colourful Chinese New Year celebrations and welcome in the Year of the Rabbit. Hundreds of performers took part in a parade involving traditional costumes, lion dances and floats.
The parade made its way from Chinatown towards Trafalgar Square, where performances took place in front of the National Gallery. The Lunar New Year is the most important annual holiday in China. Each year is named after one of the 12 signs of the Chinese zodiac in a repeating cycle, with this year being the Year of the Rabbit.
City workers switching firms trouser more than 20 per cent pay bump JACK BARNETT CITY bankers, brokers and insurers switching to a rival firm trousered a more than 20 per cent pay bump last year, new research reveals. The Square Mile’s best and brightest are switching companies in a bid to capitalise on rapid wage
inflation in the financial services sector. According to recruiter Morgan McKinley, the number of people looking for a new job in the City surged 36 per cent over the last year. Firms have been offering juicier pay packets to lure talent amid a smaller workforce.
Higher living costs have also incentivised workers to demand existing and future employers hike pay to protect their spending power. “The competition for talent clearly remains and combined with higher costs of living, candidates continue to demand premiums for their commitment,” Hakan Enver,
managing director at Morgan McKinley UK, said. The number of available jobs in the sector climbed 16 per cent over the last year. Strong hiring in the Square Mile indicates it could withstand the coming UK recession better than other sectors.
But a string of sweeping job cuts at some of the world’s biggest banks indicates they are now moving to protect their bottom lines. Wall Street lender Goldman Sachs is set to cut 3,000 jobs – its biggest since the financial crisis – while Morgan Stanley and Nomura are also shedding staff.
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