UK cost of living crisis to push 1.3m more people into absolute poverty; Moscow stock market reopens – business live
Posted On March 24, 2022
LIVE – Updated at 08:46
Rolling coverage of the latest economic and financial news.
Stocks rally in Moscow as trading resumes
The Moscow stock exchange has opened higher, as trading finally resumes after a near month-long suspension.
The MOEX index rallied as much as 11% in early trading, suggesting that measures put in place to prop up stocks are working. Its the first session since the exchange was shuttered on February 25th following the invasion of Ukraine.
Energy firms are leading the rally, with gas giant Gazprom surging 18% and oil group Rosneft gaining 20%.
Russian bank Sberbank is among the risers too, up over 10% despite having been targeted by Western sanctions; it quit almost all its European markets earlier this month
Sir Ed Davey, leader of the Liberal Democrats, described Rishi Sunak’s spring statement as “a total swindle”, arguing “he’s giving a bit and taking a lot”.
He told BBC Breakfast:
If you look at the fine print that was published yesterday, it shows taxes overall going up by over £1,500 a year per household under this Conservative Government.
“And those tax rises from Conservatives are coming at the worst possible time – the squeeze on families and pensioners, again, set to be the worst for over 40 years, pump rises, food bills, energy bills, inflation the highest for over 40 years.
“People are drowning in these tax rises and these higher bills. The Chancellor needed to provide a lifeboat for people and he didn’t.”
Introduction: 1.3m people set to fall into absolute poverty next year
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Around 1.3 million people will fall into absolute poverty over the next year because chancellor Rishi Sunak didn’t provide more help for low-income families yesterday, according to new analysis of Wednesday’s spring statement.
The Resolution Foundation has reported that Sunak delivered a “big but poorly targeted policy package” yesterday, which failed to support those families hit hardest by the cost of living crisis.
That means that absolute poverty is expected to rise by 1.3 million people next year – including 500,000 children – the first time Britain has seen such a rise outside of recessions, Resolution says.
In a sobering analysis, Resolution explains that household incomes are forecast to fall by 2 per cent across the parliament as a whole, making this parliament the worst on record for living standards.
Typical working-age household incomes are to set to fall by 4 per cent in real-terms next year (2022-23), a loss of £1,100.
The poorest quarter of households face the most pain – their incomes are set to tumble by 6 per cent, after the chancellor resisted calls to update benefit payments by more than the planned 3.1%, which means a fall in real terms.
Torsten Bell, chief executive of the Resolution Foundation, says the policies announced yesterday don’t match the Chancellor’s rhetoric.
The decision not to target support at those hardest hit by rising prices will leave low-and-middle income households painfully exposed, with 1.3 million people, including half a million children, set to fall below the poverty line this coming year.
“And despite the eye-catching 1p cut to income tax, the reality is that the Chancellor’s tax changes mean that seven-in-eight workers will see their tax bills rise. Those tax rises mean the Chancellor is able to point to a swift fiscal consolidation and significant headroom against his fiscal rules.
“The big picture is that Rishi Sunak has prioritised rebuilding his tax-cutting credentials over supporting the low-to-middle income households who will be hardest hit from the surging cost of living, while also leaving himself fiscal flexibility in the years ahead. Whether that will be sustainable in the face of huge income falls to come remains to be seen.”
Only one-in-eight workers will see actually see their tax bills fall by the end of the parliament, Resolution reports, despite Sunak’s decision to lift the National Insurance threshold by £3,000 in July:
Considering all income tax changes to thresholds and rates announced by Rishi Sunak, only those earning between £49,100 and £50,300 will actually pay less income tax in 2024-25, and only those earning between £11,000 and £13,500 will pay less tax and National Insurance (NI). Of the 31 million people in work, around 27 million (seven-in-eight workers) will pay more in income tax and NI in 2024-25.
Yesterday, the Office for Budget Responsibility warned that UK living standards are heading for a historic fall, with the tax burden heading for a 70-year high and inflation likely to average over 7% this year.
Sunak banked most of a windfall in the public finances from higher tax receipts and lower-than-expected borrowing, a move that could create firepower for a pre-election giveaway in 2024.
But there are dark economic times ahead. Last night, Sunak was challenged on LBC Radio by a single mother who told the chancellor she cannot afford to heat her home and has had to take on two extra jobs,
Hezel, a single mother, said she had a good salary “on paper” but rising costs had put “an intense strain” on her ability to provide for her children.
MPs on the Business and Transport committee are holding a hearing into P&O Ferries’s shock sacking of 800 workers last week. It starts at 9.30am, with Peter Hebblethwaite, chief executive, P&O Ferries, and Jesper Kristensen, Group COO, Maritime Services, DP World, up at 11am.
Yesterday, Boris Johnson has said it appears P&O Ferries broke the law when it suddenly sacked 800 workers, and that the government would take legal action.
Purchasing manager surveys from UK and eurozone companies are expected to show a slowdown this month, as soaring energy prices and the Ukraine war hits the economy.
Moscow’s stock market is to partially reopen today for a shortened session, after a near month-long shutdown after stocks plunged when the Ukraine invasion began.
Several measures will be in place to limit the pace of a new selloff, as Bloomberg explains:
When trading resumes at 9:50 a.m. in Moscow on Thursday for a shortened four-hour session, only 33 stocks will be active, including some of the nation’s biggest companies, such as Gazprom PJSC and Sberbank PJSC.
However, foreigners won’t be allowed to sell equities in a ban scheduled to last until April 1, and short selling won’t be permitted.
9am GMT: European Central Bank economic bulletin
9am GMT: Eurozone flash PMI survey of manufacturing and services companies for March
9.30am GMT: UK flash PMI survey of manufacturing and services companies for March
9.30am GMT-12.30pm GMT: Transport and Business Committees hearing into P&O Ferries sackings