Just now, the UK unveiled its latest Autumn Statement! Comprehensive tax hikes for the wealthy and large-scale cash handouts to the poor...

・Household energy support will be extended until April 2023; however, from that point onward, the annual household energy price cap will rise from £2,500 to £3,000. ・The National Living Wage will increase by 9.7% to £10.42 per hour; pensions will rise by 10.1%, in line with inflation. ・The additional rate (45%) income tax threshold for high earners will be lowered from £150,000 to £125,140—meaning high earners will begin paying the top tax rate at a lower income level. ・The personal income tax allowance, higher-rate threshold, main National Insurance contribution threshold, and inheritance tax threshold will all remain frozen until April 2028. ・The windfall tax on UK oil and gas producers will rise from 25% to 35%; a temporary 45% tax will also be imposed on electricity generators. ・Infrastructure development and technological innovation will continue to be prioritised, including launching the Sizewell C nuclear power station project and advancing HS2 and other rail projects, aiming to transform the UK into a ‘new Silicon Valley’. ・Budgets for the NHS, education, defence, and local government will be increased. Key highlights of the Autumn Statement: Before outlining the policy measures, Hunt also shared economic forecasts from the Office for Budget Responsibility (OBR): ・Borrowing for this fiscal year stands at £177 billion, falling to £140 billion in FY 2023/24. ・UK GDP growth for 2022 is projected at 4.2%, but the economy is currently in recession and is expected to contract by 1.4% in 2023. ・Unemployment is forecast to rise from 3.6% in 2023 to 4.9% in 2024. ・Average inflation is projected at 9.1% for 2022 and 7.4% for 2023. Additionally, Hunt confirmed two new fiscal rules in the House of Commons today: first, the ratio of underlying debt to GDP must fall in the fifth year of a rolling five-year period; second, public sector borrowing over the same period must remain below 3% of GDP. Following the Autumn Statement’s release, the GBP/USD exchange rate dipped slightly to 1.18, though it remains above its level one week earlier. The GBP/CNY exchange rate fell modestly from 8.49 earlier today to 8.45. As of publication (17 November 2022), the real-time GBP exchange rates are as follows: One day before the Autumn Statement, UK inflation hit a new record high. According to data released yesterday by the UK’s Office for National Statistics (ONS), the Consumer Price Index (CPI) rose 11.1% year-on-year for the 12 months ending October—up from 10.1% in September, and exceeding both the Bank of England’s forecast of 10.9% and economists’ median prediction of 10.7%. This marks the highest inflation rate since 1981—41 years—and further intensifies pressure on the Bank of England to raise interest rates. In response, Hunt stated that the measures announced in this Autumn Statement will help reduce mortgage rates and curb soaring energy and food prices, thereby helping UK households navigate the cost-of-living crisis. Speaking in the House of Commons, he said: “Families across the UK are making sacrifices every day—living within their means. Our government must do the same, because Britain will always stand on its own two feet.”

After the Autumn Statement was released, the pound went on a rollercoaster ride, and expectations of interest rate hikes declined! UK fixed mortgage rates dropped...

・UK nurses have given the government five days to negotiate pay rises—or else they will stage a major strike in December. ・40.8 million people became targets of telecom fraud; Ofcom has responded by strengthening regulation. ・Top UK law firms are relocating from Canary Wharf back to the historic City of London financial district. ・Cornwall Airport Newquay has received the UK’s first spaceport launch licence. ・Heavy rainfall has triggered flood warnings across multiple regions in the UK. Following the Autumn Statement, the pound went on a rollercoaster ride, and expectations of interest rate hikes declined. Yesterday (17 November), Chancellor of the Exchequer Jeremy Hunt delivered the highly anticipated Autumn Statement, aiming to signal to markets that the UK government has returned to a path of economic stability. Over the past 24 hours—i.e., since the Autumn Statement’s release—the pound sterling experienced a ‘rollercoaster’ exchange rate movement: it initially dipped sharply upon announcement, then rebounded rapidly, and has since stabilised. Below is the GBP/USD exchange rate movement over the past 24 hours; it has now recovered to 1.19. Below is the GBP/CNY exchange rate movement over the past 24 hours: it fell as low as 8.43 yesterday but has since rebounded to 8.48. As of publication (18 November 2022), the latest GBP exchange rates are as follows: The Daily Telegraph cited economists’ analysis stating that although Hunt’s Autumn Statement adopted the rhetorical tone of former Conservative Chancellor George Osborne, its substance closely resembles policies pursued by former Labour Chancellor Gordon Brown—since most welfare spending increases are funded by raising income and corporate tax rates. On interest rates: owing to lower-than-expected US inflation and analyses suggesting UK inflation may decline in the future, the UK financial sector now expects the Bank of England’s interest rate hikes to be less aggressive than previously anticipated—potentially capping the base rate at 4.5%. Markets had earlier predicted the peak could reach 6%. Under the latest forecast, the Bank of England will raise its base rate to 3.5% in December this year, to 4% in February next year, by an additional 0.25 percentage points in March, reaching a peak of 4.5% in May. Although expectations for rate hikes have moderated, 4.5% would still be the highest base rate since 2008. UK fixed mortgage rates are falling—and may drop below 4% early next year. According to recent reports by UK media, several major UK banks—including Platform, Yorkshire Building Society, HSBC, Halifax, Lloyds, and NatWest—have recently reduced their fixed mortgage rates. Data from Moneyfacts shows that the UK’s two-year fixed mortgage rate peaked at 6.65% on 20 October (when markets anticipated a 6% rate hike next year) and now stands at 6.28%; the five-year fixed rate has similarly fallen from a peak of 6.51% to 6.07%. Some mortgage brokers predict that, given the reduced expectation of further rate hikes, five-year fixed mortgage rates could fall below 4% early in 2023. UK nurses have given the government five days to negotiate pay rises—or else they will stage a major strike in December. Latest reports indicate that UK nurses have issued an ultimatum to the government: five days to negotiate pay increases—or they will hold a major strike in December.

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