LONDON: The British government on Monday axed almost all of its debt-fueled tax cuts unveiled last month to avert fresh markets chaos, in a humiliating climbdown for embattled Prime Minister Liz Truss.
The shock move by new finance chief Jeremy Hunt, parachuted into the job on Friday to replace sacked Kwasi Kwarteng, leaves Truss’ position in a precarious state after a series of embarrassing U-turns.
Hunt estimated the tax changes would raise about £32 billion ($36 billion) per year, after economists estimated the government faced a £60-billion black hole. He also warned of tough spending cuts.
The chancellor of the exchequer said no government could control markets — but stressed his action would give certainty over public finances and help secure growth.
“The prime minister and I agreed yesterday to reverse almost all the tax measures announced in the growth plan three weeks ago,” Hunt told parliament, flanked by a grim-faced Truss.
“I want to be completely frank about the scale of the economic challenge we face,” he added, detailing the domestic and international headwinds confronting Britain.
The chancellor also announced the formation of an economic advisory council, featuring four experts outside of government.
Hours earlier, he had used a brief televised statement to announce the dramatic reversals to nervous markets, conceding last month’s budget from his predecessor had harmed the public purse.
“The most important objective for our country right now is stability,” Hunt had noted.
Hunt scrapped plans to axe the lowest rate of income tax, and curbed the government’s flagship energy price freeze — pulling the plug in April instead of late 2024.
After April, his department will “review” its energy support package, he said.
A proposed reduction in shareholder dividend tax was also binned, along with planned tax-free shopping for tourists and a freeze on alcohol duty.
The announcement comes as Truss’ governing Conservative party tanks in the opinion polls amid the reversals and Britain’s worsening cost-of-living crisis.
Truss fired her close friend Kwarteng on Friday after their recent tax-slashing budget sparked markets chaos — fueling intense speculation over her political future one month after taking office.
“No government can control the markets but every government can give certainty about the sustainability of public finances,” Hunt added Monday.
His action sent the British pound soaring against the dollar and euro, while bond yields dipped.
Last month’s notorious budget had sent bond yields spiking and the pound collapsing to a record dollar-low on fears of rocketing UK debt.
Tax reductions financed via huge borrowing were the centerpiece of last month’s ill-fated budget.
Truss had already staged two embarrassing budget U-turns, scrapping tax cuts for the richest earners and on company profits, and is now facing calls to resign even from her own MPs.
“There will be more difficult decisions I am afraid, on both tax and spending, as we deliver our commitment to get debt falling as a share of the economy over the medium term,” Hunt cautioned.
“All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut.”
Hunt already stated that he was not taking anything off the table” amid speculation of cutbacks on areas like defense, hospitals and schools.
He met over the weekend with the governor of the Bank of England, Andrew Bailey, and the head of the Debt Management Office for talks.
In the wake of the earlier turmoil, the BoE launched emergency buying of UK government bonds — a policy that ended Friday.
The budget furor has reportedly sparked a plot to oust the prime minister.
UK media reported senior Conservative MPs were plotting to unseat Truss, aghast at her short tenure.
Monday’s latest massive U-turn comes after Truss was elected Tory leader on a tax-slashing platform that analysts dubbed “Trussonomics.”
“That sound you can hear is the death knell for Trussonomics, with the vast majority of her tax cutting plans now consigned to the bin,” said Laura Suter, head of personal finance at stockbroker AJ Bell.
“People have had yogurt in their fridge that’s lasted longer than some of the government’s planned tax cuts,” she added.
In two weeks’ time, Hunt will unveil his medium-term fiscal plan alongside independent economic forecasts from the Office for Budget Responsibility.
But the main opposition Labour party, riding high in the polls, said the ruling Tories were responsible for “chaos and fiasco.”
“This is a Tory crisis, made in Downing Street, but ordinary working people are paying the price,” its finance spokeswoman Rachel Reeves told parliament.
UK axes ‘almost all’ budget tax cuts in humiliation for Truss
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UK axes ‘almost all’ budget tax cuts in humiliation for Truss
- Monday’s U-turn comes after Truss was elected Tory leader on a tax-slashing platform that analysts dubbed ‘Trussonomics’
- The Labour party, riding high in the polls, said the ruling Tories were responsible for ‘chaos and fiasco’
Philippines, US, hold joint maritime drills for seventh time
- The exercises included joint operations near shorelines as well as fire support
- The joint sail also showcased the Philippine vessel Miguel Malvar, a 118-meter guided missile frigate commissioned last month
The exercises, held on Wednesday in waters off the provinces of Occidental Mindoro and Zambales and away from contested features, included joint operations near shorelines as well as fire support.
“The MCA (maritime cooperative activity) is a demonstration of both nations’ resolve to deepen cooperation and enhance interoperability in line with international law,” the Philippine armed forces said in a statement.
The joint sail also showcased the Philippine vessel Miguel Malvar, a 118-meter guided missile frigate commissioned last month. It is one of two corvettes built by South Korea’s Hyundai Heavy Industries under the Philippines’ military modernization program.
Military engagements between the treaty allies have soared under President Ferdinand Marcos Jr., who has pivoted closer to Washington in response to China’s growing presence in the South China Sea.
China claims sovereignty over nearly all the South China Sea, including parts of the exclusive economic zones of Brunei, Indonesia, Malaysia, the Philippines and Vietnam.
Indonesia allowing nickel industry abuses to go unchecked: report
- Indonesia is both the world’s largest nickel producer, and home to the biggest-known reserves
- Locals have reported a rise in air pollution from nickel processing smelters and rivers polluted by nickel tailings in soil brought down by heavy rain
JAKARTA: The Indonesian government is allowing environmental damage including deforestation and violations against Indigenous people to go unchecked around a multi-billion dollar industrial park on a once-pristine eastern island, a report said Thursday.
Indonesia is both the world’s largest nickel producer, and home to the biggest-known reserves, and a 2020 export ban has spurred a domestic industrial boom.
Operations have grown around Weda Bay, the world’s largest nickel mine by production, on Halmahera island as Indonesia exploits the metal reserves used in everything from electric vehicle batteries to stainless steel.
Climate Rights International (CRI) said companies had caused a spike in air and water pollution and deforestation around the industrial park, accusing the government of ignoring their conduct.
“The Indonesian government is giving a green light to corporate practices that prioritize profits over the rights of local communities and the environment,” Krista Shennum, researcher at Climate Rights International, told AFP.
“The Indonesian government should immediately hold companies accountable. This could include civil penalties, criminal prosecutions, or rescinding permits.”
Much of the park’s nickel is sourced by Weda Bay Nickel (WBN), a joint venture of Indonesian mining firm Antam and Singapore-based Strand Minerals, with shares divided between French mining giant Eramet and Chinese steel major Tsingshan.
An AFP report last week detailed how the home of the nomadic Hongana Manyawa tribe was being eaten away by the world’s largest nickel mine, with members issuing a call for nickel companies to leave their tribal lands alone.
Locals have reported a rise in air pollution from nickel processing smelters and rivers polluted by nickel tailings in soil brought down by heavy rain.
Water tests by Indonesian NGOs AEER, JATAM, and Nexus3 Foundation in 2023 and 2024 “revealed dangerously high levels of nickel and hexavalent chromium, among other pollutants,” the report said.
“(Companies) are failing local communities by not making information about the safety of important drinking water sources publicly available and accessible,” said Shennum.
Both WBN and Eramet told AFP last week they work to minimize impacts on the environment, including conducting water tests.
CRI also said Indonesian and foreign companies in coordination with police and military personnel had “engaged in land grabbing, coercion and intimidation” of Indigenous peoples and other communities.
Local activists and students opposing the industrial park have “faced criminalization, harassment and smear campaigns,” the report said.
Weda Bay Nickel and the Indonesian government did not immediately respond to a request for comment.
But Indonesia’s energy ministry told AFP last week it was committed to “protecting the rights of Indigenous peoples and ensuring that mining activities do not damage their lives and environment.”
New Zealand parliament suspends three lawmakers who performed Maori haka in protest
- Hana-Rawhiti Maipi-Clarke received a seven-day ban and the leaders of her political party, Debbie Ngarewa-Packer and Rawiri Waititi, were barred for 21 days
WELLINGTON: New Zealand legislators voted Thursday to enact record suspensions from Parliament for three lawmakers who performed a Maori haka to protest a proposed law.
Hana-Rawhiti Maipi-Clarke received a seven-day ban and the leaders of her political party, Debbie Ngarewa-Packer and Rawiri Waititi, were barred for 21 days. Three days had been the longest ban for a lawmaker from New Zealand’s Parliament before.
The lawmakers from Te Pati Maori, the Maori Party, performed the haka, a chanting dance of challenge, last November to oppose a widely unpopular bill, now defeated, that they said would reverse Indigenous rights.
But the protest drew global headlines and provoked months of fraught debate among lawmakers about what the consequences for the lawmakers’ actions should be and whether New Zealand’s Parliament welcomed or valued Maori culture — or felt threatened by it.
A committee of the lawmakers’ peers in April recommended the lengthy punishments in a report that said the lawmakers were not being punished for the haka itself, but for striding across the floor of the debating chamber toward their opponents while they did it. Maipi-Clarke Thursday rejected that, citing other instances where legislators have left their seats and approached their opponents without sanction.
It was expected that the suspensions would be approved, because government parties have more seats in Parliament than the opposition and had the necessary votes to affirm them. But the punishment was so severe that Parliament Speaker Gerry Brownlee in April ordered a free-ranging debate among lawmakers and urged them to attempt to reach a consensus on what repercussions were appropriate.
No such accord was reached Thursday. During hours of at times emotional speeches, government lawmakers rejected opposition proposals for lighter sanctions.
There were suggestions that opposition lawmakers might extend the debate for days or even longer through filibuster-style speeches, but with the outcome already certain and no one’s mind changed, all lawmakers agreed that the debate should end.
Pentagon chief confident NATO will commit to Trump’s defense spending target
- Donald Trump has said NATO allies should boost investment in defense to 5 percent of GDP
- Hiking defense expenditure is the price of ensuring a continued US commitment to the continent’s security
BRUSSELS: US Defense Secretary Pete Hegseth said on Thursday he was confident that members of the NATO alliance will sign up to Donald Trump’s demand for a major boost in defense spending, adding that it had to happen by a summit later in June.
The US president has said NATO allies should boost investment in defense to 5 percent of gross domestic product, up from the current target of 2 percent.
“To be an alliance, you got to be more than flags. You got to be formations. You got to be more than conferences. You need to be, keep combat ready capabilities,” Hegseth said as he arrived at a gathering of NATO defense ministers in Brussels.
“We’re here to continue the work that President Trump started, which is a commitment to 5 percent defense spending across this alliance, which we think will happen,” Hegseth said, adding: “It has to happen by the summit at The Hague later this month.”
Diplomats have said European allies understand that hiking defense expenditure is the price of ensuring a continued US commitment to the continent’s security and that keeping the US on board means allowing Trump to be able to declare a win on his 5 percent demand during the summit, scheduled for June 24-25.
“We have to go further and we have to go faster,” NATO Secretary-General Mark Rutte told reporters on Wednesday.
“A new defense investment plan will be at the heart of the NATO summit in The Hague,” he added.
In a bid to meet Trump’s 5 percent goal, Rutte has proposed alliance members boost defense spending to 3.5 percent of GDP and commit a further 1.5 percent to broader security-related spending, Reuters has reported.
Details of the new investment plan will likely continue to be negotiated until the eve of the NATO summit.
“We have to find a realistic compromise between what is necessary and what is possible really to spend,” German Defense Minister Boris Pistorius said on Wednesday.
Countries remain divided over the timeline for a new pledge.
Rutte has proposed reaching the 5 percent by 2032 – a date that some eastern European states consider too distant but which some others see as too early and unrealistic given current spending and industrial production levels.
A 2032 target is “definitely too late,” Lithuanian Defense Minister Dovile Sakaliene said on Wednesday, arguing for a target of 2030 at the latest.
There is also an ongoing debate over how to define “defense-related” spending, which might include spending on cybersecurity and certain types of infrastructure.
“The aim is to find a definition that is precise enough to cover only real security-related investments, and at the same time broad enough to allow for national specifics,” said one NATO diplomat.
China urges EU to stop ‘provoking trouble’ in South China Sea dispute
- Beijing advises Manila not to ‘fantasize’ about relying on outside forces to resolve the South China Sea dispute
- ’The EU is not a party to the South China Sea disputes and has no right to interfere in the South China Sea differences’
BEIJING: The Chinese embassy in the Philippines advised Manila on Thursday not to “fantasize” about relying on outside forces to resolve the South China Sea dispute, and urged the European Union to stop “provoking trouble.”
An embassy spokesperson made the comments after EU foreign policy chief Kaja Kallas visited the Philippine capital and voiced concern over China’s activities in the busy waterway, where its claims overlap those of some Southeast Asian nations.
“The EU is not a party to the South China Sea disputes and has no right to interfere in the South China Sea differences between China and the Philippines,” the spokesperson said in a statement on the embassy website.
The Philippine embassy in Beijing did not immediately respond to an emailed request for comment.
