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UK mini-budget shakes the stock market, benefits the wealthy | Politics News

The British government has unveiled a new mini-budget in the parliament, intending to cut household taxes and energy bills while driving economic growth.

In what represents the most significant tax cut budget since 1972, the new finance minister Kwasi Kwarteng’s sweeping new budget will see cuts to national insurance, stamp duty and the top tax rate.

During his speech in the House of Commons on Friday, Kwarteng said: “People will have seen the horrors of [Russia’s President Vladimir] Putin’s illegal invasion of Ukraine. They will have heard reports that their already-expensive energy bills could reach as high as 6,500 pounds ($7,254) next year.

“Mr Speaker, we were never going to let this happen. The prime minister has acted with great speed to announce one of the most significant interventions the British state has ever made,” he said, referring to the United Kingdom’s new PM, Liz Truss.

Kwarteng said the budget would address three key things: the energy price guarantee, equal support for businesses, and an energy markets financing scheme.

PM Liz Truss ruled out a windfall tax on oil companies to pay for the energy crisis [File: Daniel Leal/AFP]

A national insurance rise announced earlier this year under the former finance minister, Rishi Sunak, will be cancelled, saving households 330 pounds ($368) a year.

The threshold for zero stamp duty on house purchases will be doubled to 250,000 pounds, and increased to 425,000 pounds from the previous 300,000 pounds for first-time buyers.

At the same time, a plan was brought forward to cut the lowest income tax rate from 20 to 19 percent and reduce the highest rate from 45 to 40 percent.

“High tax rates damage Britain’s competitiveness,” Kwarteng said. “They reduce the incentive to work, invest and start a business. And the higher the tax, the more ways people seek to avoid them, or work elsewhere or simply work less … rather than putting their time and money to more creative and productive ends.”

But in what was seen as a controversial move while the country faces a cost-of-living crisis, Kwarteng announced he will scrap the European Union-inherited cap on bankers’ bonuses following Brexit to boost the financial services sector.

A new era of growth

“Growth is not as high as it needs to be … We need a new approach for a new era, focused on growth. Our aim, over the medium term, is to reach a trend rate of growth of 2.5 percent,” the finance minister said.

However, Rachel Reeves, Labour’s finance policy chief, said Kwarteng had prioritised big business and “bankers’ bonuses” over working people by relying on a discredited theory of “trickle-down economics”.

“The prime minister and chancellor (finance minister) are like two desperate gamblers in a casino chasing a losing run,” she told parliament.

Since the announcement of the new mini-budget, the British pound dropped to a 37-year low as the sweeping unfunded tax cuts shook the market.

Many have flagged that the new budget disproportionately benefits the wealthy.

Jo Maugham, director of the Good Law Project, tweeted that the budget “means that those earning a million a year will have £54,400 ($60,700) extra in their pockets after tax and NICs [national insurance contributions]”.

“For those earning £25,000 ($27,900), the equivalent figure is about £280 ($312). Hard to imagine a worse response to a cost of living crisis.”

The government’s tax cuts are expected to cost 45 billion pounds ($50bn) by 2026/27.

Reaction from Wales, Scotland

Leaders from the devolved regions of the UK have also criticised the tax cut plans.

Mark Drakeford, the Welsh First Minister, tweeted, “This #MiniBudget embeds unfairness across the UK.

“The UK Government should be offering meaningful support to those who need it the most. Instead, they’re giving tax cuts to the rich, bonuses to bankers and protecting the eye-watering profits of energy companies,” he said.

Nicola Sturgeon, the Scottish First Minister, also echoed Drakeford’s remarks and tweeted: “The super-wealthy laughing all the way to the actual bank (tho I suspect many of them will also be appalled by the moral bankruptcy of the Tories) while increasing numbers of the rest relying on food banks – all thanks to the incompetence and recklessness of this failed UK gov.”

Strikes

The news comes as the Bank of England has warned that Britain is slipping into recession, as rocketing fuel and food prices take their toll. Kwarteng said the government would force transport companies to maintain a minimum level of service during strike action and require pay offers to be put to members during pay negotiations.

He told the country’s parliament: “It is simply unacceptable that strike action is disrupting so many lives. Other European countries have minimum service levels to stop militant trade unions closing down transport networks during strikes. So we will do the same.

“And we will go further. We will legislate to require unions to put pay offers to a member vote to ensure strikes can only be called once negotiations have genuinely broken down,” he added.

More strikes

However, British rail unions announced on Friday that they would join a series of already-planned strikes in October over pay and conditions.

Members of the Transport Salaried Staffs’ Association (TSSA) and Unite will participate in industrial action in early October.

“To be faced with a three year pay freeze during the worst cost of living crisis in decades is disgraceful,” Unite’s general secretary Sharon Graham said in a statement.



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What the war in Ukraine means for Asia’s climate goals

NEW DELHI, India — The queues outside petrol pumps in Sri Lanka have lessened, but not the anxiety.

Asanka Sampath, a 43-year-old factory clerk, is forever vigilant. He checks his phone for messages, walks past the pump, and browses social media to see if fuel has arrived. Delays could mean being left stranded for days.

“I am really fed up with this,” he said.

His frustrations echo that of the 22-million inhabitants of the island nation, facing its worst ever economic crisis because of heavy debts, lost tourism revenue during the pandemic, and surging costs. The consequent political turmoil culminated with the formation of a new government, but recovery has been complicated by Russia’s invasion of Ukraine, and the consequent upending of global energy markets.

Europe’s need for gas means that they’re competing with Asian countries, driving up prices of fossil fuels and resulting in what Tim Buckley, the director of the thinktank Climate Energy Finance, refers to as “hyper-inflation … and I use that word as an understatement.”

Most Asian countries are prioritizing energy security, sometimes over their climate goals. For rich countries like South Korea or Japan, this means forays into nuclear energy. For the enormous energy needs of China and India it implies relying on dirty coal power in the short term. But for developing countries with already-strained finances, the war is having a disproportionate impact, said Kanika Chawla, of the United Nations’ sustainable energy unit.

How Asian countries choose to go ahead would have cascading consequences: They could either double down on clean energy or decide to not phase out fossil fuels immediately.

“We are at a really important crossroads,” said Chawla.

SRI LANKA: “SLOW GRIND”

Sri Lanka is an extreme example of the predicament facing poor nations. Enormous debts prevent it from buying energy on credit, forcing it to ration fuel for key sectors with shortages anticipated for the next year.

Sri Lanka set itself a target of getting 70% of all its energy from renewable energy by 2030 and aims to reach net zero — balancing the amount of greenhouse gas they emit with how much they take out of the atmosphere — by 2050.

Its twin needs of securing energy while reducing costs means it has “no other option” than to wean itself off fossil fuels, said Aruna Kulatunga, who authored a government report for Sri Lanka’s clean energy goals. But others, like Murtaza Jafferjee, director of the think tank Advocata Institute say these targets are more “aspirational than realistic” because the current electrical grid can’t handle renewable energy.

“It will be a slow grind,” said Jafferjee.

Grids that run on renewable energy need to be nimbler because, unlike fossil fuels, energy from wind or the sun fluctuates, potentially stressing transmission grids.

The economic crisis has decreased demand for energy in Sri Lanka. So while there are still power cuts, the country’s existing sources — coal and oil-fired plants, hydropower, and some solar — are coping.

CHINA, INDIA: HOME-GROWN ENERGY

How these two nations meet this demand will have global ramifications.

And the answer, at least in the short-term, appears to be a reliance on dirty-coal power — a key source of heat-trapping carbon dioxide emissions.

China, currently the top emitter of greenhouse gases in the world, aims to reach net zero by 2060, requiring significant slashing of emissions.

But since the war, China has not only imported more fossil fuels from Russia but also boosted its own coal output. The war, combined with a severe drought and a domestic energy crisis, means the country is prioritizing keeping the lights on over cutting dirty fuel sources.

India aims to reach net zero a decade later than China and is third on the list of current global emitters, although their historical emissions are very low. No other country will see a bigger increase in energy demand than India in the coming years, and it is estimated that the nation will need $223 billion to meet its 2030 clean energy targets. Like China, India’s looking to ramp up coal production to reduce dependence on expensive imports and is still in the market for Russian oil despite calls for sanctions.

But the size of future demand also means that neither country has a choice but to also boost their clean energy.

China is leading the way on renewable energy and moving away from fossil fuel dependence, said Buckley, who tracks the country’s energy policy.

“It might be because they are paranoid about climate change or because they want to absolutely dominate industries of the future,” said Buckley. “At the end of the day, the reason doesn’t really matter.”

India is also investing heavily in renewable energy and has committed to producing 50% of its power from clean energy sources by 2030.

“The invasion has made India rethink its energy security concerns,” said Swati D’Souza, of the Institute for Energy Economics and Financial Analysis.

More domestic production doesn’t mean that the two countries are burning more coal, but instead substituting expensive imported coal with cheap homegrown energy, said Christoph Bertram at the Potsdam Institute for Climate Impact Research. What was “crucial” for global climate goals was where future investments were directed.

“The flipside of investing into coal means you invest less into renewables,” he said.

JAPAN, SOUTH KOREA: THE NUCLEAR OPTION

Both Japan and South Korea, two of Asia’s most developed countries, are pushing for nuclear energy after the Russian invasion of Ukraine.

Sanctions against Russian coal and gas imports resulted in Japan looking for alternative energy sources despite anti-nuclear sentiments dating back to the 2011 Fukushima disaster. An earlier-than-expected summer resulted in power shortages, and the government announced plans to speed up regulatory safety checks to get more reactors running.

Japan aims to limit nuclear energy to less than a quarter of its energy mix, a goal seen as overly optimistic, but the recent push indicates that nuclear may play a larger role in the country.

Neighboring South Korea hasn’t seen short-term impacts on energy supplies since it gets gas from countries like Qatar and Australia and its oil from the Middle East. But there may be an indirect hit from European efforts to secure energy from those same sources, driving up prices.

Like Japan, South Korea’s new government has promoted nuclear-generated electricity and has indicated reluctance to sharply reduce the country’s coal and gas dependence since it wants to boost the economy.

“If this war continues … we will obviously face a question on what should be done about the rising costs,” said Ahn Jaehun, from the Korean Federation for Environmental Movement.

INDONESIA: DAMAGE CONTROL

The war, and consequent rising gas prices, forced Indonesia to reduce ballooning subsidies aimed at keeping fuel prices and some power tariffs in check.

But this was a very “hurried reform” and doesn’t address the challenge of weaning the world’s largest coal exporter off fossil fuels and reaching its 2060 net zero goal, said Anissa. R. Suharsono, of the International Institute for Sustainable Development.

“We’re sliding back, into just firefighting,” she said.

Coal exports have increased nearly 1.5 times between April and June, compared to 2021, in response to European demand and Indonesia has already produced over 80% of the total coal it produced last year, according to government data.

The country needs to nearly triple its clean energy investment by 2030 to achieve net zero by 2060, according to the International Energy Agency, but Suharsono said it wasn’t clear how it was going to meet those targets.

“There are currently no overarching regulations or a clear roadmap,” she said.

———

Bharatha Mallawarachi in Colombo, Sri Lanka, Edna Tarigan in Jakarta, Mari Yamaguchi in Tokyo, Japan, Tong-hyung Kim and Hyung-jin Kim in Seoul, South Korea contributed to this report.

———

Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.

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Ukraine hails ‘next step towards liberation’ as Russia retreats | Russia-Ukraine war News

After being encircled by Ukrainian forces, Russia pulled troops out from the strategic eastern Ukrainian city of Lyman – the latest victory for Kyiv’s counteroffensive that has humiliated and angered Moscow.

The announcement on Saturday came a day after President Vladimir Putin proclaimed the annexation of four Ukrainian regions – including Donetsk, where Lyman is located – and placed them under Russia’s nuclear umbrella, at a ceremony condemned by Kyiv and the West as an illegitimate farce.

“In connection with the creation of a threat of encirclement, allied troops were withdrawn from the settlement of Krasny Liman to more advantageous lines,” Russia’s defence ministry said, using the Russian name of the city.

President Volodymyr Zelenskyy later said in a video address although the Ukrainian flag was flying in the city, “fighting is still going on there”.

He also indicated Ukrainian troops had taken the village of Torske, on the main road out of Lyman to the east.

The Russian statement ended hours of official silence after Ukraine first said it surrounded thousands of Russian troops in the area and then that its forces were inside the city.

Ukraine’s defence ministry wrote on Twitter that “almost all” the Russian troops in Lyman had either been captured or killed.

‘Drastic measures’

Located 160km (100 miles) southeast of Kharkiv, Ukraine’s second-largest city, Lyman is in the Donetsk region near the border with Luhansk, two regions that Russia annexed on Friday.

“The Russian grouping in the area of Lyman is surrounded,” said Serhii Cherevatyi, spokesperson for Ukraine’s eastern forces.

Russia has used Lyman as a logistics and transport hub for its operations in the north of the Donetsk region. Its capture would be Ukraine’s biggest battlefield gain since a counterattack in the northeastern Kharkiv region last month.

The recent Ukrainian successes have infuriated Putin allies such as Ramzan Kadyrov, the leader of Russia’s southern Chechnya region, who said he felt compelled to speak out.

“In my personal opinion, more drastic measures should be taken, right up to the declaration of martial law in the border areas and the use of low-yield nuclear weapons,” Kadyrov wrote on Telegram.

Other top Putin allies, including former President Dmitry Medvedev, have suggested Russia may need to resort to nuclear weapons, but Kadyrov’s call was the most urgent and explicit.

Putin said last week he was not bluffing when he said he was prepared to defend Russia’s “territorial integrity” with all available means, and on Friday made clear this extended to the new regions claimed by Moscow.

Washington says it would respond decisively to any use of nuclear weapons and has spelled out to Moscow the “catastrophic consequences” it would face.

‘Psychologically very important’

Two Ukrainian soldiers taped the yellow-and-blue national flag to the Lyman welcome sign at an entrance to the city, a video posted by the president’s chief of staff showed.

“October 1. We’re unfurling our state flag and establishing it on our land. Lyman will be Ukraine,” one of the soldiers said.

Ukraine said controlling Lyman would allow Kyiv to advance into the Luhansk region, whose full capture Moscow announced in early July after weeks of grinding advances.

“Lyman is important because it is the next step towards the liberation of the Ukrainian Donbas. It is an opportunity to go further to Kreminna and Severodonetsk, and it is psychologically very important,” Cherevatyi said.

Donetsk and Luhansk regions make up the wider Donbas region that has been a major focus for Russia since soon after the start of Moscow’s invasion on February 24 in what it calls a “special military operation” to demilitarise its neighbour.

Putin proclaimed the Donbas regions of Donetsk and Luhansk and the southern regions of Kherson and Zaporizhia to be Russian land on Friday – a swath of territory equal to about 18 percent of Ukraine’s total surface land area.

Ukraine and its Western allies branded Russia’s move as illegal. Kyiv promised to continue liberating its land from Russian forces and said it would not hold peace talks with Moscow while Putin remained president.

Meanwhile, on the Russian-annexed Crimean Peninsula, the governor of the city of Sevastopol announced an emergency situation at an airfield there. Explosions and huge billows of smoke could be seen by beachgoers in the Russian-held resort. Authorities said a plane rolled off the runway at the Belbek airfield, and said ammunition on board had caught fire.

Ukrainian authorities accused Russian forces of targetting two humanitarian convoys in recent days, killing dozens of civilians.

In other developments, in an apparent attempt to secure Moscow’s hold on the newly annexed territory, Russian forces seized the director-general of the Zaporizhzhia nuclear power plant, Ihor Murashov.

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Mexican navy helicopter crashes, killing 3 marines

MEXICO CITY — The Mexican Navy said Saturday that three marines were killed and two others were injured after a reconnaissance helicopter crashed in the Gulf coast state of Tabasco.

The Navy said in a statement that the Eurocopter craft went down during an aerial surveillance patrol. Video posted on social media showed what appeared to be a small, non-armored chopper spinning and then crashing near the town of Frontera, Tabasco.

The Navy said the cause of the crash was under investigation.

The accident came two days after authorities acknowledged that the crash of another navy helicopter in July that killed 14 marines was caused by a lack of fuel.

On Thursday, the Attorney General’s Office reported that the chopper ran out of fuel following an operation to capture drug lord Rafael Caro Quintero.

The Black Hawk crashed July 15 in Los Mochis, a city in Sinaloa state near Mexico’s Pacific coast, hours after marines captured Caro Quintero in the mountains.

Caro Quintero was wanted for extradition to the United States for the 1985 killing of Drug Enforcement Administration agent Kiki Camarena. That extradition process continues.

The Attorney General’s Office said in a statement that the investigation had ruled out the possibility the helicopter was downed in an attack and that the manufacturer’s analysis of the aircraft’s flight recorder concluded it ran out of fuel.

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