18th November 2022
Bite-sized business news from the UK and beyond
- The Autumn Statement at a glance
- Despite controversy Qatar World Cup set be most lucrative yet
The Autumn Statement at a glance
Yesterday the chancellor Jeremy Hunt delivered the eagerly awaited Autumn Statement laying out the plans to improve the state of public finances.
In total there were £30bn of spending cuts and £25bn of tax hikes that the government hopes will rebuild the country’s credibility two months after the disastrous “mini” budget sparked turmoil in the financial markets.
How did we get here?
The chancellor confirmed that the UK economy is in recession – defined as two consecutive quarters of negative growth – which the Bank of England expects will be the longest on record. This has been fuelled by a cost of living crisis with inflation at a 41-year high of 11.1%.
Many of the government’s plans to address the economic problems had already been shared in recent weeks meaning that there were few surprises in the announcement. Notable highlights include:
- The 45p tax threshold will fall from £150,000 to £125,140. This along with the freeze on the income tax personal allowance, national insurance and inheritance tax thresholds means millions of people will pay more tax.
- The windfall tax on energy companies will rise from 25% to 35% and there will be a new 45% tax added on electricity generators until 2028.
- The national living wage will increase by 9.7% in 2023 to £10.42 per hour.
- Benefits and state pension will rise in line with September’s inflation rate of 10%.
- The energy price guarantee to be extended for 12 months from April 2023, but with a higher cap of £3,000 versus £2,500 currently for a typical household.
The outcome of these measures paints a gloomy outlook for households
The Autumn Statement is the largest tax-raising effort for 30 years and means a freezing of day-to-day public spending when adjusted for inflation until 2027-28.
The government’s official forecasters said living standards would suffer the biggest fall in six decades, with inflation-adjusted incomes dropping over the two years by 7%. That would erase the previous eight years’ growth.
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Despite controversy Qatar World Cup set be most lucrative yet
This Sunday the 22nd World Cup kicks off in Qatar amid continued criticism over the country’s human rights record, but football’s governing body, FIFA, is still expected to make record revenues.
How did we get here?
FIFA is in a unique position of holding the rights to the global tournament of the world’s most popular sport. That means that although it costs nothing to ‘manufacture’ football the demand for the good means it can make a lot of money.
The tournament is expected to deliver record revenue for FIFA, topping the roughly $5.4bn Russia brought in at the 2018 World Cup.
FIFA has already sold around 240,000 hospitality packages, nearly 3m tickets with major sponsorships from global brands like Coca-Cola and Adidas. But most of FIFA’s income comes from selling TV broadcast rights for the World Cup and other international tournaments. For the most recently published 2015-18 cycle, FIFA brought in $6.4bn with $4.6bn coming from TV rights.
The body is expected to beat multiple financial targets for its 2019-2022 cycle, according to Bloomberg, primarily due to the World Cup.
FIFA will share some of this good fortune with the World Cup winners receiving $44m out of a total prize pot of $440m.
Meanwhile, Qatar anticipates $17bn boost to economic activity.
But the disquiet against the host nation is unlikely to go away
Qatar’s law against homosexuality and alleged poor treatment of migrant workers has been a source of constant criticism since the decision to award the tournament was made in 2010 with many teams planning to show their solidarity with human rights causes.
In the past week former FIFA president Sepp Blatter said Qatar shouldn’t have been chosen shortly after FIFA warned World Cup teams to focus on football.
Stat of the day
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