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Reeves has to ‘neurotically fine tune taxes’, says former Bank of England deputy
Rachel Reeves has not given herself enough fiscal headroom to manage public finances, Charlie Bean, the former deputy of the Bank of England has said, and has to “neurotically fine tune taxes”.
Bean, who is also a former member of the OBR’s budget responsibility committee, told Radio 4’s Today programme the chancellor had chosen fiscal rules that give her a “very small margin” of headroom.
About £10 billion – that’s a very small number in the context of overall public spending. Government spending is about about one and a quarter trillion so £10 billion is a small number … and it is a small number in the context of typical forecasting errors.
You can’t forecast the future perfectly both because you can’t forecast the economy and you can’t forecast all the elements of public finances …. the forecasts are imprecise and there is no way you can avoid that. That is a fact of life.
She should aim to operate with a larger margin of headroom, so previous chancellors have typically operated with headroom of the order of £30 billion.
Because she has chosen about a third of that … it is very easy for numbers to go in the wrong direction and she finds she has to neurotically fine tune taxes to control the OBR forecast that is several years ahead.
The original sin is that she should not have chosen to operate with such a tight margin of error.
Reeves has been under intense public pressure, after the government’s concessions to Labour MPs over plans to change welfare payments have wiped out plans for £5bn savings a year.
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Updated at 08.25 BST
Oil futures fall as Iran reiterates commitment to nuclear non-proliferation
Oil futures have slipped after the Iranian foreign minister Abbas Araqchi said Tehran remains committed to the nuclear Non-Proliferation Treaty.
Brent crude futures dropped by 0.51% to $68.45 a barrel, while US West Texas Intermediate crude dropped 0.37% to $66.75.
Vandana Hari, founder of oil market analysis provider Vanda Insights, said:
Thursday’s news that the U.S. is preparing to resume nuclear talks with Iran, and Araqchi’s clarification that cooperation with the U.N. atomic agency has not been halted considerably eases the threat of a fresh outbreak of hostilities.
This week Tehran enacted a law suspending cooperation with the UN nuclear watchdog, the International Atomic Energy Agency. However Hari added that the oil price correction “may have to wait till Monday”, when the US returns from a long weekend and reacts to an Opec+ decision on Sunday.
Opec+, the world’s biggest group of oil producers, is expected to announce an increase of 411,000 barrels per day in production for August.
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UK electric car sales up by a third in first half
Meanwhile in the UK, British electric car sales rose by a third in the first half of 2025 after the strongest June for overall car sales since before the Covid pandemic.
The number of battery electric car sales rose 34.6% to 224,838 units in the first six months of the year, according to preliminary data from the Society of Motor Manufacturers and Traders (SMMT), a lobby group.
New car sales rose 6.8% year-on-year in June to 191,200 units, the best sales figures for the month since 2019. A quarter of all June sales, or nearly 47,400, were electric.
The figures come amid a difficult period for the the UK car industry, which has struggled to increase sales to pre-pandemic levels as potential buyers have been hit by the cost of living crisis after Russia’s full-scale invasion of Ukraine.
British car factories have also had to contend with a major slowdown in response to extra US tariffs of 25% announced by Donald Trump in March. Last month UK car production fell to its lowest level for May since 1949 as manufacturers cut back shipments.
You can read the full story from my colleague Jasper Jolly here.
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Introduction: Trump celebrates spending and tax bill on US Independence Day
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
President Donald Trump has secured passage of his controversial flagship tax and spending bill, after the House of Representatives approved the bill late on Thursday.
The 218-to-214 vote sends the legislation to Trump, who has said he plans to sign the bill on Friday as the US celebrates Independence Day.
Speaking to supporters at the Iowa State Fairground, he said “there could be no better birthday present for America”.
There could be no better birthday present for America than the phenomenal victory we achieved just hours ago, when Congress passed the “One Big Beautiful Bill” to make America great again…one-hundred-and-sixty-five days into the Trump administration, America is on a winning streak like, frankly, nobody has ever seen before in the history of the presidency.”
Meanwhile, the president’s trade war rattles on. Trump told reporters late on Thursday that his administration will start sending out letters on Friday setting unilateral tariff rates, which countries would have to begin paying on 1 August.
Trump said “10 or 12” letters would go out on Friday, with additional letters coming “over the next few days”. The higher import duties will range in value from “maybe 60 or 70% tariffs to 10 and 20% tariffs”, he said.
The top tier of that range would be higher than any of the levies the president first outlined during his Liberation Day rollout in April. He did not provide any detail on which countries might receive such high tariffs.
The UK is one of a few countries that has reached a trade agreement with Trump, including Vietnam. Many trading partners such as the European Union, Japan and South Korea are still trying to finalise trade deals. Trump has threatened that if countries fail to reach deals by 9 July, he could simply impose tariff rates on them.
The agenda
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9:00am BST: UK SMMT car market figures for the first half of the year
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9:30am BST: UK PMI construction data
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US market closed for Independence Day
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Updated at 07.43 BST