Finance
'Last chance saloon': UK finance minister expected to pledge pre-election tax cuts
British Finance Minister Jeremy Hunt said earlier this month the U.K. would not enter a recession this year.
Hannah Mckay | Reuters
LONDON â Economists expect U.K. Finance Minister Jeremy Hunt to use a small fiscal windfall to deliver a modest package of tax cuts at his Spring Budget on Wednesday.
Heading into what will likely be the Conservative government’s last fiscal event before the country’s upcoming General Election, Hunt is under pressure to offer a sweetener to voters as his party trails the main opposition Labour Party by more than 20 points across all national polls.
But he must also navigate the constraints of fragile public finances and a stagnant economy that recently entered a modest technical recession.
On the upside, inflation has fallen faster than anticipated and market expectations for interest rates are well below where they were going into Hunt’s Autumn Statement in November.
The Treasury pre-announced plans over the weekend to deliver up to £1.8 billion ($2.3 billion) worth of benefits by boosting public sector productivity, including releasing police time for more frontline work.
The Independent Office for Budget Responsibility estimates that returning to levels of pre-pandemic productivity could save the Treasury up to £20 billion per year.
Hunt will also announce £360 million in funding to boost research and development (R&D) and manufacturing projects across the life sciences, automotive and aerospace sectors, the Treasury said Monday.
However, the big questions over tax cuts remain heading into Wednesday’s statement.
Increased fiscal headroom
“On balance, we think Chancellor Hunt’s fiscal headroom will have likely increased â but only marginally, and nowhere close to what he had in the Autumn Statement (owing largely to the fall in expected debt costs),” Deutsche Bank Senior Economist Sanjay Raja said in a research note Thursday.
The German lender estimates that the government’s fiscal headroom will have grown from around £13 billion to around £18.5 billion, and that tax cuts are “very likely” the first port of call. Raja suggested the finance minister will err on the side of caution in loosening fiscal policy, favoring supply side support over boosting demand.
“Supply side measures are more likely in our view, particularly with the Bank of England more amenable to loosening monetary policy,” Raja said.
“Therefore, tax cuts to national insurance contributions (NICs) and changes to child benefits are more likely to come in the Spring Budget (in contrast to earlier expectations of income tax cuts).”
A substantial cut to National Insurance was the highlight of Hunt’s Autumn Statement, though economists were quick to point out that its benefit to payers would be more than erased by the effect of existing freezes on personal income tax thresholds â known as the “fiscal drag.”
The U.K. National Insurance is a tax on workers’ income and employers’ profits to pay for state social security benefits, including the state pension.
Raja also suggested an extension of the government’s existing freeze on fuel duty remains a possibility, and that some spending cuts will likely be used to partially offset a loosening of fiscal policy.
In total, Deutsche Bank expects Hunt to deliver net loosening of £15 billion over the coming fiscal year, dropping to around £12.5 billion in the medium-term.
“The outlook for the public finances remains precarious. Slight changes to the macroeconomic outlook could result in big shifts to the public finances. The Chancellor continues to walk a fine line between managing his fiscal rules now and rising austerity later,” Raja said.
“To be sure, big questions on the public finances remain â including whether spending cuts, or limited rises in some areas, remain realistic to tackle the rising strain in public services, and the Government’s own ambitions around net-zero, defence, and overseas development spending.”
BNP Paribas economists expect a more modest package of tax cuts worth around £10 billion across the 2024/25 fiscal year, and projected that the government will start the year with a fiscal windfall of around £11 billion.
The French bank agreed that the reductions will be aimed at stimulating labor supply, with “little impact on inflation and thus the Bank of England.”
“Our base case is that the government will spend GBP10bn of the near-term fiscal windfall and use the additional medium-term fiscal space to cut personal taxes,” economists Matthew Swannell and Dani Stoilova said in a research note entitled “last-chance saloon.”
They also expect the Treasury to postpone the March 2024 rise in fuel duty for another 12 months, at a cost of £3.7 billion a year, and to introduce a permanent 1 pence reduction in the basic rate of income tax at a cost of between £6 billion and £7.35 billion per year.
“The overall effect of this policy package would be to leave medium-term fiscal headroom roughly back where it started at GBP12.7bn,” they added.
“With the Conservative party trailing in the opinion polls and the Budget possibly the last opportunity to loosen fiscal policy before a general election, we expect Chancellor Hunt to once again, at least, spend any additional fiscal space available to him.”
The FTSE 100 (^FTSE) was hovering around the flatline on Friday, while European stocks headed lower, as traders shrugged off Donald Trump’s latest pause on striking Iran’s energy infrastructure.
On Thursday night, the US president extended the deadline for Iran to open the strait of Hormuz by 10 days, meaning the new date would be 6 April. He claimed that talks were “going very well”. However, Iran denied it was “begging to make a deal”, despite Trump’s earlier claims.
It comes after Wall Street posted its biggest daily loss since the Iran war began on Thursday.
The Wall Street Journal also reported on Thursday that the US was considering sending as many as 10,000 additional troops to the Middle East.
Tony Sycamore, market analyst at IG, said Trump has extended the uncertainty gripping markets.
“While the rhetoric around de-escalation and dialogue is certainly preferable to outright conflict, the market appears to be growing increasingly numb to President Trump’s verbal reassurances. By extending the deadline, it effectively kicks the can down the road, pushing back any concrete resolution regarding the reopening of the Strait of Hormuz. This, in turn, simply extends the uncertainty weighing on markets and the broader global economy.”
Elsewhere, UK retail sales dipped by 0.4% in February, following a rise of 2.0% in January, the Office for National Statistics revealed. In the December to February quarter, sales volumes were up 0.7% compared with the previous three months.
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London’s benchmark index (^FTSE) was hovering around the flatline in early trade
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Germany’s DAX (^GDAXI) dipped 0.5% and the CAC (^FCHI) in Paris headed 0.2% into the red
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The pan-European STOXX 600 (^STOXX) was down 0.3%
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Wall Street is set for a muted start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all lacklustre.
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The pound was 0.1% down against the US dollar (GBPUSD=X) at 1.3311
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FARGO, N.D. – North Dakota State University’s College of Business has launched the Center for Banking and Finance, a new academic and industry‑engaged hub designed to prepare students for careers in banking and finance while supporting the evolving workforce needs of the region’s financial industry, a release states.
Announced during a press conference at NDSU’s Louise Auditorium at Barry Hall, the center brings together students, faculty and industry partners to expand experiential learning opportunities, strengthen connections to employers, and address emerging trends shaping the financial services industry. The center is housed within NDSU’s College of Business and builds on growing student interest in finance‑related programs.
“The Center for Banking and Finance reflects NDSU’s responsibility as a student‑focused, land‑grant, research university to respond to workforce and economic needs across our state and region,” said Interim President Rick Berg. “By connecting education, industry, and community, this center helps ensure our graduates are prepared to contribute on day one and throughout their careers.”
The center will support undergraduate and graduate students through hands‑on learning experiences, exposure to financial tools and technologies, and direct engagement with financial institutions, regulators and business leaders. It will also serve professionals already working in banking and finance through workshops, training and research‑informed programming aligned with business needs, according to the release.
“The Center for Banking and Finance is about momentum — students who are eager to learn, faculty who are pushing applied scholarship forward, and industry partners who want to shape the future workforce,” said Kathryn Birkeland, Ronald and Kaye Olson dean of the NDSU College of Business. “When education and industry move together, everyone benefits.”
The launch of the Center for Banking and Finance coincides with a series of regional events focused on finance, fintech and economic outlook, including programming with the Bank of North Dakota, the Federal Reserve Bank of Minneapolis and regional business leaders. Together, these events underscore the Fargo‑Moorhead area’s role as a hub for financial dialogue, talent development and economic collaboration.
The center’s foundational banking partners include Dacotah Bank, Gate City Bank, Bell Bank and Western State Bank, who attended the launch and are helping shape early student experiences and industry-informed programming.
The center is led by Mark Jensen, a career banker and longtime adjunct instructor who joined NDSU full-time in 2026 as director of the Center for Banking and Finance.
“The Center for Banking and Finance is designed as a bridge,” Jensen said. “It brings industry into the learning experience in meaningful ways, and it gives students clearer pathways into a wide range of banking and finance careers.”
For students, the center represents a more direct bridge between academic study and professional opportunity.
“As a finance student, experiences outside the classroom make a real difference,” said Tavian Nelson, a senior at NDSU majoring in finance. “Going into college, I knew I wanted to be involved in the finance program but was unsure of what that would look like once I graduated. The school has truly shaped my desired career outcomes with many hands-on experiences, professional leaders, and connections throughout my time here. This center will truly strengthen these experiences for students.”
Initially, the center will focus on experiential learning opportunities, business partnerships and workforce‑aligned programming, with plans to expand offerings as partnerships and resources grow. The center is supported through external funding and business engagement.
FRANKFURT, March 26 (Reuters) – Euro zone banks have limited direct exposure to the war in the Middle East, but the conflict could still generate systemic stress given interconnected vulnerabilities, European Central Bank Vice President Luis de Guindos said on Thursday.
Financial markets have come under stress in recent weeks from the impact of the U.S. and Israeli war on Iran, but the selloff outside the Middle East has been limited, even as some assets remain overvalued.
“Spillovers to the euro area financial sector have so far remained contained,” de Guindos said in a speech. “Direct bank exposures to the region are limited, and the banking system is well positioned with strong profitability and robust capital and liquidity buffers.”
De Guindos argued that even market infrastructure operators, like central counterparties whose services include energy markets, have managed margin requirements effectively, despite the volatility.
Still, there was a broader risk, given interconnections in the financial system, said de Guindos, whose roles at the ECB include monitoring financial stability.
“Amid already elevated global uncertainty, this conflict could trigger the unravelling of interconnected vulnerabilities and cause systemic stress,” he said.
The conflict threatens to derail market sentiment at a time when asset valuations are high, potentially leading to a sharp repricing of risk for leveraged borrowers and sovereigns while amplifying stress in the non-bank financial sector, he said.
On the ECB’s core mandate of ensuring low inflation, de Guindos repeated the bank’s warning that inflation could rise and growth slow on the conflict but argued more time was needed to understand the full impact.
“We are unwavering in our commitment to ensuring that inflation stabilises at our 2% target in the medium term,” he said.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
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