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Good morning from the City AM liveblog team. Rachel Reeves likes to insist that she will “never play fast and loose with the public finances.” It’s a phrase she deploys quite often, not least when it looks as if the bond market could do with a bit of reassurance, and it means that she won’t breach her “cast iron” fiscal rules. Adherence to those rules about borrowing, debt and expenditure is important, but it’s not as simple as just declaring that “the numbers will add up.” What really matters is how they add up, and it’s becoming painfully clear that tax rises will account for the bulk of the Chancellor’s equation. A generous reading of the financial landscape implies the government will have to find around £25bn of fiscal leeway at the Budget and a cursory reading of the political landscape implies that she won’t look to find that through spending cuts. Huge tax rises are coming, and Reeves is working hard to pin the blame on Brexit, austerity and global instability. She’s perfectly entitled to point to two decades of stagnant wage growth and underinvestment as poor foundations on which to try and build her new economy, but she cannot avoid responsibility for high inflation, a ropey jobs market, poor business and consumer confidence and a high tax burden; these factors are holding back growth in the here and now and they have their origins in her first Budget. Here’s a summary of our top headlines over the weekend: Natwest shares jump after cost-cutting boosts profit Retail sales hit highest since 2022 in surprise boost for economy Petroineos: Sir Jim Ratcliffe-backed energy giant loses $250m Rishi Sunak: Tax rises at Autumn budget would crush confidence North Sea oil services group Petrofac could ‘collapse by Monday’ The compromising iPad photos that dragged a London quant trader to court On this day: Big Bang hits the Square Mile
