'Markets turn on Reeves' and 'rising sickness claims bill'

The fallout from the Budget delivered on Wednesday continues to dominate the front pages. The Financial Times says the government’s borrowing costs rose to their highest level this year on Thursday amid investor worries over the additional debt required by the government’s plans. The paper says the rise took rates closer to those seen after Liz Truss’s 2022 mini-budget, which sparked a financial crisis, though adds that “many played down any parallels”, and quotes one analyst saying “this does not look like a repeat of the market reaction” then.

The Daily Telegraph says markets have “turned on” Chancellor Rachel Reeves and are “dumping UK assets in a swift rebuke of [her] debt-fuelled spending plans”. It quotes from an interview with Bloomberg in which Reeves sought to reassure the markets, saying public finances were on a “stable trajectory” and that “fiscal stability” was her “number one commitment”.

Economists have warned that interest rates will fall more slowly as a result of the Budget, according to the i. But the paper also quotes the International Monetary Fund backing the Budget and saying that it supports the “envisaged reduction in the deficit over the medium term”.

The Guardian says Reeves has been warned that an extra £9bn in tax rises may be required to avoid a fresh round of austerity for some public services. It quotes Paul Johnson, director of the Institute for Fiscal Studies, saying that Reeves is effectively pretending that she plans to provide generous funding to government departments and rein in public spending later. “That’s not going to happen,” he says. “The spending plans will not survive contact with her cabinet colleagues.”

“A kick in the bullocks”, reads the headline in the Sun. The paper says farmers are furious over changes that mean family farmers will have to pay inheritance tax at an effective rate of 20% on assets worth more than £1m. It says some are warning of “massive disruption” and possible food shortages because of the move.

The Daily Mail says the chancellor’s decision to increase the national insurance contributions paid by employers will cost charities £1.4bn a year. The paper says charity bosses have warned the change may mean they will have to cut services, lay off staff, and even close down, and that they have asked Reeves to exempt them from the tax altogether.

The total cost of sickness benefits is on course to reach £100bn a year by the end of this parliamentary term, according to the Times. The paper says a surge in claims after the pandemic is becoming permanent because of a decline in the population’s health, and that Britain is unusual in the developed world in not seeing a decline in the numbers after the pandemic passed. Work and Pensions Secretary Liz Kendall is quoted calling the trend “unacceptable” and saying the government will “bring forward a proper plan to get Britain working”.

The Metro reports that a total of 421 people have told lawyers they were victims of or witnesses to sexual abuse by former Harrods owner Mohamed Al Fayed. The paper reports that the Justice for Harrods Survivors group says most of the alleged abuse took place “in the Harrods context”, though some was at Fulham FC, which Al Fayed also owned at the time, and elsewhere. Harrods’ new owners have previously said they were “utterly appalled” by the allegations and were investigating whether any current staff were involved.

And the Daily Mirror carries a picture of a street in Valencia devastated by the floods that have swept through eastern and southern Spain in recent days. The paper says the death toll has reached 158, with rescuers desperately hunting for survivors, and that residents are “trapped in a nightmare”. It also quotes experts blaming climate change for the flooding and warning that more disasters are to come.