Jeremy Hunt ‘to cut national insurance and freeze fuel duty’ in budget; bitcoin hits record high over $69,000 – as it happened

Time for a recap.

Jeremy Hunt is to cut national insurance by 2p in his budget on Wednesday, the Guardian understands, in a move designed to offer voters a pre-election giveaway but which could mean steeper spending cuts after the election.

The UK chancellor is preparing to announce the second big cut to employment taxes in a year, after his decision to cut national insurance rates by 2p at last year’s autumn statement.

Wednesday’s move should save the average earner £450 a year, which combined with last year’s cut will add up to £900. However, the chancellor has been looking at further public spending cuts after the election as one way to pay for the tax reduction, despite economists’ warnings that such a move would cause public services to buckle.

Hunt and the prime minister, Rishi Sunak, have spent the last few weeks looking for ways to offer a tax cut on the scale of that announced last year as a way to boost the Conservatives’ flagging poll ratings in their last budget before an election.

More here:

The chancellor is also expected to freeze fuel duty, again.

In other news..

A swathe of major tech platforms are experiencing problems today, with Facebook and Instagram experiencing severe issues and Google hit by login problems.

Bitcoin has climbed to a new alltime high, trading over $69,000 for the first time, before slipping back.

UK car sales were their highest for any February in 20 years last month, driven by increased sales to businesses.

And there are hopes that the UK economy has ‘turned a corner’ and is exiting recession, after a pick-up in private sector growth last month.

But retail sales were soggy last month, as bad weather kept consumers away from the shops.

Here’s the rest of today’s news:

In the tech world, users are reporting problems accessing a range of services including Meta‘s Facebook, Messenger and Instagram platforms.

Technical problems are preventing users worldwide from accessing the social media platforms.

Users are also reporting problems accessing Google services, such as YouTube, and also flagging problems with Microsoft’s Teams….

Bitcoin’s supporters sometimes describe it is ‘digital gold’.

And today’s record high comes just a few hours after actual gold also hit a record high.

The spot price of gold traded as high as $2,141 per ounce today,

AJ Bell investment director Russ Mould says gold is benefiting from increases in government debt around the globe, but particularly in the USA.

“It is unfashionable to focus on gold, especially when the Magnificent Seven are doing so much to propel US equities to new highs (or at least five of them are, anyway), and it is easy to dismiss the case for including the precious metal in even the most balanced of portfolios.

As Warren Buffett succinctly put it in a speech he gave at Harvard in 1998, ‘Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.’

“Yet, unusually, the market is shrugging off the Sage of Omaha’s words of wisdom and embracing gold instead. Its rise to new highs even means that in capital terms it has matched strides with the much more widely lauded S&P 500 index since the start of 1971, the year when President Richard M. Nixon withdrew America from the gold standard and pulled down the curtain on the Bretton Woods monetary system that had prevailed since the end of the Second World War. This nugget of data may give a warm glow to gold bugs.

Newsflash: Away from the budget speculation, bitcoin has just hit a new alltime high.

The price of the world’s largest crypto currency just traded over $69,000, above the previous record set in November 2021.

It just hit $69,202.

Today’s rally means bitcoin has gained around 65% since the start of 2024, and almost 170% over the last six months.

Recent gains have been driven by the launch of bitcoin EFTs (exchange traded funds) by major asset managers, which make it easier to invest money in bitcoin.

Those ETFs have seen large inflows from investors, creating more buying pressure.

Even if national insurance rates are cut tomorrow, many workers would still face being dragged into paying income tax, or paying it at the higher rate, due to the freeze on income tax thresholds.

That freeze is causing significant ‘fiscal drag’, as rising wages push more people into tax higher bands.

Sarah Coles, head of personal finance at Hargreaves Lansdown, says:

“Reports suggest Jeremy Hunt has decided to cut National Insurance by 2p in the Budget. It wouldn’t be so much a rabbit pulled out of a hat as a slightly tatty-looking ferret dragged from a box, labelled ‘rabbit’. An income tax cut has been discussed for well over a year. A National Insurance cut would be far better than nothing, but it would be a scaled-down, less attractive option. Jeremy Hunt would just have to hope it didn’t bite.

With taxes swallowing such a massive proportion of GDP, any tax cut would be welcome. This one would save us an average of £450 a year. And while the biggest savings would be reserved for those earning more, every saving helps at a time when our own budgets are stretched so thin.

t’s easy to see why this may have pipped income tax to the post in the race for Budget tax cuts, because it’s much cheaper. A 2p cut would cost about £10 billion, which is more manageable for a Chancellor with shrinking headroom. However, the price Hunt would pay for opting for NI is clear. It would benefit fewer people. 27 million workers would pocket a tax cut, but millions more wouldn’t, because it wouldn’t affect the tax on pensions, and income from savings and investments like property. It means an awful lot of voters would get no benefit from the change.

Coles also points out that January’s cut to National Insurance hasn’t made a dramatic difference in the polls:

It may be that Jeremy Hunt has decided this is all he can afford to offer right now. The question will be whether it’s a enough of a blockbuster tax cut to move the dial on a general election.

Unfortunately, if NI is cut, it’s not as good as it may sound, because it would come at the same time as yet another freeze in the personal allowance and the higher rate tax threshold, which the OBR says will see 1.1 million more people dragged into paying income tax and 800,000 more forced to pay higher rate tax. It means the government would be giving with one hand and taking away with the other.”

The King has held an in-person pre-Budget audience with Jeremy Hunt at Buckingham Palace today, ahead of tomorrow’s fiscal event.

It’s traditional that before a Budget is presented, the Chancellor of the Exchequer meets with the monarch, usually the day before the Government’s plans for the economy are delivered in a statement to the Commons (at 12.30pm tomorrow).