LONDON — The British government is working to give its trade chief new powers to move faster in imposing higher tariffs on imports, as it faces pressure from Brussels and Washington to combat Chinese industrial overcapacity. Under new rules drawn up by British officials, Trade Secretary Peter Kyle will have the power to direct the Trade Remedies Authority (TRA) to launch investigations and give ministers options to set higher duty levels to protect domestic businesses. The trade watchdog will be required to set out the results of anti-dumping and anti-subsidy investigations within a year, better monitor trade distortions and streamline processes for businesses to prompt trade probes. The U.K. is in negotiations with the U.S. and the EU to forge a steel alliance to counter Chinese overcapacity as the bloc works to introduce its own updated safeguards regime. The EU is the U.K.’s largest market and Brussels is creating a new steel protection regime that is set to slash Britain’s tariff-free export quotas and place 50 percent duties on any in excess. The government said its directive to the TRA will align the U.K. with similar powers in the EU and Australia, and follow World Trade Organization rules. It is set out in a Strategic Steer to the watchdog and will be introduced as part of the finance bill due to be wrapped up in the spring. “We are strengthening the U.K.’s system for tackling unfair trade to give our producers and manufacturers — especially SMEs who have less capacity and capability — the backing they need to grow and compete,” Business and Trade Secretary Peter Kyle said in a statement. “By streamlining processes and aligning our framework with international peers, we are ensuring U.K. industry has the tools to protect jobs, attract investment and thrive in a changing global economy,” Kyle added. These moves come after the government said on Wednesday that its Steel Strategy, which plots the future of the industry in Britain and new trade protections for the sector, will be delayed until next year. The Trump administration has been concerned about the U.K.’s steps to counter China’s steel overcapacity and refused to lower further a 25 percent tariff carve-out for Britain’s steel and aluminum exports from the White House’s 50 percent global duties on the metals. Trade Secretary Kyle discussed lowering the Trump administration’s tariffs on U.K. steel with senior U.S. Cabinet members in Washington on Wednesday.  “We are very much on the case of trying to sort out precisely where we land with the EU safeguard,” Trade Minister Chris Bryant told parliament Thursday, after meeting with EU Trade Commissioner Maroš Šefčovič on Wednesday for negotiations. “We will do everything we can to make sure that we have a strong and prosperous steel sector across the whole of the U.K.,” Bryant said. The TRA has also launched a new public-facing Import Trends Monitor tool to help firms detect surges in imports that could harm their business and provide evidence that could prompt an investigation by the watchdog. “We welcome the government’s strategic steer, which marks a significant milestone in our shared goal to make the U.K.’s trade remedies regime more agile, accessible and assertive, as well as providing greater accountability,” said the TRA’s Co-Chief Executives Jessica Blakely and Carmen Suarez. Sophie Inge and Jon Stone contributed reporting.

BRUSSELS — The EU has struck a political agreement to overhaul the bloc’s foreign direct investment screening rules, the Council of the EU announced on Thursday, in a move to prevent strategic technology and critical infrastructure from falling into the hands of hostile powers. The updated rules — the first major plank of European Commission President’s Ursula von der Leyen’s economic security strategy — would require all EU countries to systematically monitor investments and further harmonize the way those are screened within the bloc. The agreement comes just over a week after Brussels unveiled a new economic security package. Under the new rules, EU countries would be required to screen investments in dual-use items and military equipment; technologies like artificial intelligence, quantum technologies and semiconductors; raw materials; energy, transport and digital infrastructure; and election infrastructure, such as voting systems and databases. As previously reported by POLITICO, foreign entities investing into specific financial services must also be subject to screening by EU capitals. “We achieved a balanced and proportionate framework, focused on the most sensitive technologies and infrastructures, respectful of national prerogatives and efficient for authorities and businesses alike,” said Morten Bødskov, Denmark’s minister for industry, business and financial affairs. It took three round of political talks between the three institutions to seal the update, which was a key priority for the Danish Presidency of the Council of the EU. One contentious question was which technologies and sectors should be subject to mandatory screening. Another was how capitals and the European Commission should coordinate — and who gets the final say — when a deal raises red flags. Despite a request from the European Parliament, the Commission will not get the authority to arbitrate disputes between EU countries on specific investment cases. Screening decisions will remain firmly in the purview of national governments. “We’re making progress. The result of our negotiations clearly strengthens the EU’s security while also making life easier for investors by harmonising the Member States’ screening mechanism,” said the lead lawmaker on the file, French S&D Raphaël Glucksmann. “Yet more remains to be done to ensure that investments bring real added value to the EU, so that our market does not become a playground for foreign companies exploiting our dependence on their technology. The Commission has committed to take an initiative; it must now act quickly,” he said in a statement to POLITICO. This story has been updated.

BRUSSELS — Britain’s top Europe minister defended a decision to keep the U.K. out of the EU’s customs union — despite sounding bullish on a speedy reset of ties with the bloc in the first half of 2026. Speaking to POLITICO in Brussels where he was attending talks with Maroš Šefčovič, the EU trade commissioner, Nick Thomas-Symonds said a non-binding British parliamentary vote on Tuesday on rejoining the tariff-free union — pushed by the Liberal Democrats, but supported by more than a dozen Labour MPs — risked reviving bitter arguments about Brexit. Thomas-Symonds described the gambit by the Lib Dems — which had the backing of one of Labour’s most senior backbenchers, Meg Hillier — as “Brexit Redux.” And he accused Ed Davey, the Lib Dem leader, of wanting “to go back to the arguments of the past.” The Lib Dems have drawn support from disillusioned Labour voters, partly inspired by the party’s more forthright position on moving closer to the EU. But Thomas-Symonds defended Labour’s manifesto commitment to remain outside the single market and the customs union. “The strategy that I and the government have been pursuing is based on our mandate from the general election of 2024, that we would not go back to freedom of movement, we would not go back to the customs union or the single market,” the British minister for European Union relations said. Thomas-Symonds said this remained a “forward-looking, ruthlessly pragmatic approach” that is “rooted in the challenges that Britain has in the mid 2020s.” He pointed out that post-Brexit Britain outside of the customs union has signed trade deals with India and the United States, demonstrating the “advantages of the negotiating freedoms Britain has outside the EU.” ‘GET ON WITH IT’ Speaking to POLITICO’s Anne McElvoy for the “Politics at Sam and Anne’s” podcast, out on Thursday, Thomas-Symonds was optimistic that a grand “reset” of U.K.-EU relations would progress more quickly in the new year. The two sides are trying to make headway on a host of areas including a youth mobility scheme and easing post-Brexit restrictions on food and drink exports. “I think if you look at the balance of the package and what I’m talking about in terms of the objective on the food and drink agreement, I think you can see a general timetable across this whole package,” he said. Pressed on whether this could happen in the first half of 2026,  the U.K. minister sounded upbeat: “I think the message from both of us to our teams will be to get on with it.”  The Brussels visit comes after talks over Britain’s potential entry into a major EU defense program known as SAFE broke down amid disagreement over how much money the U.K. would pay for access to the loans-for-arms scheme. The program is aimed at re-arming Europe more speedily to face the threat from Russia. Asked if the collapse of those talks showed the U.K. had miscalculated its ability to gain support in a crucial area of re-connection, Thomas-Symonds replied: “We do always impose a very strict value for money. What we would not do is contribute at a level that isn’t in our national interest.” The issued had “not affected the forward momentum in terms of the rest of the negotiation,” he stressed. YOUTH MOBILITY STANDOFF Thomas-Symonds is a close ally of Prime Minister Keir Starmer and has emboldened the under-fire British leader to foreground his pro-Europe credentials. The minister for European relations suggested his own elevation in the British government — he will now attend Cabinet on a permanent basis — was a sign of Starmer’s intent to focus on closer relations with Europe and tap into regret over a post-Brexit loss of business opportunities to the U.K. Fleshing out the details of a “youth mobility” scheme — which would allow young people from the EU and the U.K. to spend time studying, traveling, or working in each other’s countries — has been an insistent demand of EU countries, notably Germany and the Netherlands. Yet progress has foundered over how to prevent the scheme being regarded  as a back-door for immigration to the U.K. — and how exactly any restrictions on numbers might be set and implemented. Speaking to POLITICO, Thomas-Symonds hinted at British impatience to proceed with the program, while stressing: “It has to be capped, time-limited, and  it’ll be a visa-operated scheme. “Those are really important features, but I sometimes think on this you can end up having very dry discussion about the design when actually this is a real opportunity for young Brits and for young Europeans to live, work, study, enjoy other cultures.” The British government is sensitive to the charge that the main beneficiaries of the scheme will be students or better-off youngsters. “I’m actually really excited about this,” Thomas-Symonds said, citing his own working-class background and adding that he would have benefited from a chance to spend time abroad as a young man “And the thing that strikes me as well is making sure this is accessible to people from all different backgrounds,” he said. Details however still appear contentious: The EU’s position remains that the scheme should not be capped but should have a break clause in the event of a surge in numbers. Berlin in particular has been reluctant to accept the Starmer government’s worries that the arrangement might be seen as adding to U.K. immigration figures, arguing that British students who are outside many previous exchange programs would also be net beneficiaries.  Thomas-Symonds did not deny a stand-off, saying: “When there are ongoing talks about particular issues, I very much respect the confidentiality and trust on the ongoing talks.”  Britain’s most senior foreign minister, Yvette Cooper, on Wednesday backed a hard cap on the number of people coming in under a youth mobility scheme. She told POLITICO in a separate interview that such a scheme needs to be “balanced.” “The UK-EU relationship is really important and is being reset, and we’re seeing cooperation around a whole series of different things,” she said. We also, at the same time, need to make sure that issues around migration are always properly managed and controlled.” A U.K. official later clarified that Cooper is keen to see an overall cap on numbers. BOOZY GIFT As negotiations move from the technical to the political level this week, Thomas-Symonds sketched out plans for a fresh Britain-EU summit in Brussels when the time is right. “In terms of the date, I just want to make sure that we have made sufficient progress, to demonstrate that progress in a summit,” Nick Thomas-Symonds said. “I think that the original [post-Brexit] Trade and Cooperation Agreement did not cover services in the way that it should have done,” he added. “We want to move forward on things like mutual recognition of professional qualifications.” Thomas-Symonds, one of the government’s most ardent pro-Europeans, meanwhile told POLITICO he had forged a good relationship with “Maroš” (Šefčovič) – and had even brought him a Christmas present of a bottle of House of Commons whisky. “So there’s no doubt that there is that trajectory of closer U.K.-EU cooperation,” he quipped. Dan Bloom and Esther Webber contributed reporting.

The soldiers separated the villagers by gender and stripped them of their money and phones. Around 180 people, mostly men, were crammed into two shipping containers. A woman gave birth beside the doors. No one was given food or water. Then, over three months, the soldiers took most of the men away and executed them. These scenes — detailed in a human rights report commissioned by the Netherlands — lay out further evidence that Mozambican government soldiers in the pay of TotalEnergies were responsible for a 2021 massacre first revealed by POLITICO. They are based on the testimony of four witnesses to a July-September 2021 massacre in the makeshift gatehouse of a vast gas plant being built by the French energy giant in northern Mozambique. Only 26 of the imprisoned men would survive.  Released this week as the British and Dutch governments announced they were pulling some $2.2 billion in support for the gas plant, the collected accounts closely match those from a 2024 investigation by POLITICO. They pile further pressure on a project already plagued by a local insurgency and two criminal cases.  On Tuesday, after the release of the report, TotalEnergies said its stance on the massacre remained unaltered. It has previously claimed its own “extensive research” into the allegations has “not identified any information nor evidence that would corroborate the allegations of severe abuses and torture.” The four accounts — from a survivor, a person who knew one of those detained, and two eyewitnesses — were collected independently of each other and from POLITICO, which was not informed that the government-funded think tank Clingendael was reinvestigating the atrocity.  Total’s project in Mozambique has an estimated cost of $20.5 billion. | Gallo Images/Getty Images They will provide further ammunition for a criminal complaint alleging that TotalEnergies was complicit in war crimes because it “directly financed and materially supported” Mozambican soldiers protecting its compound from an ISIS-linked insurgency.  The company has said it “firmly rejects all such accusations.” In March, a French state prosecutor also announced the opening of a formal criminal investigation into TotalEnergies over allegations of involuntary manslaughter at its Mozambican operation.  At the center of that inquiry is an accusation that, three months before the container killings, the company abandoned contractors who were building its gas plant to a devastating ISIS attack in March 2021 on the adjacent town of Palma. A house-to-house survey carried out by POLITICO found 1,354 civilians were killed in that attack, 330 of them beheaded. Other reporting established that 55 of those dead were from TotalEnergies’ workforce. The company, which has claimed it lost none of its workforce during the attack, denies the accusations. WIDESPREAD ABUSE The Dutch report indicates the container massacre was part of a systematic pattern of mass rape and execution in reprisal for the ISIS attack carried out by the army against villagers living around TotalEnergies’ plant.  With ISIS militants roaming the area for weeks after their attack on Palma, 25,000 to 30,000 people sought shelter outside Total’s gates, which “exacerbated the already dire humanitarian situation,” the report reads.  “By June 2021, the situation had become catastrophic, with people (including many children) reported to be dying on a daily basis due to starvation, disease or a lack of medical treatment,” the report reads. The army’s response was to steal aid, and sell looted food at inflated prices. It was also at this point that an army “unable to distinguish ‘villagers’ from ‘terrorists,’” took its revenge on the civilian population.  “Villagers reported discovering bodies in surrounding farmland, widely believed to be victims of [army] violence,” reads the report.  “Eyewitnesses also reported cases of sexual violence. In [one village], locals described drunk soldiers entering homes without permission and raping women.”  In another village, a random survey of 60 households found that 57 percent of them had at least one member who had been killed.  Those crammed by the soldiers into the containers endured three months of physical abuse, according to the report. According to the survivor, one day a large group was taken away. “Others were removed in smaller groups, never to return. The survivor believes that they were interrogated and executed.”  Human rights and environmental campaigners called on TotalEnergies to reconsider its project in the light of the loss of life and abuse. | Luisa Nhantumbo/EPA Upon their release, a survivor said that a soldier told them never to talk about the killings. “Those who died, died — it was war,” the soldier said. “If anyone asks, say the others were in different containers and are still coming.” In May, an investigation by U.K. Export Finance, which had pledged to lend Total’s project $1.15 billion, heard directly from two of the 26 survivors of the atrocity via video calls from Mozambique. The British state lender has not yet made its findings public. Total’s project in Mozambique has an estimated cost of $20.5 billion. It is part of a wider natural gas development that, at $50 billion, was once hailed as the largest private investment ever made in Africa. PROCEEDING AS PLANNED In the wake of the Dutch report, human rights and environmental campaigners called on TotalEnergies to reconsider its project in the light of the loss of life and abuse. “It has been blatantly clear for years that this project is a disaster for local communities and for the climate,” said Antoine Bouhey of Reclaim Finance. Adam McGibbon of Oil Change International called on other lenders to “pull out too and put an end to this nightmare project forever.” On Tuesday, TotalEnergies said its gas project was proceeding as planned and that its other lenders had “unanimously agreed to provide additional equity” to fill the shortfall created by the British and Dutch withdrawal. 

LONDON — The U.K. will break China’s stranglehold over crucial net zero supply chains, Energy Minister Chris McDonald has pledged. McDonald, a joint minister at the Department for Energy Security and Net Zero and the Department for Business and Trade, told POLITICO he is determined to bolster domestic access to critical minerals. Critical minerals like lithium and copper are used in essential net-zero technologies such as electric vehicles and batteries, as well as defense assets like F35 fighter jets. China currently controls 90 percent of rare earth refining, according to a government critical minerals strategy published last week. McDonald said China’s dominance of mineral processing risks driving up prices for the net zero transition.  The U.K. has made a legally-binding pledge to reduce planet-damaging emissions to net zero by 2050. McDonald fears China has become a “monopoly provider” of critical minerals and that its dominant role in processing allowed China to control the costs for buyers. “We want to capture this supply chain in the U.K. as part of our industrial strategy. To do that … means, ultimately, we’re going to have to wrest control of critical minerals back into a broad group of countries, not just China,” he said. The government’s critical minerals strategy includes a target that no more than 60 percent of U.K. annual demand for critical minerals in aggregate is supplied by any one country by 2035 — including China. “So, if there is an investment from China that helps with that, then that’s great. And if it doesn’t help with that, or it sort of compounds that issue that isn’t consistent with our strategy, then we judge it on that basis ultimately,” McDonald said. Additional reporting by Graham Lanktree.

LONDON — The U.K. has pulled out of funding a major gas project in Mozambique, the government confirmed Monday. Business Secretary Peter Kyle has overturned plans to provide more than $1 billion in support for the liquefied natural gas project, which is run by French energy giant TotalEnergies.  In March 2021, a Mozambican ISIS group attacked the town of Palma, adjacent to the gas plant, where thousands of project workers were based, killing 1,354 people and abducting another 209. A total of 330 people were beheaded. Among the dead were 55 workers on Total’s project, according to a house-to-house survey carried out by POLITICO. A Mozambican military unit operating out of the gatehouse of the site massacred at least 97 civilians in summer 2021, POLITICO reported last year. British financial backing, in the form of taxpayer loans and guarantees for U.K. exporters and banks supporting the project, had been on hold after TotalEnergies invoked force majeure — a contract clause that allows firms to suspend obligations in the event of a disaster — after the security situation deteriorated in the region. Referring to the massacre of civilians, the French energy giant has previously said it has “no knowledge of the alleged events … and has never received any information indicating that such events took place.” Kyle confirmed today in a written statement that “after a detailed review, the U.K. government has decided to end UKEF’s participation in the project,” referencing the U.K.’s official export credit agency.  He added: “My officials have evaluated the risks around the project, and it is the view of His Majesty’s government that these risks have increased since 2020. This view is based on a comprehensive assessment of the project and the interests of U.K. taxpayers, which are best served by ending our participation in the project at this time.” UKEF will reimburse the premium rate already paid to the project. Kyle insisted the government is “committed to our national partnership with Mozambique.” The decision to finance the development was first made by Boris Johnson’s Conservative administration in 2020, but the decision has since been mired in controversy.  Kyle argued that financing the project would no longer “advance the interest of our country.” Climate campaigners Friends of the Earth praised the government’s decision, pointing to estimates that gas from the field could generate around 4.5 billion tons of greenhouse gas emissions over its lifetime — more than the combined annual emissions of all 27 EU countries.    “This Mozambique gas project is a huge carbon timebomb, linked to serious human rights abuses. It should never have been given UK taxpayer-funded support in the first place,” Asad Rehman, chief executive of Friends of the Earth, said. “We now urge other countries to follow suit and end their backing for this destructive project.” POLITICO has approached TotalEnergies for comment.

LONDON — The British government said it opposes attempts to cool the planet by spraying millions of tons of dust into the atmosphere — but did not close the door to a debate on regulating the technology.  The comments in parliament Thursday came after a POLITICO investigation revealed an Israeli-U.S. company Stardust Solutions aimed to be capable of deploying solar radiation modification, as the technology is called, inside this decade. “We’re not in favor of solar radiation modification given the uncertainty around the potential risks it poses to the climate and environment,” Leader of the House of Commons Alan Campbell said on behalf of the government. Stardust has recently raised $60 million in finance from venture capital investors, mostly based in Silicon Valley and Britain. It is the largest ever investment in the field.  The emergence of a well-funded, private sector actor moving aggressively toward planet cooling capability has led to calls for the global community to regulate the field.  Citing POLITICO’s reporting, Labour MP Sarah Coombes asked the government: “Given the potential risks of this technology, could we have a debate on how Britain will work with other countries to regulate experiments with the earth’s atmosphere, and ensure we cooperate with other countries on solutions that actually tackle the root cause of climate change?” Campbell signaled the government was open to further discussion of the issue by inviting Coombes to raise the point the next time Technology Secretary Liz Kendall took questions in parliament.  Stardust’s CEO Yanai Yedvab told POLITICO the company was also in favor of regulation to ensure the technology was deployed safely and after proper public debate. Some scientists and experts, though, have raised concerns about the level of secrecy under which the company has conducted its research.  Stardust is proposing to use high-flying aircraft to dump millions of tons of a proprietary particle into the stratosphere, around 12 miles above the Earth’s surface. The technology mimics the short term global cooling that occurs when volcanoes blow dust and gas high into the sky, blocking a small amount of the sun’s heat.  Most scientists agree this could temporarily lower the Earth’s surface temperature, helping to avert some impacts of global warming. The side effects, however, are not well researched.  The U.K. has one of the world’s best funded research programs looking at the impacts of its potential use, via its Advanced Research and Invention Agency.  “We do work closely with the international research community to evaluate the latest scientific evidence,” said Campbell.   POLITICO has meanwhile been blocked from receiving internal government advice on solar radiation modification. The Department for Energy Security and Net Zero has refused to release the documents, arguing this would have a “chilling effect” on the candor of advice by officials to ministers.  In a response to a records request, DESNZ Director of International Climate Matt Toombs said: “Our priority is to reduce greenhouse gas emissions from human activities and to adapt to the unavoidable impacts of climate change. Any research into cooling technologies in no way alleviates the urgent need for increased decarbonization efforts.”

LONDON — For a nation addicted to political chaos, it wasn’t a bad metaphor. A stream of measures from Rachel Reeves’ budget leaked an hour before Britain’s finance minister delivered them Wednesday, when the independent fiscal watchdog accidentally published its market-moving 203-page analysis online. Britain’s problems, though, run far deeper than one spectacular budget leak. Keir Starmer was elected last year on a 10-year plan to change the country, and a vow to end “sticking-plaster politics.” But U.K. politics remains far stickier than the prime minister feared. Faced with a productivity downgrade and a need to calm the markets, his chancellor ditched her overzealous promises of last year — that Labour would not raise taxes on “working people,” come back “with more tax increases” or extend a freeze on income tax thresholds beyond 2028. Instead Reeves did all three, unveiling £26 billion of tax rises (on top of £40 billion last year) to balance the books and “beat the forecasts” of stagnation. As a result, Britain’s tax take will reach an all-time high of 38.3 percent of GDP in 2030-31. This time, Reeves insisted, it’s for real. Her mission is to finally end Britain’s economic doom loop — to stop the country living year-to-year, hand-to-mouth.  In some ways she made progress, more than doubling her fiscal margin for error to £21.7 billion. The Office for Budget Responsibility (OBR) watchdog ruled that she was more likely to meet her “fiscal rules” by 2030 than any chancellor since the Covid-19 pandemic.  Yet her position is still immensely fragile. The OBR said her margin remains relatively small and Britain’s public finances are “relatively vulnerable to future shocks” that would leave her coming back for more pain in future years. Reeves pointedly refused to rule out further tax hikes before 2029. And that’s if Reeves remains in the job at all. Facing dire polls, the Labour MPs who cheered her on Wednesday are chattering privately about whether to unseat Starmer next year. If they do, Britain will be onto its sixth prime minister since 2019. ‘THE GRAVITATIONAL PULL OF SHORT-TERMISM’ In short, “nothing in British economic policymaking survives the gravitational pull of short-termism,” said Cameron Brown, a former adviser to Conservative chancellors including Kwasi Kwarteng (whose “mini-budget” led to a market backlash so severe it forced Kwarteng and Prime Minister Liz Truss from office). Brown argued: “Reeves came in promising stability and long-term planning, but this fiscal event shows how quickly the system drags even the most disciplined chancellor back into the year-to-year cycle. “From my time in the Treasury, the pattern is familiar. We would spend months crafting multi-year strategies, only for the final decisions to be dictated by the latest OBR run, the next inflation stats or the politics of the Commons that week. The faces have swapped, but the architecture is the same.” This manifests itself in a few ways. Firstly, many of Reeves’ tax rises and spending cuts are backloaded in a way that will delay the pain until around or beyond the next U.K. general election, currently scheduled for 2029. Wednesday’s tax rises would net the Treasury £10.7 billion the year before the election, but £23.1 billion and £26.6 billion in the two years after it. Reeves, on a visit to an NHS hospital that will receive new funding, told POLITICO this was exactly the long-termism she wants. “When you’re making tax reform, it’s often not possible to change those rates overnight,” she said. Government officials insist the changes will be legislated for soon and start before 2029, so are locked in.  Yet that’s all very well until another chancellor unlocks them. Reeves declined to answer whether she believes she will still be in her job by the end of the decade. These sorts of accounting tactics are, of course, common in all budgets. Reeves did promise a big change of tack — to end Britain’s 15-year freeze on fuel duty from fall 2026 — but even then she still managed to extend it by another six months. THE BOND MARKETS RULE EVERYTHING Secondly, Britain’s finances remain at the mercy of small fluctuations to the bond markets.  A sharp rise in interest rates in recent years, along with smaller domestic demand for government debt, means U.K. debt costs more to serve than any other G7 country. Desperate to convey this disparity to the public, one young Labour MP, Gordon McKee, created a viral video explaining it using a stack of custard creams (a popular British biscuit).  Reeves’ higher fiscal buffer left the bond markets happy Wednesday. Internally, government officials shared images of a Bloomberg TV ticker that said: “U.K. markets rally, bond yields fall: U.K. traders welcome borrowing restraint.” Yet the OBR said debt will still rise from 95 to 96.1 percent of GDP by the end of the decade, twice the level of the average advanced economy. Even if the government meets its own fiscal rules, more will still be paid on debt interest than at almost any time in Britain’s post-war history. The markets’ dominance led to a stream of pre-budget leaks and briefings, many of which were designed to calm traders. One MP even said they weren’t worried about how their colleagues react — only the bond markets. LABOUR MPS WAIT IN THE WINGS But (and thirdly), Reeves’ colleagues matter too. The biggest cheer by far from Labour MPs during her speech was for the removal of the “two-child limit,” a Conservative policy that blocks benefit payments for third children in a family. MPs had failed to remove it last year, but months of internal pressure finally paid off. More widely, the budget was plainly progressive — even if, as Reeves admitted, it will have a cost for many of the “working people” she once promised to protect. The chancellor juxtaposed tax hikes on £2 million homes, pension contributions and savings pots juxtaposed against a higher minimum wage and help for energy bills. She pointed to distributional analysis that showed it will help the poorest tenth of Brits the most and the richest tenth the least. Yet her MPs’ immediate shout of “more!” showed the pressure will not stop there. Some have bigger ideas. Many have long complained about the dominance of OBR forecasts, and one Labour MP — just before the leak — complained that “putting the OBR on a pedestal” makes the problems of short-termism even worse.  Others wonder about having a big bang budget at all, given it leads to months of speculation, market fluctuations and leaks. One veteran MP wondered aloud on Wednesday night: “Isn’t there another way we can do it in 21st century Britain?” Then, finally, there is the question of what sort of chancellor Reeves will be; tax-raising, redistributive and pouring funding into public services, or slashing regulation in the name of growth. She insists she can be both, but her critics — especially among conservatives — believe she has gravitated to the former. While Britain’s growth projection was revised up to 1.5 percent in 2025, it was revised down for every future year. Inflation is now projected to fall to the Bank of England’s 2 percent target only in 2027, a year later than previously thought. And while real spending on government departments will continue to rise, the increase slows down from 4 percent in 2025/26 to 0.7 percent by the end of the decade. “Britain remains in a bind,” Ruth Curtice, chief executive of the Resolution Foundation, an economic think tank, told POLITICO. “On the one hand, the political system continues not to have a serious conversation about how to pay for an aging and ailing population. On the other, both parties have now significantly raised personal taxes.” Adrian Pabst, deputy director of the National Institute of Economic and Social Research, a nonpartisan research institute, added: “While [Reeves] has built a larger fiscal buffer against shocks, it’s not clear how her budget will raise economic growth based on higher business investment. “Higher tax, higher spend, no significant reduction in the ballooning welfare bill and no path of people who are inactive into work. There is as yet no clear bold plan to get the UK economy firing on all cylinders.” Reeves perhaps put it best herself, surrounded by nurses in a small room in London’s University College Hospital. “If you are asking, is this a budget I wanted to deliver today? I would have rather the circumstances were different,” she told journalists. “But as chancellor, I don’t get to choose my inheritance, and I have to live in the world as it is.”

LONDON — The wait is finally over. After weeks of briefings, speculation, and U-turns, Chancellor Rachel Reeves has set out her final tax and spending plans for the year ahead. As expected, there is plenty for policy wonks to chew over. To make your lives easier, we’ve digested the headline budget announcements on energy, financial services, tech, and trade, and dug deep into the documents for things you might have missed.  ENERGY  The government really wants to bring down bills: Rachel Reeves promised it would be a cost-of-living budget, and surprised no one with a big pledge on families’ sky-high energy bills. She unveiled reforms which, the Treasury claims, will cut bills by £150 a year — by scrapping one green scheme currently paid for through bills (the Energy Company Obligation) and moving most of another into general taxation (the Renewables Obligation). The problem is, the changes will kick in next year at the same time bills are set to rise anyway. So will voters actually notice? The North Sea hasn’t escaped its taxes: Fossil fuel lobbyists were desperate to see a cut in the so-called Windfall Tax, which, oil and gas firms say, limits investment and jobs in the North Sea. But Rachel Reeves ultimately decided to keep the tax in place until 2030 (even if North Sea firms did get a sop through rules announced today, which will allow them to explore for new oil and gas in areas linked to existing, licensed sites.) Fossil fuel lobbyists, Offshore Energies UK, were very unimpressed. “The government was warned of the dangers of inaction. They must now own the consequences and reconsider,” it said. FINANCIAL SERVICES Pension tax changes won’t arrive for some time: The widely expected cut in tax breaks for pension salary sacrifice is set to go ahead, but it will be implemented far later than thought. The thresholds for exemption from national insurance taxes on salary sacrifice contributions will be lowered from £60,000 to £2,000 in April 2029, likely to improve forecasts for deficit cuts in the later years of the OBR’s forecasts. The OBR has a markets warning: The U.K.’s fiscal watchdog warned that the price-to-earnings ratio among U.S. equities is reminiscent of the dotcom bubble and post-pandemic rally in 2021, which were both followed by significant market crashes. The OBR estimated a global stock market collapse could cause a £121 billion hike in U.K. government debt by 2030 and slash U.K. growth by 0.6 percent in 2027-28. Even if the U.K. managed to stay isolated from the equity collapse, the OBR reckons the government would still incur £61 billion in Public Sector Net Financial Liabilities. Banks back British investments: British banks and investment houses have signed an agreement with the Treasury to create “invest in Britain” hubs to boost retail investment in U.K. stocks, a plan revealed by POLITICO last week. Reeves also finally tabled a cut to the tax-free cash ISA allowance: £12,000 from spring 2027 (the amount and timings also revealed by POLITICO last week), down from £20,000, with £8,000 slated for investments only. Over-65s will keep the full tax-free subscription amount. Also hidden in the documents was an upcoming consultation to replace the lifetime ISA with a “new, simpler ISA product to support first-time buyers to buy a home.” No bank tax: Banks managed to dodge a hike in their taxes this time, despite calls from the IPPR for a windfall-style tax that could have raised £8 billion. The suggestions (which also came from inside the Labour Party) were met with an intense lobbying effort from the banks, both publicly and privately. By the eve of the budget, City figures told POLITICO they were confident taxes wouldn’t be raised, citing the high rate of tax they already pay and Reeves’ commitment to pushing for growth through the financial services industry. TECH ‘Start, scale, stay’ is the new mantra:  Startup founders and investors were in panic mode ahead of the budget over rumored plans for an “exit tax” on wealthy individuals moving abroad, but instead were handed several wins on Wednesday, with Reeves saying her aim was to “make Britain the best place in the world to start up, to scale up and to stay.” She announced an increase in limits for the Enterprise Manage Scheme, which incentivizes granting employees share options, and an increase to Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) thresholds to facilitate investment in growing startups. A further call for evidence will also consider “how our tax system can better back entrepreneurs,” Reeves announced. The government will also consider banning non-compete clauses — another long-standing request from startups. Big Tech will still have to cough up: A long-standing commitment to review a Digital Services Tax on tech giants was quietly published alongside the budget, confirming it will remain in place despite pressure from the Trump administration. The government will ‘Buy British’ on AI: Most of the government’s AI announcements came ahead of the budget — including plans for two new “AI Growth Zones” in Wales, an expansion of publicly owned compute infrastructure — meaning the only new announcements on the day were a relatively minor “digital adoption package” and a commitment to overhaul procurement processes to benefit innovative tech firms. But the real point of interest on AI came in the OBR’s productivity forecasts, which said that despite the furor over AI, the technology’s impacts on productivity would be smaller than previous waves of technology, providing just a 0.2 percentage point boost by 2030. The government insists digital ID will ultimately lead to cost savings. | Andrea Domeniconi/Getty Images OBR delivers a blow to digital ID: The OBR threw up another curveball, estimating the cost of the government’s digital ID scheme at a whopping £1.8 billion over the next three years and calling out the government for making “no explicit provision” for the expense. The government insists digital ID will ultimately lead to cost savings — but “no specific savings have yet been identified,” the OBR added. TRADE  Shein and Temu face new fees: In a move targeted at online retailers like Shein and Temu, the government launched a consultation on scrapping the de minimis customs loophole, which exempts shipments worth less than £135 from import duties. These changes will take effect from March 2029 “at the latest,” according to a consultation document. Businesses are being consulted on how the tariff should be applied, what data to collect, whether to apply an additional administration fee, as well as potential changes to VAT collection. Reeves said the plans would “support a level-playing field in retail” by stopping online firms from “undercutting our High Street businesses.”  Northern Irish traders get extra support: Also confirmed in the budget is £16.6 million over three years to create a “one-stop shop” support service to help firms in Northern Ireland navigate post-Brexit trading rules. The government said the funding would “unlock opportunities” for trading across the U.K. internal market and encourage Northern Ireland to take advantage of access to EU markets.  There’s a big question mark over drug spending: Conspicuously absent was any mention of NHS drug spending, despite U.K. proposals to raise the cost-effectiveness threshold for new drugs by 25 percent as part of trade negotiations with the U.S., suggesting a deal has not yet been finalized. The lack of funding was noted as a potential risk to health spending in the Office for Budget Responsibility’s Economic and Fiscal Outlook, which was leaked ahead of the budget. 

LONDON — Ministers must act now to address an “emerging risk to gas supply security,” the government’s official independent energy advisers have warned.  The government must make plans to avert a threat to future gas supplies, the National Energy System Operator (NESO) said.  While the advisers say the conditions creating a gas supply crisis are unlikely, any shortage would have a severe impact on the country. In its first annual assessment of Britain’s gas security, expected to be released later today but seen by POLITICO, the NESO said diminishing reserves of gas in the North Sea and competition for imports are creating new energy security risks, even as the country’s decarbonization push reduces overall demand for the fossil fuel.  Britain is projected to have sufficient gas supplies for normal weather scenarios by winter 2030/31, but in the event of severe cold weather and an outage affecting key infrastructure, supply would fall well short of demand, NESO projects.   The scenario in the report involves what the NESO calls the “unlikely event” of a one-in-20-year cold spell lasting 11 days alongside the loss of vital infrastructure.   If this were to occur, the consequences of a shortfall in gas supply could be dire.   It could trigger emergency measures including cutting off gas from factories, power stations, and — in extreme scenarios — homes as well. It could take weeks or months to return the country to normal.   The vast majority of homes still use gas boilers for heating.   VULNERABILITY Informed by the NESO’s findings, ministers have published a consultation setting out a range of options for shoring up gas security.  It comes amid growing concern in Whitehall about the U.K.’s vulnerability to gas supply disruptions. Russia is actively mapping key offshore infrastructure like gas pipelines and ministers have warned it has the capability to “damage or destroy infrastructure in deepwater,” in the event that tensions over Ukraine spill over into a wider European conflict.  While Britain has long enjoyed a secure flow of domestically-produced gas from the North Sea — which still supplies more than a third of the fuel — NESO’s report says gas fields are experiencing “rapid decline.” The amount available to meet demand in Britain falls to “12 to 13 percent winter-on-winter until 2035,” it says.  That will leave the U.K. ever more dependent on imports, via pipeline from Norway and increasingly via ship-borne liquefied natural gas (LNG) from the U.S. — and Britain will be competing with other countries for the supply of both.  The report projects that during peak demand periods in the 2030s, the Britain’s import dependency will be as high as 90 percent or more.  Overall, gas demand will be lower in the 2030s because of the shift to renewable electricity and electric heating, but demand will remain relatively high on very cold days, and when there is little wind to power offshore turbines, requiring gas power stations to be deployed, the report says.  “This presents emerging risks that we will need to understand to ensure reliable supplies are maintained for consumers,” it adds.  Reducing demand for gas by decarbonizing will be key, the report says, and risks are higher in scenarios where the country slows down its shift away from gas.   But decarbonization alone will not be enough to ensure the U.K. would meet the so-called “N-1 test” — a sufficient supply of gas even if the “single largest piece” of gas infrastructure fails — during a prolonged cold spell in winter 2030/31. In that scenario, “peak day demand” is projected to reach 461 million cubic meters (mcm), but supply would fall to 385 mcm, resulting in a supply deficit of 76 mcm, a shortfall of around 16 percent of what is needed to power the country on that day.  That means ministers should start considering alternative options now, including the construction of new infrastructure like storage facilities, liquefied natural gas (LNG) import terminals, or new onshore pipelines to ensure more gas can get from LNG import sites to the rest of the country. The government consultation will look at these and other options.   The critical piece of gas infrastructure considered under the N-1 test is not identified for security reasons, but is likely to be a major import pipeline from Norway or an LNG terminal. The report says that even “smaller losses … elsewhere in the gas supply system” could threaten gas security in extreme cold weather.  GAS SECURITY ‘PARAMOUNT’  The findings will likely be seized on by the oil and gas industry to argue for a more liberal licensing and tax regime in the North Sea, on a day when the government announced its backing for more fossil fuel production in areas already licensed for exploration.  But such measures are unlikely to be a silver bullet. The report says: “Exploration of new fields is unlikely to deliver material new capacity within the required period.”  Deborah Petterson, NESO’s director of resilience and emergency management, said that gas supply would be “sufficient to meet demand under normal weather conditions.”  “We have, however, identified an emerging risk to gas supply security where decarbonization is slowest or in the unlikely event of the loss of the single largest piece of gas infrastructure on the system.  “By conducting this analysis, we are able to identify emerging risks early and, crucially, in time for mitigations to be put in place,” she added.  A spokesperson for the Department of Energy Security and Net Zero said ministers were “working with industry to ensure the gas system is fit for the future, including maintaining security of supply — which is paramount.”   “Gas will continue to play a key role in our energy system as we transition to clean, more secure, homegrown energy,” they added. “This report sets out clearly that decarbonization is the best route to energy security — helping us reduce demand for gas while getting us off the rollercoaster of volatile fossil fuel markets.”  Glenn Bryn-Jacobsen, director of energy resilience and systems at gas network operator National Gas Transmission, said in the short-term, Britain’s gas supply outlook was “robust” but that “looking ahead, we recognise the potential longer-term challenges.” “Gas remains a critical component of Britain’s energy security — keeping homes warm, powering industry, and supporting electricity generation during periods of peak demand and low renewable output,” he added. “In considering potential solutions, it is essential to look at both the gas supply landscape and the investment required in network infrastructure,” he said.