CHANCELLOR WARNS UK DEBT COULD BECOME UNAFFORDABLE

Rishi Sunak has signalled that tax rises could be needed sooner rather than later as he issued a warning over Britain's debt (The Daily Telegraph, p2, £). The chancellor warned that the debt could become unaffordable if there is a rise in interest rates.

Boris Johnson has said that the Conservatives will retain the tax triple lock, a manifesto pledge that they will not raise income tax, VAT or national insurance, leaving Mr Sunak with limited fiscal room for manoeuvre. The Treasury has drawn up plans to cut pensions tax relief for high earners, increase capital gains tax and introduce a digital sales tax for online retailers.

The Treasury is likely to borrow £370 billion this year, more than double the £158 billion deficit in the peak year of the financial crisis. It has taken debt to close to 100 per cent of GDP for the first time since the 1960s (The Times, p4, £).

Separately, Kristalina Georgievav, chief of the International Monetary Fund, has said that the global economy can withstand the coronavirus crisis but warned against complacency. Ms Georgieva said policymakers must act quickly to deliver a return to economic growth and avoid widespread financial distress (Financial Times, p6, £).

FRANCE TO PUSH FOR ?NO DEAL? IF UK DOES NOT MAKE CONCESSIONS

Michel Barnier has been warned by France and five other EU states not to concede too much to the UK in efforts to get a Brexit deal over the line. France and other countries are said to have suggested that the EU should be prepared to walk away and trigger no-deal unless the UK government makes significant concessions soon. According to The Times (p6, £), sources said that Philippe Léglise-Costa, the French ambassador to the EU, argued that ending the transition period without a deal would only ?add a small shock to the big shock of Brexit?.

Meanwhile, The Daily Telegraph (online only) reports on research from Aston Business School, which has found almost a fifth of UK exporters have shifted trade away from the EU since the Brexit referendum as they ?forge new opportunities around the world?. The growth in value of exports to EU countries fell by an average of 8.7 per cent annually over five years, according to analysis of 340,000 quarterly export transactions of 26,000 British exporters.

Separately, UBS chairman Axel Weber said Brexit would not threaten London's position as Europe's dominant financial centre as long as the continent remained fragmented in terms of regulation and embroiled in internal competition. Mr Weber said no other city had emerged as a viable challenger to the City as a base for international finance, and that squabbles between countries had been mutually detrimental (Financial Times, p1, £).

NEWS IN BRIEF

The UK has become the first country in the world to approve the Pfizer/BioNTech coronavirus vaccine. Rollout of the vaccine will begin next week, with 800,000 doses on their way to the UK (BBC News).

Bonmarché has fallen into administration just months after rescue. Bonmarché is the third major high street brand in trouble this week following news from Arcadia and Debenhams (Sky News).

Global financial regulators will examine ways to encourage lending during crises, the top US banking supervisor Randal Quarles has said (Financial Times, p10, £).

The number of shoppers at English retail parks, shopping centres and high streets was up 87 per cent on the same day the previous week, as the country came out of lockdown yesterday. However, crowds were down 26 per cent on the same day last year, according to Springboard (The Guardian, p11).