Crypto News: What fiscal room?

The International Monetary Fund's message to the UK government couldn't have been clearer: Don't cut taxes.

To provide functioning public services, invest in infrastructure and hit net zero targets, the government will have to spend more than was set aside at the Autumn Statement. That means higher, not lower taxes, according to the IMF. "We would advise against further discretionary tax cuts," chief economist Pierre-Olivier Gourinchas said.

The advice won't be welcome in Number 11, where Chancellor Jeremy Hunt is plotting ways to cut taxes at the next budget on March 6. With the Conservatives trailing Labour by almost 20 points in the polls, a feel-good summer of affordable consumerism is its best chance to turn the tide at the general election, which is most likely later this year.

Hunt has already handed households a £10 billion cut in national insurance. Pensions, benefits and the living wage will all rise by at least three times the forecast level of inflation in April. Chuck an income tax cut in April on top and living standards may feel genuinely better for the first time in years.

The IMF's unsolicited warning, which will have the Cabinet seething as there is little love for the fund anyway, is a reminder that tax cuts are just another way of kicking the can down the road. "Current policy settings are not sustainable," Richard Hughes, chair of the Office for Budget Responsibility, told the House of Lords last week.

Hunt is struggling to find the money. Lower debt interest costs appeared to have handed him about £10 billion in December, but have since taken some of it back. Migration projections today, which show there will be 315,000 net arrivals a year from the middle of 2028, may help boost tax receipts.

Jeremy Hunt Photographer: Maja Smiejkowska/PA

The chancellor might pocket that and "pretend" the larger population won't require more public spending, as Resolution Foundation chief executive Torsten Bell put it on X. But it would only be another can-kicking "fiscal fiction."

The truth is the government's finances have been transformed by Covid and inflation. Debt servicing costs are about £50 billion higher than pre-pandemic days. That's almost the entire defense budget spent on nothing useful.

As ever, growth promises an easy solution — if only it would come. So expect more of the justification Hunt used in response to the IMF in the months ahead: "We continue to believe that smart tax reductions can make a big difference in boosting growth."

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Power sharing in Northern Ireland may finally be about to return. At 1 a.m. this morning, Jeffrey Donaldson said his Democratic Unionist Party would end its boycott of Stormont and bring two years of political paralysis to a long overdue close. "We are prepared to move forward," he announced.

Of course, there is an "if." The DUP will rejoin the assembly on the condition that changes are made to the post-Brexit customs border checks between Northern Ireland and the rest of the UK. The terms will be published tomorrow, which must keep both the DUP and the EU happy.

A brief recap is necessary. The DUP backed Brexit only to discover that, to protect the 1998 Good Friday Agreement peace accord on the island of Ireland, there would be border checks under Boris Johnson's Northern Irish Protocol. The DUP, which sides with the UK, objected and collapsed Stormont in May 2022 after coming second in elections to Sinn Fein.

Jeffrey Donaldson speaks to press this morning Photographer: Charles McQuillan/Getty Images Europe

Rishi Sunak last year replaced the NIP with the Windsor Framework, which reduced customs checks by separating goods bound for Northern Ireland and those bound for the Republic of Ireland, an EU member.

The government has bunged the region £3.3 billion, contingent on the revival of power sharing. The new arrangements presumably ease the flow of goods further.

Conceivably, two years of political chaos that have done immense damage to public services could end before the weekend. Northern Ireland could finally "move forward," to use Donaldson's words. The lesson of the last few years, though, is believe it when you see it.

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Amazon.com Inc. initially vowed to make half of all deliveries with zero carbon pollution by 2030. Photographer: Bing Guan/Bloomberg

The appetite for speedy package delivery is skyrocketing around the planet. Americans do more than 15% of their shopping online, with digital purchases of groceries, shoes, pet food and other goods quadrupling over the past decade to $1 trillion a year.

All of this comes with a hefty climate footprint. FedEx Corp., United Parcel Service Inc. and DHL Group, three of the world's larger delivery companies, combined to emit 92 million tons of heat-trapping gases in 2022 — more than the entire climate footprint of Greece.