FirstFT: Rishi Sunak to pledge tax cuts by curbing welfare spending

Stay informed with free updates

Simply sign up to the World myFT Digest — delivered directly to your inbox.

Good morning.

Rishi Sunak will set out his pitch to voters during a visit to Lancashire today. He will claim that Britain enters an expected election year “pointing in the right direction”, as he puts the promise of tax cuts at the heart of his attempt to revive Tory fortunes.

The prime minister is attempting to emulate John Major’s unlikely 1992 Tory election win by deploying the same core message: that a weak economy is turning and that voters would be taking a risk by switching to the Labour party.

But Labour leader Sir Keir Starmer said he was ready for a “fight” with Sunak over tax policy and the size of the state, arguing his party was ready to borrow to invest to boost the growth potential of the economy.

Sunak said the Conservatives would focus on cutting taxes on “work”, funded by shrinking the size of the state relative to economic growth, including curbs on welfare spending. Here’s more from his expected remarks later today.

For the inside track on British politics and policy, sign up for our Inside Politics newsletter by Stephen Bush. And here’s what else I’m keeping tabs on today:

Economic data: The EU reports November retail sales and unemployment figures and consumer confidence for December, while Germany publishes November industrial orders. KPMG and REC have their jobs report for the UK and the US publishes monthly consumer credit data.

Meta: Competition Law Forum director Liza Lovdahl Gormsen brings a £2.3bn claim for damages against Meta under EU competition law.

Thames Water: Chris Weston faces a daunting task as he takes over as chief of the troubled water monopoly from Sarah Bentley, who stepped down in June.

Blinken in Middle East: After visiting Jordan and Qatar yesterday as part of a five-day diplomatic trip in the region, the US secretary of state will hold talks in the United Arab Emirates and Saudi Arabia before travelling to Israel. (Reuters)

Five more top stories

1. European Council president Charles Michel has announced he will run in EU-wide elections in June, a move that would force him to step down early from his current role if elected and could hand Viktor Orbán more influence over EU policymaking. Here’s why the Hungarian prime minister could stand to benefit.

2. Electric vehicle exports from China to Europe have been held up by a shortage of ships that has pushed up shipping prices to record levels. Shipping companies scrapped older vessels while car factories were idling during the pandemic, but replacement vehicle carriers are not expected to be ready for another three years. Read the full story.

3. Israel says it has successfully destroyed Hamas as an organised fighting force in northern Gaza. The Israel Defense Forces’ chief spokesperson said the military had shifted its focus to the centre and south of the battered territory in a new stage of its war against the Palestinian militant group.

Hostage’s account: Wichian Temthong, a Thai worker who was held for seven weeks in Gaza by Hamas, speaks to the Financial Times about the ordeal he went through.

The FT View: A series of incidents in the past week has brought the region to the brink, but a diplomatic solution is still worth the effort, writes the FT’s editorial board.

4. Congressional leaders have reached a $1.66tn deal on the level of US federal spending for 2024, less than two weeks before a budget deadline. Jointly announced yesterday by Democratic Senate majority leader Chuck Schumer and Republican House Speaker Mike Johnson, the framework brings Capitol Hill closer to avoiding a costly government shutdown. But there are doubts as to whether it will be passed in time.

US politics: Defence secretary Lloyd Austin remained in hospital yesterday as he faced criticism for concealing his medical condition, even from US President Joe Biden.

5. US regulators have launched a probe into how a section of a new Boeing 737 Max blew out mid-flight, as airlines in Turkey and Panama grounded their planes for inspection. All 171 passengers and six crew of the Alaska Airlines-operated Boeing plane landed back safely at Portland, Oregon, after the incident on Friday night. But investigators said the outcome could have been much worse.

Go deeper: This dangerous mid-air breach is just the latest production lapse at Boeing, raising questions about the quality of its products as it strives to churn out planes faster.

The Big Read

The NHS outsources mental health support to the private sector just as it does other procedures. But unlike other segments of the public health sector, the 50 mental health trusts that provide services to patients across England tend to rely on private providers for specialised care that is often complex and expensive — and could have damaging effects on patients sent far away from their home and loved ones for treatment.

We’re also reading . . . 

Chart of the day

The global shipping fleet has reached its oldest average age in almost 15 years, with shipowners cashing in on surging demand for second-hand vessels from operators of a “shadow fleet” transporting Russian oil that is the subject of sanctions.

Take a break from the news

Being out of touch with internet slang can pose problems in the workplace and highlight a broader issue of the generational divisions playing out in offices around the world. But that doesn’t mean bosses should be trying to drop “rizz” into the conversation, writes Emma Jacobs.

Additional contributions from Benjamin Wilhelm