hello, again. this is al jazeera and these are the headlines. at least 21 people have been killed in a refugee camp in gaza. we have more from the scene. there is a leak in the gas while

they lit the candles of the birthday cake. the police also said that they found fuel amounts stored in the apartment and that it could've been the reason for the huge explosions that happened. >> a dutch court found them guilty of murder. all 298 people were killed. u.s. house speaker nancy pelosi says she won't seek reelection as democratic leader. she served as the top house democrat now for two decades. policy says she will remain a member of congress and will serve out her term. the polish president has visited the site of a missile strike that killed two people on tuesday. both poland and nato say it was likely a ukrainian air defense

missile and the strike was not intentional. the family of jailed egyptian activist has been allowed to days after he ended the hunger strike. the condition has deteriorated severely. the company used customer funds to buy employees phones in the bahamas. ftx filed for bankruptcy last week. former italian prime minister silvio berlusconi is acquitted of bribing a witness in a 2013 underage prosecution case. they are charged with allegedly paying an italian singer of lying at a previous trial. those of the headlines. inside story is next. stay with us.

>> the cost of living crisis worsens in the u.k.. it at its highest level in more than 40 years. millions of people cannot afford to buy food or heat their homes. this is inside story. hello, welcome to the program. the u.k. government says it is making difficult decisions to control the spiraling cost of living crisis.

millions of people are struggling to pay their food and energy bills and things can get much worse as winter sets in. inflation has hit 11.1%, the highest level and 41 years. fans are paying 90% more than they were a year ago. more people are asking for help from the previous prime minister , liz truss resigned in september after announcing $54 billion in unfunded tax cuts. the market took a nosedive. the prime minister rishi sunak is basing taxes on cutting public spending instead. >> this is a balanced path to stability. tackling inflation to reduce the cost of living and protect savings while supporting the economy on a path forward.

but it means making difficult decisions. anyone who says there are easy answers is not being straight with the british people. >> more than $38 billion in cuts and around $28.5 billion raised in increased taxation. nobody in the u.k. will explain that because stealth is the word or as anyone else would call it, a budget. this is in the sense that they will actually find the thresholds crossed quite easily. they stay the same but with inflation high and wages increasing, they will still end up paying more taxes. add to that the number of increases in indirect taxation and the fact that most of the really big cuts will be held

over until 2025. that is just after the general elections are due. advantageous to the public. that is really going to be overtaken by inflation. in bold terms, straightforward, people are going to suffer in the u.k. because of this statement. andrew simmons for inside story. >> let's bring in our guests who will be joining us from london today.

we have the professor and public policy. a director of the new york economics foundation, and max is the head of inequality policy at oxford international. welcome to the program. patrick, is this an attempt to fix an economy that has been grappling with inflation? or more of a political attempt by the tories to build credibility that has been battered by blunders. >> i think it is a very political economic statement. it is attempting to restore the credibility. it is trying to create a platform for a conservative election victory.

they are mapping out political choices and debates. >> the statement by jeremy hunt, he's talking about the need to hide taxes and cut public spending as somehow an idea. coupled with the decision by the bank of england. this is a plan to fix the economy? >> it is highly problematic. and we just heard today, a record collapse in disposable income per person.

i will ask the question where this come from? it will come from policies including the one you just mentioned. the bank of england, increasing interest rates faster and harder than other countries. it has a net contractionary start, taking money out of the economy. spending cuts, tax rises. >> there are decisions to be made.

they don't seem to be offering very clear answers. >> there is suffering out on the country for the poorest people. and a large portion of the population, and some ways, politically, it is hard to of nor the poorest people in the country and looking by these payments. one in seven people are skipping meals because they can't get enough food. and we are still one of the richest countries in the world. so it's suffering not just for the poorest of the poor. although they are the hardest hit. but across the country, it's a serious political problem for this government. >> how to the u.k. get to this

particular point? >> it's the legacy of a series of decisions that would be taken over a number of years. separating out the causal impacts of these different decisions is in itself challenging, but we've had decisions in the european union that followed very significant austerity in the early 2010s that was self-inflicted and significant damage on the welfare state. so when the u.k. went into the crisis by covid-19 and the subsequent geopolitical crisis, it was already in an economically and socially vulnerable position. i think the measures we are seeing today is a reflection of that. the economic fundamentals of the u.k. are so weak because of

decisions going back over the last decade. >> it was obvious when liz truss decided to move ahead with a plan where she has based on supply-side economics. without going to cut public spending and this has created a panic. and we know what happened right after that. jeremy hunt is trying to reverse all of those decisions but it does not really give you strong guarantees that like six months from now we will see an economy that is back on track. >> i would not over exaggerate the impact. one is the main impact that budget in terms of perfecting the u.k. is an increased cost of government borrowing. those markets have now

eradicated that competency premium that they were giving to the u.k.. secondly, the budget didn't show us there were hard limits to borrowing. they same markets go into panic, the lesson is if it country borrows but does not support the economy, then markets take a very dim view. it's quite important to learn that we are not supporting the economy despite the cost of living and despite recession says we have not learned that lesson. it is certainly not mandated by investors. >> when you look at the chances presented by different countries, most of them have exactly the same set of problems. rising gas, food shortages. coupled with the ramifications

from the russian invasion of ukraine, but they manage to bring the economy to levels that were before covid-19. why? >> a lot of it is down to the fundamentals. the u.k. went into the pandemic hardly worse prepared. we had a health system at a breaking point and weak productivity. we went and incredibly weak. we also mismanaged the pandemic compared to other countries. but back to the point i was making about public finances, the eu -- sorry, the u.s. owned countries have suspended this and they are not about to cut spending or raise taxes going to this difficult time. they have suspended the target.

and i think that will become increasingly new. >> if you look at all of the projections, they are likely to see the recession moving all the way towards the first half of 2020 -- 2023. >> that means terrible hardship. they are struggling to make ends meet. these are people that are holding down jobs and struggling to pay their bills. it is really important to get the message across that there is plenty of money in this country and good to see the chancellor increase taxes at the top. but there is so much more that he could do to ensure that the richest people pay more taxes.

capital gains is still 20%. taxes for work is much higher, the highest being 45%. you pay less tax on the money you earn then from your bank account in the interest rates from savings then with the money with hard work. really simple steps. you can only protect the poor. let's tax the rich. let's not hurt the poor. >> was brexit responsible in a way? does it appear to be a different scenario?

>> i would not oversimplify the effects here, and saying that the cause of brexit would be a distortion. there are many different factors at work here. i think the underlying fundamentals have been weak for some time due to low levels of public and private investment and economic decision-making. those have been exacerbated. in choosing to leave the european market in the last few years has inflicted further shocks on particular parts of the economy. in some respects, london and southeast, the house being there for economic shock. other parts of the u.k., parts of wales are doing very badly

indeed. the fact that brexit has created it. you take all these factors together and it underlines the weak economic position that britain finds itself in. >> does the economy have all the fundamentals it takes? also, rebuild the economy? >> there isn't a 54 billion dollars hole. it's a gap. and the underlying things that the previous guest has for the economy. and ultimately, what it means for people.

there are short incomes over the next two years and that's what it fails to address. >> we are talking about the measures that will continue for quite some time and that mean some people have to pay 4000 pounds a year to try to tackle some of the rising businesses. could the middle-class be mostly targeted? and we see it expanding toward other sections of society. >> where it because a real political problem is the rising interest rates. this is in the cost of mortgages where people are overstretched, first-time buyers, and spending a huge portion of their income on mortgages. it's not the same as being able to choose between heating and the suffering is coming in the bottom half of the population,

particularly for women and people of color. but i think as a political problem, when it starts to look, there is a portion of the population where people can make a difference between that. and i think that is a really big issue. it will make a big difference politically. >> they said the country is sick of being ripped off by tourism again and again. she does not see a way out from an economy that is not based on growth. could this be the moment to build momentum for the labour party and see how it could benefit from the situation politically speaking? >> the loss of economic trust and credibility under the

previous prime minister. people can see the current policies are not very successful. it has traditionally been strong supports. certainly, labor's position is strengthened but still faces the challenge itself which is to say what it would do, trying to lay the ground for the next couple of years. would you be willing to borrow more, would you tax more? would you be prepared to go along with cuts in public spending? labor's position is that it has

to get its act together and it needs to be able to have a clear argument in response to the question the government would pose, what labor would do if it was in government. >> can the u.k. get out of this mess? and at what price? >> the key thing is that you can come through this in a way that does protect the living standards of those that need protecting. and it does three things. first, acknowledge that the economic stakes at home is fundamentally a price shock. and that we need to protect people's standards as this moves through the system and that is supportive energy bills. it is much more protection than public service based on an

investment and icon safety net. and to say that all of that support for families doesn't set up the tax rises that would offset that. and if you were to go down that route and acknowledging the real world, raising taxes on those who can afford it, that situation getting worse, you can come through the situation and come out of it stronger than what the government currently is on. >> when you look at a decade of missteps which have left the public service is close to a breaking point, you have key sectors here like education and health care. if this is going to go for quite some time, is it bad news for everybody in the u.k.? >> i think if you look at cuts to the nhs, then the vast majority of people are used by the very rich in this country

and it is very different to any of the other countries where universal health coverage is only the privilege of the rich. massive cuts in real terms to what the nhs can do off the back of the heroic steps they took during covid. that's another reason why it is a political dynamo. i think it is good news for the opposition that the conservative party is taking such a beating. and i think the labour party, they are agreeing with the speaker. they need to be very specific about how they will increase taxation on the very wealthy. we have seen some good solid research showing the wealth tax could raise another $10 billion. we know from pulling that that is a normal sleep popular.

across the political spectrum. that's something they could do to take the initiative further and that there is an alternative to prosperity. >> what happens when it comes to the issue of taxes? they would like to cut taxes because it is one of the key components of the strategy. but the base itself which has already been skeptical, is it something that could erode the trust of the tories that they've had a of the time with the power base? >> it's important to reflect on the wild oscillations of the fiscal policy that the u.k. has recently been going through. i know that the mini budget, there is a taxcutting budget for 50 years.

is the largest statement by a government in 30 years. in the space of a few months, fiscal policy has kind of dramatically changed her action. i think for the conservatives, the real problem is the main claim is based around that commitment. taxes have risen. that is bound to affect the popularity by a higher proportion of these kinds of middle income earners. >> in less than 30 seconds if you don't mind, if you look at all the metrics now. at the highest in more than 41

years, where does that leave the u.k.? >> it leaves us exposed. those are all symptoms of the problem. >> i really appreciate your insight. look forward to talking to you in the near future. thank you for watching. you can see the program any time by visiting our website. al jazeera.com. go to facebook.com/al jazeera. you can also join the conversation on twitter. goodbye for now.

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