Welcome to Thursday’s Early Edition from i.

It was supposed to be a day to bring some sense of stability, the antithesis of Kwasi Kwarteng’s disastrous tax-cutting mini-budget, which six months ago sent the pound plunging among other fiscal catastrophes. While Jeremy Hunt’s Budget was not seen as likely to spook the markets, a different series of events has raised the’ heartrates of bankers and investors, from London to New York. Yesterday, more than £75bn was wiped off the FTSE 100, which had its worst one-day performance in three years. The collapse of Silicon Valley Bank in the US at the weekend was first to spark the market jitters, and now troubled bank Credit Suisse’s share price has hit a record low, raising fears of further turmoil. One US broker said: “The question that is in everyone’s mind is: are we headed for another financial crisis? That’s what’s driving the bus at the moment.” So what is going on and how serious is it? We’ll look after the news.

Today’s news, and why it matters

The UK’s tax burden will hit its highest level since the Second World War as £30bn of stealth taxes take effect in the wake of Jeremy Hunt’s Budget. The increase in the income tax bill is equivalent to raising the basic rate by 4p, according to the Office for Budget Responsibility.

Out-of-work parents on universal credit will face tougher sanctions as part of a Government crackdown on benefit claimants. Chancellor Jeremy Hunt announced the move in order to compel non-working mums or dads or stay-at-home partners to look for a job or increase their working hours, and said he would expand existing sanctions to include stay-at-home parents, and apply them more rigorously to people who do not meet “strict work-search requirements” or “choose not to take up a reasonable job offer”.

The richest earners will be able to escape paying inheritance tax by passing on their pension pots to their children under a loophole created by Jeremy Hunt’s changes to pension allowances, experts say. “Sadly, these measures will not benefit younger savers or those on low and middle incomes who are struggling to maintain even the minimum pension contributions amidst the cost of living crisis,” one said.

A landmark devolution deal could help Greater Manchester create a ‘Canary Wharf of the north’, Andy Burnham has told i. It will mean Mr Burnham and his Conservative counterpart Andy Street in the West Midlands are given control of a much larger budget by Whitehall and can set their own priorities in key areas such as transport, housing and post-16 education.

A 29-year-old man has been charged with the stabbing of a US spy seconded to GCHQ, who was attacked outside a leisure centre in Cheltenham. The attack is being treated as an alleged terrorist incident, but security sources said there was no link to a hostile state.

How serious is the latest banking crisis?

What has happened? First, there was the collapse of SVB – the Silicon Valley Bank. It was the largest failure of a US bank since the 2008 financial crisis and it is the second-largest single bank to collapse in US history. You can read all the details of why it collapsed here. The quick response of regulators in the UK and the US helped calm markets, investors and went someway to protecting the technology sector. The US Treasury also said last week there was not a wider threat to the banking and tech sectors. The Bank of England sought to reassure the sector too, claiming SVB UK had a “limited presence” in the economy and “no critical functions supporting the financial system”. But on Tuesday, credit ratings giant Moody’s downgraded its outlook for the US banking sector from “stable” to “negative” to reflect the “rapid deterioration in the operating environment”. And then yesterday, Credit Suisse’s shares nosedived, wildly enhancing fears of a fresh banking crisis. That happened after the bank told investors it had found “material weaknesses” in its financial reporting, meaning it failed to identify certain risks. That prompted one of its leading shareholders the Saudi National Bank, which owns just under 10 per cent of the Swiss bank, ruled out providing the lender with more money to bolster its financial security. When asked whether it would inject fresh capital into Credit Suisse, the chairman said: “Absolutely not, for many reasons.” The bank now plans to borrow up to $54bn from the Swiss central bank and buy back about $3bn of its debt, in an attempt to regain investor confidence. Early this morning, stock markets across Asia fell on the back of fears over the banking crisis. Meanwhile, the Bank of England has said it is “monitoring” the situation.

The worrying things experts are saying: Nouriel Roubini, the Iranian-American economist known more commonly as “Dr Doom” after he predicted the cause of the 2008 financial crisis, has described the situation with Credit Suisse as a “Lehman moment” for European and global markets, with the bank “too big to fail and too big to be saved”. He tweeted: “It is not even clear what their various unrealized losses on securities and other assets are.” He also said: “Now this risk is out in the open & the contagion is already severe,” and added, cheerily, that an “economic and financial hard landing is now unavoidable”. Andrew Kenningham, an economist at Capital Economics, said that “at this stage, a huge amount is unclear” regarding the viability of the bank. “The problems in Credit Suisse once more raise the question whether this is the beginning of a global crisis or just another ‘idiosyncratic’ case.” Meanwhile Larry Fink, the CEO of BlackRock, said the collapse of SVB could be the start of “a “slow rolling crisis” in the US financial system. “It’s too early to know how widespread the damage is,” he wrote in a letter to investors.

The less worrying: The Swiss National Bank and the Swiss Financial Market Supervisory Authority have been quick to try and calm the situation, saying in a joint statement: “There are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the US banking market.” And in terms of the broader impact of the European markets, Daniel Davies wrote in the FT: “There are a lot of reasons to believe that the European banking system is not as vulnerable in the current storm as are US regionals of comparable size. This is not because European banks are very good — it is precisely because they have historically been quite bad,” And finally, Mark Zandi, the chief economist at Moody’s Analytics , tweeted out four reasons “why this banking crisis is different than the 2008-2009 global crisis,” citing the size of the banks, reforms made since the 2008 crash, government intervention and the economic backdrop. Nevertheless, all eyes will be on the fresh movements happening when stock markets open here this morning.

A FTSE share index board in the atrium of the London Stock Exchange Group (Photo: Jose Sarmento Matos/Bloomberg via Getty Images)

Around the world

Western allies are close to announcing a major boost in their supplies of ammunition and other defence equipment for Ukraine in the face of Kyiv’s rapidly shrinking stockpiles. The EU is poised to confirm a €2bn (£1.75bn) proposal to both speed up shipments of artillery ammunition to Ukraine and increase European production, while defence officials from more than 50 countries supporting Kyiv met to discuss how to get pledged weapons into Ukraine as soon as possible.

Chinese billionaire Guo Wengui has been arrested in New York, accused of orchestrating a $1bn fraud scheme. Guo, an associate of former Donald Trump White House adviser Steve Bannon, was charged with 12 counts including wire fraud, securities fraud, bank fraud and money laundering.

An ongoing strike by refuse collectors in Paris has seen more than 7,000 tonnes of foul-smelling rubbish and waste piling up in the city, bin lorries grounded and depots and waste incinerators at a standstill. Workers are protesting Macron’s plan to increase the retirement age.

A lucky tourist in an Arkansas state park has discovered what he has named a “Big, Ugly Diamond” – a 3.29 carat brown jewel. “At first I thought it was quartz but wondered why it was so shiny,” David Anderson from Murfreesboro, Tennessee, said.

Nasa has debuted a new generation of spacesuits that are intended to be used for its Artemis mission to the moon, in its first major redesign since 1981. The new suit is designed to have enhanced mobility and added protection from hazards on the Moon, as well as being a better fit for female astronauts.

 Watch out for…

 more reaction to the Budget – with the Resolution Foundation providing its analysis early this morning, and the IFS shortly afterwards. 

 Thoughts for the day

Don’t be dazzled by Jeremy Hunt’s Budget: hidden in the small print lies a catastrophe. The bleak reality of our predicament stares us in the face, argues Ian Dunt.

The Credit Suisse stock plunge is a ripple that could yet be felt around banking world, says David Connett.

The strange case of Andrew Bridgen. The Tory MP has fallen down a far-right conspiracy rabbit hole, writes Katherine Denkinson.

Former Conservative MP Andrew Bridgen joins the procession to Downing Street, while supporters hold boards and signs warning of the dangers of the vaccine (Photo: Martin pope/SOPA Images/LightRocket via Getty Images)

Culture Break

Guys and Dolls reinforces the thrill of live theatre like nothing else. The initial booking period for Nicholas Hytner’s exuberant Guys and Dolls at Bridge Theatre is six months – but it could just as easily run forever, writes Fiona Mountford.

The cast of Guys and Dolls at the Bridge Theatre (Photo: Manuel Harlan)

The Big Read

How Russia is evading sanctions to get the computer chips it needs for war in Ukraine. Russia has bypassed sanctions on vital technologies by using repurposed consumer goods, including microchips from fridge, in its missiles, reports Leo Cendrowicz.

A damaged church and destroyed Russian tank in the town of Svyatogirsk in Ukraine’s Donetsk region on 1 March (Photo: Anatolii Stepanov / AFP)

Sport

Liverpool’s limp Champions League exit to Real Madrid shows the age of heavy metal football is over. After bowing out of Europe, Liverpool face Man City, Chelsea and Arsenal in their next three league games as they look to salvage a broken season, writes Kevin Garside.

Benzema was on target as Real Madrid eased past Liverpool (Photo: AP)

Something to brighten your day

A species of dinosaurs discovered in China may have had necks longer than a school bus. Scientists studying the Mamenchisaurus sinocanadorum discovered the beast had a neck measuring up to 15m, but are baffled as to why, or how it worked. ‘We really have no idea how that animal would have worked mechanically,’ Professor Paul Barrett, at the Natural History Museum said. “It looks like these necks were probably to do with enhanced feeding like in other sauropods, but it could have had more than one role.”

Illustration of Mamenchisaurus sinocanadorum feeding on brown algae (Photo: Getty Images)

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