The UK Chancellor of Finance presented a growth plan for the UK economy on Friday, keeping the fight against inflation a priority despite calls for tax cuts, which were lukewarmly received by the business community. Criticizing the “decline” of a UK on the brink of recession, Jeremy Hunt outlined a long-term strategy focused on green energy, biotech, infrastructure, digital or creative industries.
Pushing aside calls for tax cuts from his own conservative camp, the finance minister said that against a backdrop of skyrocketing prices and a cost-of-living crisis, the “best tax cut (was) lower inflation “. Inflation reached 10.5% in December in the UK.
The worst economic performance of the G7 until 2024
In September and October, the short-lived government of Liz Truss released a budget with massive tax cuts and colossal energy aid, rattling markets, sending lending rates soaring and forcing the Bank of England to intervene.
Jeremy Hunt said when presenting his latest budget in mid-November, based on forecasts from the public body OBR, that the country had already entered a recession. Britain’s Gross Domestic Product (GDP) performed slightly better than expected in November, posting a slight increase for the second month in a row but, according to official statistics, contracted by 0.3% in the three months to the end of November compared to the previous one. Three. In November, the OECD forecast that the UK would experience the worst performance of the rich G7 countries in the next two years.
The Solvency II reform is an important lever
Jeremy Hunt admitted on Friday that the UK had “not returned to pre-pandemic levels of employment or production”.
The Government is committed to a reform of the European Solvency II directive, which governs insurance and which will come into force in a few months, to attract “100,000 million pounds of additional investment for the most productive British assets of this decade, such as clean energy or infrastructure”.
Asked at a brief press conference about the negative impact of Brexit on the availability of workers or the increase in red tape, Jeremy Hunt replied that Britain’s departure from the EU represented “a big change in our economic relations with our neighbors ( …) and, of course, there are short-term interruptions.” Finally, the Chancellor called on people who left the labor market during the pandemic to return to work, to alleviate a significant shortage of workers caused in part by the administrative complications of Brexit but also by long-term illness.
Susannah Streeter, an analyst at Hargreaves Lansdown, said details were “missing” about how the government intended to implement the plan. The minister hinted that he was saving his announcements for the March budget.
The announcement of the budget in March expected as a reinforcement
This speech comes after a series of criticisms from the business community. Billionaire James Dyson, founder of the group of the same name, for example, described the economic strategy as “stupid” and “shortsighted.” CBI chief Tony Danker ruled on Monday that the country was lagging behind on green growth, lamenting obstacles to the movement of skilled European workers and the abandonment of much of the EU’s legacy regulations this year. He estimated on Friday, in reaction to the speech, that the Chancellor had established “a solid framework for growth. We hope that the budget in less than two months will include new strong measures to move us forward.”
“But half of that fall is due to Brexit” and, “caught up in his party politics, Hunt is unable to promise the main thing that companies want to hear to boost investment: that (…) he will end the uncertainty of Brexit and mend ties with the EU, Britain’s main market.”
Source: BFM TV
