The UK is preparing to raise taxes and cut government spending in a budget that should mark a return to austerity, despite millions of Britons suffering from the crisis of rising cost of living in a recessionary economy . Chancellor of the Exchequer Jeremy Hunt will present his plan in parliament, along with official economic forecasts that should not bode well for an economy also hit by Brexit and the government’s response to the covid-19 pandemic.
Conservative Prime Minister Rishi Sunak, who took office three weeks ago, has vowed to solve the economic chaos his predecessor caused. Liz Truss’ mini-budget, which provided for a tax cut without providing a way to finance it (opened a gap of almost £200 billion, that is, EUR 228 billion), caused the collapse of the pound and forced the intervention of the Bank from England.
But despite Sunak being aware of the overwhelming rise in energy and food bills – with inflation hitting a 41-year record (11.1%) – and interest rates, the budget should usher in a new era of austerity, as after the 2008 crisis.
“Tackling inflation is my top priority and that is driving the tough tax and spending decisions we will be making,” said Hunt, after official data also revealed rising unemployment – up to 3.6%
The Chancellor of the Exchequer is expected to present a budgetary consolidation plan of between £50 and 60 billion (between EUR 57 and 68.5 billion), according to forecasts average🇧🇷 “We’re all going to pay a little more tax, I’m sorry,” he told reporters, comparing himself to the miserly character Ebenezer Scrooge, from the book A Christmas story, by Charles Dickens. “We are going to ask everyone to make sacrifices,” he added, reiterating however that this will fall disproportionately on those who are in a better economic situation.
The UK will already be in recession, after the economy contracted in the third quarter and is expected to contract further in the last three months of the year, the Bank of England said. The recession will last at least until mid-2024.
After the mini-budget debacle, Truss fired Finance Minister Kwasi Kwarteng and replaced him with Hunt, who reversed many of the measures and cut expensive aid to help families pay their energy bills. But that wasn’t enough to keep her in Downing Street – her reign lasted just 49 days.
you average Brits suggest Hunt will now go further by freezing income tax rate caps, meaning more people will be swept into higher tax brackets.
The minister also proposed in the House of Representatives on Tuesday to increase municipal taxes. To help the poorest with energy bills, the government is expected to announce a tax on excessive profits from the oil and gas giants (and electricity giants), whose profits have soared in the aftermath of the war in Ukraine.
Source: DN
