Jeremy Hunt announced a series of tax hikes and public spending tightening in his budget plan on Thursday. which he said was necessary after former Prime Minister Liz Trust discredited the country’s fiscal reputation.
Outlining a £55billion plan – almost half of the tax increase – to tackle public finances, Hunt said the economy was already in recession and expected to contract next year. as it contends with inflation expectations that will average 9% this year and 4% next year 2024.UK finance minister raises taxes to squeeze spending
Britain’s budget watchdog said Raising prices will further erode people’s wages. And reduce living standards by 7% by April 2024, the year when national elections are expected. That will destroy growth in the eight years to 2022. Millions of Britons are struggling with costs. subsistence crisis.
The tax burden will hit 37.1% of GDP, the highest level sustained since World War II. At the end of the five-year forecast period, OBR said, up from 33.1% in the 2019-20 tax year.
But Hunt said he couldn’t avoid the painful fiscal drug. Although most drugs don’t start taking them right away. If the UK wants to build on the recent revitalization of calm in financial markets.
“Trust cannot be underestimated. And yesterday’s inflation numbers show that we must fight relentlessly to bring it down. including a significant commitment to rebuilding the public finance system,” he told parliament.
England inflation was 11.1% in October, the highest in 41 years.
Sterling was down almost 1% against the dollar and 0.2% against the euro. After Hunt spoke while investors assess austerity measures This looks more severe than planned by other large, wealthy economies.
“There are still concerns about the long-term health of the UK economy. Will there be enough of what (Hunt) said for the long-term growth outlook?” said Susannah Streeter, senior market analyst at Hargreaves Lansdowne.
Hunt announced changes that will mean more people paying basic income taxes and higher rates. and lowering the threshold where people pay taxes at the maximum rate of 45% to £125,000, including a tax break on dividend income.
He holds off until 2028, the threshold at which employers start paying Social Security contributions. which will cost the company more expenses.
The tax on energy company profits will increase to 35% from 25% from January 1 through 2028, and a new temporary 45% tax will be imposed on generators. to raise the total by 14 billion pounds next year,
Government spending will grow at a slower pace than the economy. but increased in overall terms, he said.
Downsizing existing energy costs will cost less than £13 billion next year. About half of what had been planned by former finance minister Kwasi Kwarteng.
But pensions and benefits will increase with inflation. which is the main expense for public finances. After this year’s price increase.
Paul Johnson of the Treasury Research Institute said: The UK will be spared significant spending cuts over the next two years, with tax increases remaining limited in the short term. But the real pain will come after the 2024 election.