British Chancellor of the Exchequer Jeremy Hunt on Wednesday announced a budget plan he hopes to jump-start the country’s stagnant economy, including childcare, tax reforms to get more people to work and tax breaks for businesses to boost profits for low levels of business investment.
The world’s sixth-largest economy is now expected to avoid a recession this year even if it is still expected to contract, Hunt said, and also said he would provide assistance to households hit by rising energy bills and a fuel tax freeze.
“Faced with enormous challenges, I reported today on a British economy that proves the doubters wrong,” Hunt said, mocking the opposition Labor Party, which is leading in opinion polls ahead of next year’s election.
“In the fall we made tough decisions to bring stability and strong money,” said Hunt, who was swiftly moved into Cabinet in October last year to roll back plans for tax cuts that sowed chaos in financial markets during his short tenure. Liz Truss.
“Since mid-October, 10-year government bond prices have fallen, debt servicing costs have fallen, mortgage rates have fallen and inflation has peaked. Our approach means the UK economy is on the right track,” the IMF says.
After the shocks of Brexit, a crippling blow from Covid-19 and double-digit inflation, the British economy was the only one among the G7 countries to regain its pre-pandemic size, having already suffered a decade of stagnant income growth. almost.
Hunt and Prime Minister Rishi Sunak have resisted calls by some Tory MPs for deep tax cuts now, instead focusing on the debt rules he announced late last year to calm the chaos in British bond markets.
But he found the money to extend household energy subsidies for another three months and freeze a decade-long fuel tax for another year.
He also announced a new business investment incentive that would allow companies to offset 100% of their capital expenditures from profits, although it represented a reduction in tax breaks under an earlier two-year scheme.
According to a new set of forecasts, Britain’s gross domestic product is set to contract by 0.2% in 2023, rather than contracting by 1.4%, as projected by the Independent Office for Budget Responsibility (OBR) in November.
Hunt said the Balance Sheet Office projected that economic output would grow 1.8% in 2024 and 2.5% in 2025, compared with its previous forecasts for growth of 1.3% and 2.6%, respectively.
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