British Finance Minister Jeremy Hunt said on Wednesday, January 29, that there is a “very high risk” that the country will enter a recession next year, as growth in GDP is low and inflation remains persistent. Despite this, he sees an improvement in the national economic situation, and highlights that, a year ago, expectations indicated a “deep recession,” and today the chances of a moderate contraction are approaching 50%.
Testifying before the UK Parliament's Treasury Committee on the Autumn Statement announced last week, Hunt said the support provided should boost the economy and try to boost domestic growth.
He points out that the government's current debt is less than expected, and this has allowed some measures, such as freezing the increase in the fuel tax. However, Hunt highlights that this is a temporary measure.
According to him, spending on support must remain above 0.7% of national revenue over the next five years, which contradicts former Prime Minister Boris Johnson's proposal to cap spending on support. Hunt pledged to bring spending back to the target level as soon as possible, but did not give details of how he intended to do so.
Throughout the testimony, members of the Treasury Committee expressed concern about the excessive increase in spending, and questioned the government's ability to attract investment, especially foreign investment. Hunt said private and international investment was likely to increase thanks to subsidies provided by the autumn announcement.
Among the highlights, he mentioned support for power generation, which should be allocated mainly to carbon-free energy generations. Last week's announcement provides £960 million to green industries to reduce reliance on fossil fuels, which are responsible for much of the country's inflation, according to the minister.
