UK announces cuts and tax hikes today to pay deficit

Finance Minister Jeremy Hunt will present the measures to British MPs this morning after weeks of speculation about the content of the so-called “Autumn Declaration”.

So far, Hunt has said only that “tough decisions” will be made on spending, and on Sunday he admitted to Sky News that all taxpayers in the UK “need to pay a bit more tax” to respond to the current economic crisis.

However, the opposition fears that the budget cuts represent a new wave of austerity similar to that of 2010, which penalizes the most vulnerable and low-income people from rising cost of living.

The British public broadcaster BBC said the government had prepared budget cuts of around 35,000 million pounds (40,000 million euros, at current exchange rates) and planned a tax increase of 20,000 million pounds (23,000 million euros).

The UK main state budget, also known as the “Spring Report”, is usually presented in March, while the “Autumn Report” usually provides a reduced assessment of implementation, and may sometimes include revisions.

Initially called the “Medium-Term Financial Plan”, today’s intervention has been transformed into an extraordinary budget in practice due to its emphasis on social support and investment in pensions, public services and infrastructure.

With today’s measures, the British executive hopes to restore the country’s economic viability after the chaos caused by former prime minister Liz Truss’ “mini-budget”. debt..

Liz Truss resigned after 40 days in her position.

Recruited by Truss to “stabilize” the economy, Jeremy Hunt reversed all the measures taken by his predecessor Kwasi Kwarteng and curbed volatility in financial markets, which contributed to the current British prime minister’s continued tenure after his appointment. Minister, Rishi Sunak, at the end of October.

According to research center the Resolution Foundation, the small budget lost around 20,000 million pounds (23,000 million euros) in tax revenue and 10,000 million pounds (11,400 million euros) in extra spending as interest rates on sovereign debt rose.

Jeremy Hunt’s report will be accompanied by new independent forecasts from the Office for Budget Responsibility on economic growth and the level of public debt, which currently stands at 98% of gross domestic product (GDP).

The British economy, like many others, has been hit by the impact of the Russian invasion of Ukraine, which has pushed up food and energy prices, with inflation rising to 11.1% in October, the highest since 1981.

Official British figures revealed last week that the British economy shrank by 0.2% in the third quarter of 2022, confirming estimates of a recession the UK believes will be prolonged.

Earlier this month, the central bank announced the biggest increase in interest rates by 0.75 percentage points to 3% in three decades, stressing the need to fight inflation.

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