Britain’s Finance Minister Rishi Sunak cut taxes on workers and lowered fuel taxes on Wednesday as he tried to ease severe pressures on the cost of living amid fast-rising inflation and slowing economic growth.
Mr Sunak announced a half-yearly budget update that has been overshadowed by the conflict in Ukraine, setting out measures that would add around £17.6bn (€21bn) to the economy in the coming financial year.
“The measures we have taken to sanction Putin’s regime are not free for us at home,” he told parliament. “The invasion of Ukraine poses a risk to our recovery, as well as to countries around the world.”
With inflation peaking at almost 9 per cent at the end of 2022, Mr Sunak announced a 5p per liter fuel tax cut, set to last until March next year. He said the base income tax rate would be cut by a pence a pound in 2024 when Britons next voted in a general election.
However, the Office for Budget Responsibility (OBR) said inflation-adjusted living standards would not return to their pre-pandemic levels until fiscal 2024-25, suffering the largest decline in the 12 months beginning April since at least the mid-1950s.
Mr Sunak and Prime Minister Boris Johnson have been pressured, including by lawmakers within their Conservative Party, to do more to help households struggling with the rising cost of living.
Mr Sunak announced new forecasts showing the UK economy will grow at a slower pace this year than previously forecast and inflation will be much higher.
Forecasts produced by the OBR showed the economy was likely to grow 3.8 percent in 2022, a significant slowdown from a 6.0 percent forecast in October.
Inflation, as measured by the consumer price index, is now at 7.4 percent in 2022, compared to the October forecast of 4.0 percent.
Earlier data showed that consumer price inflation in the UK hit a 30-year high of 6.2 per cent last month, on the back of rising energy and food costs, which poorer households in particular may struggle to bring down.
The OBR forecast that gross domestic product would grow by 1.8 percent, 2.1 percent, and 1.8 percent in 2023, 2024, and 2025, respectively. In October, the OBR had forecast growth of 2.1 percent, 1.3 percent and 1.6 percent for the next three years.
The OBR said government borrowing in October would be £55 billion less than expected.
https://www.independent.ie/business/world/rishi-sunak-cuts-uk-taxes-in-a-bid-to-relieve-the-pain-of-inflation-41480987.html Rishi Sunak cuts UK taxes to ease the pain of inflation