UK Chancellor Jeremy Hunt targets £55bn tax and spending package

Jeremy Hunt has targeted wealthy people and energy companies with a £55bn (€65bn) package of tax hikes and spending cuts to clean up the mess left in the UK economy by unprecedented shocks.

The measures set out by the UK Treasury Secretary will contribute to a 7 per cent fall in Britons’ disposable income over the next two years, the biggest bottleneck on record, and wipe out eight years of gains.

Prime Minister Rishi Sunak’s government is trying to fight inflation and stem the burgeoning deficit in a bid to restore credibility to financial markets, which dumped British assets in September after a disastrous experiment in deep tax cuts by his predecessor Liz Truss. Reverse these movements, Mr Hunt is set to increase the tax burden to the highest since World War II and warned the economy is in a recession that will shrink output by 1.4 percent next year.

“We’re making tough decisions to fight inflation and keep mortgage rates low,” he said Hunt announced this to the House of Commons on Thursday. “But our plan will also result in a flatter downturn, lower energy costs, higher long-term growth and a stronger NHS and education system.”

Mr Hunt’s program represents the sharpest cut in government spending since the austerity plans laid down a decade ago by fellow Conservative George Osborne in the wake of the global financial crisis.

The scale of the pain, combined with growing unrest among workers – train drivers, nurses, doctors and postal workers are among those on strike or threatening to – is compounding the political headache for the Conservative government after 12 years in office. While many of the cuts will not take effect until after the deadline for the next election in just over two years, there was little in Mr Hunt’s package to boost the Tories’ poll ratings, which currently trail the Labor opposition by 20 points.

Rachel Reeves, the Labor MP shadowing Mr Hunt, said the Treasury Department had “picked everyone’s pockets” in the country with a “bill for economic carnage” produced by Mrs Truss’ September 23 tax plan.

Financial market interest rates have fallen since Mr Hunt was appointed Chancellor last month. The yield on the benchmark 10-year UK government bond fell to 3.21% from 4.5% in the wake of Truss’ program, rising 7 basis points on Thursday.

The combination of recession, higher inflation and rising interest rates resulted in a £75bn increase in borrowing compared to March expectations in the key forecast year of 2027-28. The Office for Budgetary Responsibility said “nearly two-thirds are due to higher debt interest costs.”

To fill the hole, Mr Hunt announced savings of £61.7 billion through a combination of tax hikes and spending cuts. Debt will rise from 84.3 percent of GDP last year to 97.6 percent in 2026-27, a 63-year high.

Mr Hunt extended an unexpected tax on oil and gas companies and lowered the threshold for paying tax on dividends and wages over £125,000. He also raised the minimum wage, targeted support for the most vulnerable people struggling with energy bills, and outlined measures to bolster long-term growth.

https://www.independent.ie/business/uk-chancellor-jeremy-hunt-targets-wealthy-in-55bn-tax-and-spending-package-42153595.html UK Chancellor Jeremy Hunt targets £55bn tax and spending package

Fry Electronics Team

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